Impact of Globalizationon Service Sector

Group No. 4

Vikram Gade 10Sonica Ghatkar 12

Globalization• Does it mean the fast movement of people which results

in greater interaction?

• Does it mean that because of IT revolution people can be in touch with each other in any part of the world?

• Does it mean trade and economy of each country is open in Non-Intrusive way so that all varieties are available to consumer of his choice?

• Does it mean that mankind has achieved emancipation to a level of where we can say it means a social, economic and political globalization?

An Example of Globalization

A British Princess and her Saudi Arabian boyfriend died in Paris after being treated by Swiss doctors with American medicines while their German BMW car driven by a drunken Turkish driver consuming excessive French wine and chased by Italian Paparazzi crashed against a river tunnel.

This news is being sent as SMS by an Indian journalist using a Chinese made Nokia handset with a Singaporean Airtel simcard smuggled from Korea and using Orange network of Thailand.

Globalization in Simple terms

Globalization is an attitude of mind- it is a mindset which views the entire world as a single market

Process of transformation of local or regional phenomena into global ones

Process by which the people of the world are unified into a single society and function together.

This process is a combination of economic, technological, sociocultural and political forces.

Is often used to refer to economic globalization, i.e, integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.

Positive AspectsIncreased free trade between nationsIncreased liquidity of capital allowing investors in

developed nations to invest in developing nationsThe business market in the world has no boundaries, they

can market their products in any part of the world.Corporations have greater flexibility to operate across

bordersGlobal mass media ties the world togetherIncreased flow of communications allows vital information

to be shared between individuals and corporations around the world

Greater ease and speed of transportation for goods and people

Reduction of cultural barriers increases the global village effect

Spread of democratic ideals to developed nationsGreater interdependence of nation-states

Negative Aspects Increased flow of skilled and non-skilled jobs from

developed to developing nations as corporations seek out the cheapest labor

Foreign salaries attracted a lot of human capital which affected our productivity.

Lead to a great dissatisfaction among the under developed/developing countries.

Increased the chances of inferiority complex among these nations.

Increased likelihood of economic disruptions in one nation effecting all nations

Corporate influence of nation-states far exceeds that of civil society organizations and average individuals

Greater risk of diseases being transported unintentionally between nations

Spread of a materialistic lifestyle and attitude that sees consumption as the path to prosperity

Globalization and India

Reductions In Import DutyRemoval of restrictions on imports importsDevaluation of CurrencyRemoval of permissions on setting up

enterprises and expansion of capacity Privatization of Public Sector Units Membership of WTO Easier entry of multinationals

Service SectorService Sector of Indian Economy contributes to around 55

percent of India's GDP during 2006-07. This sector plays a leading role in the economy of India, and contributes to around 68.6 percent of the overall average growth in GDP between

2002-03 and 2006-07. The various sectors that combine together to constitute

service industry in India are:o Retailo Real Estateo Communication o Banking o IT & ITESo Health CareIn the current economic scenario it looks that the boom in the

services sector is here to stay as India is fast emerging as global services hub.

RETAIL INDUSTRYGenerating more than% 10 ’ of India s ’ GDP Largest source of employment after agriculture Increase in the number of international brandsIncrease in urbanization credit, availability

infrastructure and technology India's economy is booming, due to so many economic

reforms.the rise in the working population which is young & reduction of the unemployment rate.pay- packets which are hefty, and having a huge package of salary package.more nuclear families in urban areasrise in the number of working womenmore disposable income and customer aspirationwestern influenced life style is adopted. growth in expenditure for luxury items increases.

Reason for the growth of retail industry

Existing Indian middle classes with an increased purchasing power

Rise of upcoming business sectors like the IT & engineering firms

Change in the taste and attitude of the Indians Effect of globalization Heavy influx of FDI in the retail sectors in India

Big Bazaar Crossword, Ebony Retail Holdings Ltd., Food Bazaar, Globus Stores Pvt. Ltd., Food World Ltd., Pantaloon Retail IndiaLtd., Shoppers Stop, Titan Industries and

Reliance Retail Ltd,New enterants like Wal-Mart Stores, Carrefour, Tesco,

Boots Group

Real Estate – Second Largest employment driver in India next only to agriculture

Indian real estate industry is growing with a compounded growth rate (CAGR) of more than 30%on the back of robust economic performance of the country.

Market is getting more organized with presence of overseas Developers Housing sector contributes to 5%of the country’s GDPEmergence of small cities – tier II & tier III citiesNew avenues of investment – hospitality, health

care, integrated townships, infrastructure corridorsInvestments flowing from multiple sources –

FDI/PE/Institutional Investors/Debt

Real Estate Industry

Banking Industry

Great innovations in financial reforms , restructuring convergence

The arrival of foreign and private banksFall in hardware prices and the advent of cheap

and inexpensive but high powered PCs & servers The market focus is shifting from mass banking products to class banking The financial market has turned into a buyer's marketCustomized banking products have been introduced

Personal Care IndustryThe Indian personal care industry is estimated at Rs 170

billion. Most segments of this industry are going through a

decline in 2002 with several leading players reporting lower sales in 2002 due to lower volumes as well as lower realization.

The next phase of growth has to come from the rural market as the urban markets are near saturation levels.

The industry has a low entry barrier and competition is severe.

Though most of the market share is with the larger players, companies vie for the marginal market share.

Cheaper imports and duplicate products are also affecting the major players.

The way ahead for the personal care companies is

to introduce new & better product, improve

penetration, make the consumer trade up in

price &quality.

Software IndustryIT and ITES empowered companies by softwareCreates employmentExport Export software servicesGrowth of BPOFastest growing sector of Indian economyIncrease in GDP contribution by service sector

Communication IndustryCommunication Technology is basically an

electronic based system of information

transmission, reception, processing and retrievalExceptional growth of mobile users Increasing access to high-technology for developing

countries.The Indian telecommunication industry, with about 525

million mobile phone connections (Dec 2009), is the third largest telecommunication network in the world and the second largest in terms of number of wireless connections.

companies such as Vodafone, Bharti Airtel,

Tata Indicom, Idea Cellular, Aircel and

Loop Mobile have entered the space.

Health care Industry

India spends about 6.5% to 7% of GDP on Health care.Out of this 1.5% is in the Govt. Sector and 4.7% in private sector.Provision of Health care in the Country is the shared responsibility of the Centre, State and Local Governments.Includes beneficiaries covered under ESIS, CGHS,

Army, Railways, self funded, PSUs and Insurance products.

Most of the health care providers in the country are in private sector and are on fee for service basis

The share of public financing in total health care is just about 1% of GDP compared to 2.8% in other developing countries.

Health care spend in India is considerably lower than that in other countries

2008 US UK Mexico Brazil China India

Life expectancy (avg. # of years)

77.4 78.3 72.6 71.4 72.5 64.0

# of Physicians per 1,000 people

2.7 1.9 1.7 1.2 1.7 0.4

Healthcare spend (USD per capita)

5,365 3,036 336 236 62 32

Healthcare spend (% of GDP)

13.2 8.4 5.5 7.5 5.0 5.3

Health care Industry in IndiaThe Ajay Piramal Group-owned private equity (PE)

firm, India Venture Advisors, will launch its second US$ 150 million healthcare fund next year.

Healthcare major, Fortis Hospitals plans to invest US$ 55 million, to expand its facilities pan-India.

According to a latest report by McKinsey, driven by strong local demand, Indian healthcare market is expected to continue growing close to previously projected rates of 10 to 12 per cent.

Ranbaxy Laboratories’ acquisition by Japan’s second largest pharmaceutical company, Daiichi Sankyo Ltd, in June last year

Various health care products like insurance, mediclaim on rise…

ConclusionA country must carefully choose a combination of policies that best enables it to take the opportunity - while avoiding the pitfalls. For over a century the United States has been the

largest economy in the world but major developments have taken place in the world economy since then, leading to the shift of focus from the US and the rich countries of Europe to the two Asian giants- India and China.

Economics experts and various studies conducted across the globe envisage India and China to rule the world in the 21st century. India, which is now the fourth largest economy in terms of purchasing power parity, may overtake Japan and become third major economic power within 10 years.

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