Globalisation

Understanding Globalisation

Concept and Drivers

• Globalisation is generally understood as the integration of economies, societies and cultures of the world. This integration occurs due to advances in communication, transportation and information technologies.
• Factors driving globalisation include technology and innovation, reduction of trade barriers, increasing market demand, and strategic advantages.

Impact on Business

• Globalisation expands the market reach of businesses. This comes with increased opportunities but also added competition.
• Businesses often have access to cheaper resources and labour in other countries.
• Companies also gain from sharing and applying best practises globally.

Benefits and Challenges

• Among the benefits of globalisation are growth opportunities, cost savings, greater consumer choice, and knowledge exchange.
• Challenges include cultural differences, political risk, and income inequality.

Case Studies

• Large tech companies like Apple and Google demonstrate both the opportunities and challenges presented by globalisation.
• Lessons can also be drawn from industries like pharmaceuticals and automotive which have long-established global supply chains.

Globalisation Strategies

Standardisation and Adaptation

• Standardisation involves offering the same products globally. This approach maximises production efficiencies but may not meet local preferences.
• Adaptation customises products to meet local tastes and requirements. While this approach may satisfy local market demands, it can result in higher costs.

Market Entry Methods

• International businesses can enter new markets through exports, licencing and franchising, joint ventures, strategic alliances, and direct foreign investment.
• The choice between these methods depends on factors like risk tolerance, market knowledge, capital resources and control preferences.

Dealing with Globalisation

Managing Diversity

• Businesses operating globally need to manage a diverse workforce. Best practises include promoting inclusivity, providing cultural training, and respecting local customs.

Ethical Considerations

• Ethical considerations hold particular importance in global business. Businesses need to uphold standards concerning human rights, environmental concerns and corporate social responsibility.

Regulation Compliance

• Businesses have to comply with both home-country and host-country regulations. These regulations cover areas like business registration, taxation, labour standards, environmental protections, and data privacy.