What is globalization

The worldwide movement toward economic, financial, trade, and communications integration. Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers. However, it does not include unhindered movement of labor and, as suggested by some economists, may hurt smaller or fragile economies if applied indiscriminately.

From a cultural perspective, it is the growth of cross-cultural understanding made possible by the increasing two-way flow of entertainment and news, and the development of human values that transcend those of any one culture. At the same time, it is also the erosion of local traditions and standards and their replacement by foreign ones. 

 From an business/economic perspective, globalization is perceived as the creation of high-tech jobs in wealthy nations and the lifting from poverty of some three billion people or half the world’s population. At the same time, it is also perceived as the loss of jobs in wealthy nations and the exploitation of workers in poor nations. 

From a technological perspective, globalization is the spread of knowledge and the dramatic leaps in world communications and travel that has resulted in eradication of deadly diseases, saving of endangered species, the reduction of famine and the increase in world productivity to the benefit of all humankind. At the same time, it has also unleashed destructive forces leading to loss of species, spread of disease, environmental degradation, war, and terrorism. 

Globalization of Markets:

 “Merging of historically distinct and separate national markets into one huge global marketplace.”

Facilitated by offering standardized products:

 Citicorp

 Coca-Cola

 Sony PlayStation

 McDonalds

 Does not have to be a big company to participate:

 Over 200,00 U.S. companies with less than 100 employees had foreign sales in 2000.

The Largest Global Markets:

 Consumer Goods

 Industrial Goods and Materials

 Commodities such as aluminum, oil and wheat.

 Industrial products such as microprocessors, aircraft.

 Financial assets such as U.S. Treasury bills and

 Eurobonds.

 Industrial Goods and Materials

 Commodities such as aluminum, oil and wheat.

 Industrial products such as microprocessors, aircraft.

 Financial assets such as U.S. Treasury bills and Europe.

Globalization of production

 Refers to sourcing of goods and services

 from locations around the world to take advantage of

 Differences in cost or quality of the factors of

 production

 Labor

 Land

 Capital

 “The sourcing of goods and services from locations around the globe to take advantage of

national differences in the cost and quality of factors of production (labor,energy, land

and capital).”

 Companies hope to lower their overall cost structure and/or improve the quality or

functionality of their product offering - increasing their competitiveness.