1. Globalisation and
Strategies for Going
Global

2. MEANING OF GLOBALISATION
• Globalization means integrating the Indian economy with the
world economy. In the process India becomes economically
interdependent with other countries at the global or
international level. It seeks removal of trade barriers
There are various features of globalization they are:
1. Many producers from other countries can sell their goods and services in
India.
2. India can also sell its goods and services in other countries.
3. Businessmen of other countries can establish their enterprises in India,
produce goods for sale within the country or to other countries as export.
4. In the same way entrepreneurs from India can also invest in other countries.
5. Globalization includes not only movement of capital and goods but also allows
exchange of technology experience and labourers from one country to other
and
6. In pursuance of this policy government of India has removed restrictions on
imports of goods, reduced taxes

3. • Globalization has helped in:
• Raising living standards,
• Alleviating poverty,
• Assuring food security,
• Generating buoyant market for expansion of industry and services, and
• Making substantial contribution to the national economic growth.
• Impact of Globalization on Industrial Sector:
Globalization of the Indian Industry took place in its various sectors such as steel,
pharmaceutical, petroleum, chemical, textile, cement, retail, and BPO
• Impact on Financial Sector:
Because of Globalization, the financial services industry is in a period of transition.
Market shifts, competition, and technological developments are ushering in
unprecedented changes in the global financial services industry.

4. The Indian globalization…..
• Doing or planning to expand, business globally
• Interlinking production across countries: Almost all MNC’s set up production
where it is close to the markets; where there is skilled and unskilled labour
available at low costs; and where the availability of other factors of production
is assured. At times, MNC’s set up production jointly with some of the local
companies of these countries. MNC’s provide money for additional investments
like buying new machines for faster production and they might bring with them
the latest technology for production. As a result, production in these widely
dispersed locations is getting interlinked.
• GLOBALISATION PICTURE IN INDIA
 Mushrooming of industries like cell phones, automobiles electronics, soft
drinks, fast food or services, via MNCs have created new avenues.
 globalization has enabled some large Indian companies to emerge as
multinationals themselves, Tata-Motors (automobiles), Infosys (IT), Ranbaxy
(Medicines), Asian Paints (Paints).
 Globalization and the pressure have also posed a threat to the worker’s jobs, as
they are not secure any more. Workers are low and workers are forced to work
overtime to make both ends meet. The workers are sometimes denied their fair
share of benefits which is brought about by globalization.

5. • Impact on Export and Import:
Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are
the other prominent products each of which accounts from nearly 5 to 10% of the
countries total agricultural exports.
• There is an International market for companies and for consumers there is a
wider range of products to choose from.
• Increase in flow of investments from developed countries to developing
countries, which can be used for economic reconstruction.
• Greater and faster flow of information between countries and greater cultural
interaction has helped to overcome cultural barriers.
• Technological development has resulted in reverse brain drain in developing
countries.
Advantages of Globalization:

6. Demerits of Globalization
(Challenges):
• The outsourcing of jobs to developing countries has resulted in loss of jobs in
developed countries.
• There is a greater threat of spread of communicable diseases.
• There is an underlying threat of multinational corporations with immense power
ruling the globe.
• For smaller developing nations at the receiving end, it could indirectly lead to a
subtle form of colonization.
· The number of rural landless families increased from 35 %in 1987 to 45 % in 1999,
further to 55% in 2005. The farmers are destined to die of starvation or suicide.

7. Conditions for globalization
• Business freedom: unnecessary restrictions like import, foreign
investments
• Facilities: infrastructure facilities,
• Government support: financial market reforms, R&D support
• Resources: technology, finance, man power, skilled managers, HR
• Competitiveness:
• orientation

8. FOREIGN MARKET ENTRY STRATEGIES…..
• EXPORTING
 “A function of international trade whereby goods produced in one country are
shipped to another country for future sale or trade. The sale of such goods adds
to the producing nation's gross output. If used for trade, exports are exchanged
for other products or services. Exports are one of the oldest forms of economic
transfer, and occur on a large scale between nations that have fewer restrictions
on trade, such as tariffs or subsidies.”
• LICENSING/FRANCHISING
 Definition of Franchising: “Franchising may be defined as a business
arrangement which allows for the reputation, (goodwill) innovation, technical
know-how and expertise of the innovator (franchisor) to be combined with the
energy, industry and investment of another party (franchisee) to conduct the
business of providing and selling of goods and services.”
 Franchising is a system of business that has grown steadily in the last 50 years
and is estimated to account for more than one-third of the world’s retail sales
 Successful franchises are the result of innovation, initiative, investment and
industry.

9. • The license allows the licensee to use make and sell, the product or name for a
fee without censure.
• In a Trade Mark license, for example, the licensee will be granted full privilege to
use the Trade Mark on goods or services provided that the use is in accordance
with agreed signage protocols and quality guidelines

10. Typical Franchise System
• A license to use the system
• A shared development and improvement obligation
• The franchisor’s right to determine how the business operates
LICENSING:
• A license arrangement is a business arrangement where a licensor via a
monopoly right such as a Patent, a Trade Mark, a design or a copyright has to
exclusive right which prevents others from exploiting the idea, design, name or
logo commercially.
• The license allows the licensee to use make and sell, the product or name for a
fee without censure.
• In a Trade Mark license, for example, the licensee will be granted full privilege to
use the Trade Mark on goods or services provided that the use is in accordance
with agreed signage protocols and quality guidelines.
• There is usually no training component, product development strategy and
limited marketing support.

11. The following is a list of some of the things that should be considered:
• Is the license exclusive, i.e. granted to only one person, or non-exclusive?
• Can the licensee sub-license?
• Are there any limitations to the license e.g., geographic or territorial?, minimum
sales, minimum production requirement etc.?
• What is the amount, frequency, and form of payment, e.g. either lump sum or by
way of royalty, or both, or other payment schedule?
• Who pays for prosecution and maintenance of any IP (patents, trade marks,
designs)?
• How are any developments, modifications or improvements to be protected and
who owns them?
• Does the license contain a clause which allows for the license to be cancelled if
the IP is not being used?
• What is the term of license?
• Is there a right to renew?
• What are the conditions of termination?

12. • When are royalty or other payments due?
• If sub-licensing is permitted what payment does the licensor receive?
• What information is the licensee committed to providing to the licensor?
• What happens if the IP under which the license is granted is refused, infringed,
opposed, revoked or other?
• Is copyright a consideration?
• Does the licensee agree not to challenge the validity of the patent?
• Does the licensor agree to provide essential “know-how”?
• What provisions for any “hardware”, should the license be terminated?
• How will any disputes be resolved?
• What happens in the event of death of one of the parties?
• In whose name will the applications be made in?

13. • MANAGEMENT CONTRACT: The management contract is a business format which
separates ownership from operation. The operator assumes full responsibility for the
management of the business, while the ultimate legal and financial responsibilities
and rights of ownership of the property, its furniture and equipment, its working
capital and the benefits of its profits (or burden of its losses) remain those of the
owner. The owner may be a private individual, a financial institution, a real estate
company or a government. The operator is most likely to be an established hotel chain
offering marketing strength, brand names, bargaining power, systems and procedures,
project design and management, technical services, training and management
development.
• CONTRACT MANUFACTURING: Contract manufacturing is a process that establishes a
working agreement between two companies. As part of the agreement, one
company custom produces parts or other materials on behalf of their client. In most
cases, the manufacturer also handles the ordering and shipment processes for the
client. As a result, the client does not have to maintain manufacturing facilities,
purchase raw materials, or hire labour in order to produce the finished goods.
Industries like personal care and
hygiene products, automotive parts, and medical supplies are often created under the
terms of a contract manufacture agreement.
• TURNKEY CONTRACTS: A turnkey contract is a business arrangement in which a
project is delivered in a completed state. The builder or developer is separate from
the final owner or operator, and the project is turned over only once it is fully
operational. In effect, the developer is finishing the project and “turning the key”
over to the new owner. This
type of arrangement is commonly used for construction projects ranging from single
buildings to large-scale developments, residential home building industry. Under a
traditional lump-sum contract

14. • ASSEMBLY OPERATIONS: A market entry strategy in which an organization sends parts
for products to a foreign plant for final assembly. The products are then sold in the foreign
market or exported to other countries. Assembly plants may allow a company to take
advantage of low cost labour in the most labour intensive portion of production. There
may also be lower duties and other taxes because unfinished products are imported
instead of finished products. Assembly plants also allow a foreign manufacturer to meet
host country requests for more domestic production while at the same time allowing the
manufacturer to continue control over production by using its own sub-products as
supplies and materials for the foreign assembly plant.
STARTEGIC ALLIANCES: An arrangement between two companies that have decided to
share resources to undertake a specific, mutually beneficial project. A strategic alliance is
less involved and less permanent than a joint venture, in which two companies typically
pool resources to create a separate business entity. In a strategic alliance, each company
maintains its autonomy while gaining a new opportunity. A strategic alliance could help a
company develop a more effective process, expand into a new market or develop an
advantage over a competitor, among other possibilities.
an oil and natural gas company might form a strategic alliance with a research
laboratory to develop more commercially viable recovery processes. A clothing retailer might
form a strategic alliance with a single clothing manufacturer to ensure consistent quality and
sizing. A major website could form a strategic alliance with an analytics company to improve
its marketing efforts.

16. • WHOLLY OWNED MANUFACTURING FACILTIES : A company whose common
stock is 100% owned by another company, called the parent company. A company
can become a wholly owned subsidiary through acquisition by the parent
company or spin off from the parent company. In contrast, a regular subsidiary is
51 to 99% owned by the parent company. One situation in which a parent
company might find it helpful to establish a subsidiary company is if it wants to
operate in a foreign market. This arrangement is common among high-tech
companies who want to retain complete control and ownership of their
technology.
• JOINT VENTURING: Joint ventures are set up for a number of reasons, including
carrying out a specific project or simply assisting with the growth and
continuation of a business.
The parties to a joint venture can be individuals,
partnerships, companies, or other organizations or associations. In certain cases,
the joint venture can be created through the incorporation of a company that
becomes a party to the joint venture agreement. The joint venture will take effect
on the day the parties sign the agreement. The parties should be as specific as
possible in outlining the parties' relationship and commitments to the joint
venture.
∞“Tata Global Beverages and Starbucks Form Joint Venture to Open Starbucks
Cafés across India, TATA Starbucks Limited, will own and operate Starbucks cafés
which will be branded as Starbucks Coffee “A Tata Alliance.”

17. The services of a management contractor might include:
Advising on the development of the brief (if appointed at this stage),
on appointments (such as site inspectors), feasibility, interfaces, build ability, cost and
programming of the design, packaging of production information
Defining key performance indicators for works contractors
Cost planning and cost control.
Preparing a construction programme and defining methods of working on site.
Consenting to sub-contracting of work by works contractors
Arranging for site accommodation, welfare facilities, fences, hoardings, roads and
walkways, drainage, power and water supply.
Arranging labour for certain site activities (such as cleaning).
Managing site inspectors
Co-ordinating the release of information.
Managing and co-ordinating works contracts, including acting as contract
administrator, carrying out inspections, issuing instructions and certificates etc.
Collating as-built information, building owner's manual, building users
handbook, project handbook, health and safety file, pre-construction
information, site waste management plan and construction phase plan
Chairing site progress meetings and preparing progress reports for the client

18. • COUNTERTRADE : International trade in which goods are exchanged for other
goods, rather than for hard currency. Countertrade can be classified into three
broad categories –
Barter: Barter is the direct exchange of goods between two parties in a transaction
Counter purchase : Sale of goods and services to one company in other country by
a company that promises to make a future purchase of a specific product from
the same company in that country.
Buy back: occurs when a firm builds a plant in a country - or supplies technology,
equipment, training, or other services to the country and agrees to take a certain
percentage of the plant's output as partial payment for the contract.
Compensation deal: Compensation trade is a form of barter in which one of the
flows is partly in goods and partly in hard currency.
•
MERGERS AND ACQUISITIONS : A merger is a combination of two companies to
form a new company, while an acquisition is the purchase of one company by
another in which no new company is formed.