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Globalisation

Mikkeli 2005Compiled by Rulzion Rattray

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What does Globalisation mean?Four Perspectives on Globalisation:1. Economists focus on the growth of international trade

and the increase in international capital flows.

2. Political scientists view globalisation as a process that leads to the undermining of the nation state and the emergence of new forms of governance (control).

3. Sociologists view globalisation in terms of the rise of a global culture and the domination of the media by global companies.

4. International Relations experts tend to focus on the emergence of global conflicts and global institutions.

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The Globalisation of Markets.Levitt, T. (1983).

• Advances in Technology Driving the world to a converging commonality.– Proletarianisation of:

• Communication, transport, travel

• Global corporations which operate with resolute consistency at low relative cost using the entire world as a single market.

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The Myth of Globalisation. Susan Douglas & Yoram Wind (1987), .

• Attacks Levitt's view of global standardisation as naive and over simplistic. Homogenisation not a clear & universal trend.

• Contra Evidence of homogenisation:– Food firms adapt to national

characteristics.

– Growth of intra-country segmentation:

– growing demand for differentiated products.

• The myth of economies of scale:– Technical developments

lowering scale requirements.

– cost of production often only small part of total costs.

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• Globalisation is multi-dimensional, characterised by a number of opposing tendencies. For example;

• Universalisation vs. Particularisation - Whilst globalisation may point out that many aspects of modern social life are universal (assembly line production, fast food restaurants, consumer fashions..) it also helps us to point out the differences between places/peoples.

• Homogenisation vs. Differentiation - Globalisation has led to a “sameness” in product, processes and institutions but at a deeper level the general must be assimilated into local conditions. Example, practice of specific religion takes on different forms in different places.

Globalisation:

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• Integration vs. Fragmentation - Globalisation creates new forms of global, regional and transnational communities which unite (integrate) people across geographical boundaries. However, it also has the ability to divide and fragment communities.

Doubts! Globalisation has become the topic of the moment. However

not everyone agrees that globailisation is something new and points to the fact that world trade and investment as a proportion of GDP have changed little over the last 100 years. That said, the ‘doubters’ would concede that there are three common elements usually involved:

Globalisation:

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• Shrinking Space - jobs, incomes, environment, health… increasingly depend on factors outside national and local boundaries.

‘When America catches a cold the rest of the world sneezes’

• Shrinking Time - events occurring on one place now tend to have almost instantaneous (real time) impacts worldwide. Good example is world share prices.

• Disappearing Borders - Decisions are increasingly being taken by regional trading blocks (example, EU, NAFTA) and supranational bodies (example, IMF, WTO).

• Case - ‘Preparing to compete in the wider world’.

Globalisation Issues Raised:

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Dynamics of Global Competition.

PressureforGlobal Integration

High

Low

PressureforLocal Responsiveness

HighLow

Global BusinessIntegrated product

strategy world-wide management

Multifocal BusinessProduct emphasis

Area emphasis

Locally Responsiveautonomous national

subsidiaries

Adapted from the Dynamics of Global CompetitionPrahalad & Doz. Drawn by Rulzion Rattray

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References• de Wit, B & Meyer, R, (1998), Strategy

Process, Content Context. 2nd Ed, West.

• Douglas, S., & Wind, Y., (1987), “The Myth of Globalisation”, Columbia Journal of World Business, Winter.

• Griffiths, A., and Wall, S., (Eds), (1999), “Applied Economics”, Prentice Hall.

• Levitt, T. (1983), “The Globalisation of Markets”, Harvard Business Review May/Jun.