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Date Submitted: 12/02/2012 08:34 AM
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...