Globalisation of Market
Merging of historically distinct and separate market to form a huge global marketplace.

Globalisation of Production
Sourcing of goods and services from all parts of the world to take advantage of national differences in the cost and quantity of factors of production to better compete with competitors.

2) Foreign Direct Investment (FDI)

• 1960, US accounted for 66% of worldwide FDI.
• From 1980 - 2007, share of US has declined from 38% - 18%.
• Developing countries have their shares increased from <1% - 15%.

3) Types of Companies

• Increase in non-US multinationals (Eg. France,Japan)
• Developing countries (Korea & China) become major players.
• Growth in mini-multinationals with international sales accounting for large shares in revenue. (Eg. China's Lenovo acquired IMB's PC division in 2004).

4) Change in World Order

• Collapse of Russian communism and new opportunities in Eastern Europe.
• The rise in china and india, Mexico, Latin America and Middle East.

1) Change in World Output and Trade

• 1960s, US dominated world economy and trade.
• 2008, US only accounted for 20% world economic activity.
• By 2020, developing countries are likely to account for 60% of global economy.

Competition

• International competition drives for cost reduction and also prompts improvement in quality, efficiency and productivity of goods and services.
• As international barriers fall, firms have to compete internationally and domestically to succeed.

Cost

• Difference in resource costs in different countries. Businesses search for lower cost in production of raw material and components or relocating production of service operations abroad such as offshoring and outsourcing of value chain activities.
• Internationalism enables firms to take advantage of economies to scale hence lower production cost.

Market

• Domestic sales growth in many developed countries has slowed down and market has become more saturated. Businesses are increasing reliance on international sales for business continued expansion.
• Rise of income in international markets such as China and India.
• Population has growth by doubled from 3 billion in 1960 to over 7 billion in 2013.
• Proximity of market has also become a driver for FDI.

Economic Liberalisation

• Describes the internal economic reform such as deregulation, privatelisation and removal of barriers to trade.
• Especially in the 19th century there are more openness to free trade among countries.
• Free market economies are supported by IMF and the world bank.
• Free market capitalism after the collapse of the communist central planning brings growth to the economy.
• Economic liberalization enables business to take advantage of resources outside its traditional/geographical boundaries.

Technological

• ICT enables for internet communication, information sharing and operation and control of remote activities such as outsourcing and offshoring.
• Micro processes which facilitated the development of computers and the creation of WWW.

Political

• Relatively world peace and security after the end of world war.
• China and other countries previously from the soviet bloc has drive trade and investments.
• The fall of berlin wall symbolise the end of communism in Eastern Europe and the end of Cold War.
• Transnational (EU, NAFTA) and Supranational (WTO, IMF) has also helped driver globalization.