An Essay on the Impact of Globalisation on Business

What is globalisation? What does it mean for International Business?

"Globalisation is the process by which geographic constraints on economic, social and cultural arrangements recede, thus increasing our global interdependence." – Sir Richard Branson

"[Globalisation] suggests a growing magnitude or intensity of global flows such that states and societies become increasingly enmeshed in worldwide systems and networks of interaction. As a consequence, distant occurrences and developments can come to have serious domestic impacts while local happenings can engender significant global repercussions. In other words, globalisation represents a significant shift in the spatial reach of social relations and organisation towards the interregional and intercontinental scale." - Held and McGraw

1. World trade exports amounted to US$ 4,261 billion in 1990, US$ 7,036 billion in year 2000 and US$ 12,461 billion in 2005

2. Foreign direct investment outflows were US$ 230 billion in 1992 and US$ 779 billion in 2005

Trade vs Globalisation

Apples vs Apple Macs

Enablers of Globalisation

* Deregulation

* Exploitation of comparative advantages

* Containerisation and technological advances

* Microprocessors and Telecommunications (Moore’s Law)

* Shifts towards democracy

* Global increases in FDI

Globalisation of Markets

* Internationalisation leads to product homogeneity, economies of scale

* But we can’t always write off production being for a ‘global market’

Case Study: Thums Up and Coca-Cola

* Thums Up is an Indian Cola brand created in the 1970’s after the expulsion of Coca Cola.

* After liberalisation in 1991, Pepsi and Coca Cola both entered the market

* The brand was sold for US $60 million in 1993 to Coca Cola. It had an 80% market share. The brand was intended to be divested.

* It still has a 42% market share in India

Case Study: Thums Up and Coca-Cola

* Thums Up is an Indian Cola brand created in the...