Globalisation
A process in which the world appears to be converging economically, politically and
culturally.
Environmental context:
o World economy is closely interlinked
o Trade increased
o Nation states from alliances
o Faster technology/information flow
o Increased flows of services, money, ideas and people
o Cultures grow together
Organisational context:
o Ownership patterns are more complex due to cross-border acquisitions.
o Many changes in the small business sector
o In organisations: new structures and cultures emerge
Strategy: shift from a national competitive focus to a global one. This affects business
activities.
o The ease of technology transfer
o Operations involve the coordinated efforts of a number of organisations
across the globe
o Marketing: global activity
What is globalisation?
Global circulation of goods, services and capital, but also information, ideas and
people.
Scholte identifies 5 elements that define globalisation. Keep in mind,
deterritorialisation provides the true understanding of globalisation according to
Scholte.
o Internationalisation: rapid growth in international trade of goods and
services, money, information and development of global networks for
production and finance
o Liberalisation: creation of free markets around the world. Also liberalisation
of information (e.g. internet)
o Universalisation: process of convergence due to regulatory frameworks. WTO:
rules for free trade. EU: legal framework
o Westernisation; dominance of western values, with particular influence from
the USA
o Deterritorilisation: process that places less emphasis on
national/geographical boundaries. This creates a better flow between
countries
Scholte & Waters see globalisation as a fundamental change in social relations at all
levels.
Castells: “a global economy is something different: it is an economy with the capacity
to work as a unit in real time on a planetary scale”.
Changes took place due to transportation and communication technologies.
, The start of globalisation
Michael porter: 19th century: industrialisation and expansion of trade.
Marx identified that capitalism was concerned with accumulation
o Firms must increase the scale of production to continue to accumulate profit
Also: commodification: broadening the scale of consumption: develop new goods and
services
As result: firms seek to develop new goods and services and increase sales volumes
Through global production/global markets, firms achieve economies of scale.
World bank claims we have ‘cyclical variations’, but also a reduction in trade and
foreign direct investment.
Causes and drives
Importance of rational knowledge
o Emphasises knowledge derived from scientific, objective methods, and sees
the importance of knowledge to solve problems
Trade growth
o Individual national economies have become interconnected through trade
Growth of FDI
o The investment and management of overseas operations by companies,
leading to the growth of multinational companies
Multinational corporations
o Products/drivers of globalisation.
o They have contributed towards the diffusion of technology and ideas, and the
convergence of processes and management practices.
Costs
o Global sales mean that economies of scale in production can be achieved
o Costs of R&D has risen disproportionally
o Global sourcing: raw materials can be accessed anywhere: price is the key
driver
o Competition increases the cost
Technology innovation
o Development in computer technology and decrease of cost to store
information
o Improvements increase the flow of people, goods, money, information and
ideas
World politics
o Political transformation leads to free market economies
o Changes toward liberalisation lead to more trade
Changing markets
o Emergence of groups of customers around the world with similar needs
satisfied by the global products
Regulations
o World economy: easier to achieve with an agreement on certain standards
o Standardisation: e.g. property rights on computers.
A process in which the world appears to be converging economically, politically and
culturally.
Environmental context:
o World economy is closely interlinked
o Trade increased
o Nation states from alliances
o Faster technology/information flow
o Increased flows of services, money, ideas and people
o Cultures grow together
Organisational context:
o Ownership patterns are more complex due to cross-border acquisitions.
o Many changes in the small business sector
o In organisations: new structures and cultures emerge
Strategy: shift from a national competitive focus to a global one. This affects business
activities.
o The ease of technology transfer
o Operations involve the coordinated efforts of a number of organisations
across the globe
o Marketing: global activity
What is globalisation?
Global circulation of goods, services and capital, but also information, ideas and
people.
Scholte identifies 5 elements that define globalisation. Keep in mind,
deterritorialisation provides the true understanding of globalisation according to
Scholte.
o Internationalisation: rapid growth in international trade of goods and
services, money, information and development of global networks for
production and finance
o Liberalisation: creation of free markets around the world. Also liberalisation
of information (e.g. internet)
o Universalisation: process of convergence due to regulatory frameworks. WTO:
rules for free trade. EU: legal framework
o Westernisation; dominance of western values, with particular influence from
the USA
o Deterritorilisation: process that places less emphasis on
national/geographical boundaries. This creates a better flow between
countries
Scholte & Waters see globalisation as a fundamental change in social relations at all
levels.
Castells: “a global economy is something different: it is an economy with the capacity
to work as a unit in real time on a planetary scale”.
Changes took place due to transportation and communication technologies.
, The start of globalisation
Michael porter: 19th century: industrialisation and expansion of trade.
Marx identified that capitalism was concerned with accumulation
o Firms must increase the scale of production to continue to accumulate profit
Also: commodification: broadening the scale of consumption: develop new goods and
services
As result: firms seek to develop new goods and services and increase sales volumes
Through global production/global markets, firms achieve economies of scale.
World bank claims we have ‘cyclical variations’, but also a reduction in trade and
foreign direct investment.
Causes and drives
Importance of rational knowledge
o Emphasises knowledge derived from scientific, objective methods, and sees
the importance of knowledge to solve problems
Trade growth
o Individual national economies have become interconnected through trade
Growth of FDI
o The investment and management of overseas operations by companies,
leading to the growth of multinational companies
Multinational corporations
o Products/drivers of globalisation.
o They have contributed towards the diffusion of technology and ideas, and the
convergence of processes and management practices.
Costs
o Global sales mean that economies of scale in production can be achieved
o Costs of R&D has risen disproportionally
o Global sourcing: raw materials can be accessed anywhere: price is the key
driver
o Competition increases the cost
Technology innovation
o Development in computer technology and decrease of cost to store
information
o Improvements increase the flow of people, goods, money, information and
ideas
World politics
o Political transformation leads to free market economies
o Changes toward liberalisation lead to more trade
Changing markets
o Emergence of groups of customers around the world with similar needs
satisfied by the global products
Regulations
o World economy: easier to achieve with an agreement on certain standards
o Standardisation: e.g. property rights on computers.
