WHAT IS GLOBALIZATION?• The trend toward countries joining together economically,• Education• Society• Politics and• Viewing themselves not only through their national identity but also as part of the world as a whole.
It has benefited women and children’s rights.• EXAMPLE:• Uganda has the worlds youngest population, according to a 2008 World Bank report.• It also has the highest youth (ages 15-24)• unemployment rate: 83 percent.• Uganda Rural Development Programme / World Bank
IMPACT OF GLOBALIZATION• COMMUNICATION• TRANSPORTATION• TRADE• LIBERALISATION
IMPORTANCE AND NEED• Global Marketing / Advertising• Outsourcing
PROS• Pros Of Globalization• With globalization, there is a global market for companies to trade their products & a wider range of options for people, to choose from among the products of different nations.• Developing countries benefit a lot from globalization, as there is a sound flow of money and thus, a decrease in the currency difference.• To meet the increasing demands that follow globalization, there is an increase in the production sector. This gives loads of options to the manufacturers as well.• Competition keeps prices relatively low, and as a result, inflation is less likely to occur.
……CONTD• The focus is diverted and segregated among all the nations. No country remains the single power head; instead there are compartmentalized power sectors. The decisions at higher levels are meant for the people at large.• Communication among the countries is on the rise, which allows for better understanding and broader vision.• As communication increases amongst two countries, there is interchange of cultures as well. We get to know more about the others cultural preferences.• As we feed to each others financial needs, the ecological imbalance is also met . Governments of countries show concern about each other.
CONS• Globalization is causing Europeans to lose their jobs as work is being outsourced to the Asian countries. The cost of labor in the Asian countries is low as compared to other countries.• The high rate of profit for the companies, in Asia, has resulted in a pressure on the employed Europeans, who are always under the threat of the business being outsourced.• Companies are opening their counterparts in other countries. This results in transferring the quality of their product to other countries, thereby increasing the chances of depreciation in terms of quality.
……CONTD• There are experts who believe that globalization is the cause for the invasion of communicable diseases and social degeneration in countries.• The threat that the corporate would rule the world is on high, as there is a lot of money invested by them.• It is often argued that poor countries are exploited by the richer countries where the work force is taken advantage of and low wages are implemented.
Advantages DisadvantagesIncreased free trade between nations Increased flow of skilled and non-skilled jobs from developed to developing nations as corporations seek out the cheapest laborIncreased liquidity of capital allowing Increased likelihood of economicinvestors in developed nations to invest disruptions in one nation effecting allin developing nations nationsCorporations have greater flexibility to Corporate influence of nation-states faroperate across borders exceeds that of civil society organizations and average individualsGlobal mass media ties the world Threat that control of world media by atogether handful of corporations will limit cultural expressionIncreased flow of communications allows Greater chance of reactions forvital information to be shared between globalization being violent in an attemptindividuals and corporations around the to preserve cultural heritageworld
Advantages DisadvantagesGreater ease and speed of Greater risk of diseases beingtransportation for goods and people transported unintentionally between nationsReduction of cultural barriers increases Spread of a materialistic lifestyle andthe global village effect attitude that sees consumption as the path to prosperitySpread of democratic ideals to International bodies like the World Tradedeveloped nations Organization infringe on national and individual sovereigntyReduction of likelihood of war between Increase in the chances of civil wardeveloped nations within developing countries and open war between developing countries as they vie for resourcesIncreases in environmental protection in Decreases in environmental integrity asdeveloped nations polluting corporations take advantage of weak regulatory rules in developing countries
CHALLENGES• Productivity: Productivity is improved by producing in countries where production is most efficient. However, this often means workers in one country lose jobs as their work moves to more efficient locations.• Consumers: Consumers benefit from a wider array of competitively priced goods. However, they have less control over supplies coming from abroad than over goods produced domestically.• Employment: Employment may increase as economic growth and specialization take hold. However, domestic employment fluctuates according to foreign conditions (such as economic crises elsewhere that reduce demand for employment domestically).• The Environment: As global consumption increases due to globalization, more natural resources deplete. Differing environmental standards across countries create opportunities for businesses to exploit resources in countries with the least amount of environmental protection regulation.
• Monetary and Fiscal Conditions: As money moves more freely, it is better able to seek out the best investment opportunities on a global scale. However, governments have less control over the inflow and outflow of funds. Furthermore, capital seems to be flowing more freely to countries with lower tax rates and less regulatory restrictions, putting additional pressures on national fiscal and monetary policies.• Sovereignty: Globalization may undermine national sovereignty in two ways: First, contact with other countries creates more cultural borrowing and may dilute a countrys cultural uniqueness. Second, countries are concerned that important decisions may be made abroad by foreign owners of domestically located firms.
IMPACT• India‟s growth rate in the 1970‟s was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India.• Though India‟s average annual growth rate almost doubled in the eighties to 5.9%, it was still lower than the growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped improve India‟s global position.• India‟s position in the global economy has improved from the 8th position in 1991 to 4th place in 2001; when GDP is calculated on a purchasing power parity basis.
• During 1991-92 the first year of Rao‟s reforms program, The Indian economy grew by 0.9%only.• However the GDP growth accelerated to 5.3 % in 1992-93, and 6.2% 1993- 94.• A growth rate of above 8% was an achievement by the Indian economy during the year 2003-04.• India is ranked 18th among the world‟s leading exporters of services with a share of 1.3% in world exports• India‟s GDP growth rate can be seen from the following graph since independence
Political factors• Stability of the government• Type of government - Democratic - Theocracy (religious) - monarchy ( kingdom)• Control structure Canada, USA ( decentralized province) Japan, France( centralized)
• Govt take over of asset(with or without permission)• Operational restriction• Remittance/ Repatriation restrictions• Government policies• Opposition parties, pressure groups, external linkages
Economic factors• Economic system ( open / mixed)• Economic development• Standard of living( per capita income)• Sectorial share in GDP• Foreign Exchange reserves• Economic indicators( inflation rate, BOP)
Socio cultural factors values Behavioral attributesSocio cultural attitudesenvironment Demographic factors Population Age , sex Geographic growth distribution spread
Legal factors• Home country laws• Host country laws• International laws UN resolutions, Patents & Trademark protection & piracy laws, GATT, codes of conduct
Entry strategy for global companies• Exporting ( Direct or Indirect)• Licensing• Franchising• Contract manufacturing/ International subcontracting• Strategic Alliance• Joint ventures• Wholly owned subsidiary• Mergers & Acquisition
TOYOTA Kiichiro Toyoda, founder of TMC, 1929 From starting, eye on global competition Use of cultural practices in business Taiichi ohno , founder of TPS Customer 1st, dealer 2nd, manufacturer 3rd…
Elimination of 3 M’s MURI ( Overburdening ) MURA MUDA (unevenness) (Waste)
JITHigher Levels of Inventory Hides Problems Bad Design Lengthy Poor Setups Quality Machine Inefficient Unreliable Breakdown Layout Supplier
Lower Levels Of Inventory To ExposeProblems Bad Design Lengthy Poor Setups Quality Machine Inefficient Unreliable Breakdown Layout Supplier
“5 Why” investigation process Level of problem Corresponding level of countermeasure There is a puddle of oil on the shop Clean up the oil floorWHY? Because the machine is leaking oil Fix the machineWHY? Because the gasket has deteriorated Replace the gasketWHY? Because we bought gasket made of Change gasket specification inferior materialWHY? Because we got the good deal on Change purchasing policies those gasketsWHY? Because the purchasing agent gets Change the evaluation policy for evaluated on short term cost savings purchasing agents
5 S’s SEIRI Clear out rarely used items by red tagging SHITSUKE SEITON Use regular Organize & label a management audit to place for everything stay discipline SEIKETSU SEISO Create rules to Clean it sustain the first 3 S’s
4 principle categories Problem solving “Kaizen” People & Partners Respect, Challenge & Grow Process ( eliminate waste) Philosophy (Long term thinking)
Toyota’s Global Marketing Product research : - 2 time visit to ford plant - Design requirements “Genchi genbutsu “( go look, go see) - Customized product ( Toyota sienna for North America) Place or Distribution research : - Trust in minds of supplier ( Be slow in choosing a person and much slower in loosing that person) - Few but Big supplier(JIT) - Cross Docking
Toyota’s Global HR functions3 stage process of selection - Written application process - Attending Job fair - 3 one hr. interviews
Motivational strategiesInternal motivation theoriesTheory Concept Toyota ApproachMaslow’s need hierarchy Satisfy lower level needs & Job security, good pay , safeTheory move employees up the working conditions satisfy hierarchy toward self lower level needs. Culture of actualization continuous improvement supports growth towards self actualizationHerzberg’s Job Enrichment Eliminate “dissatisfiers” 5S, visual management, HRTheory ( hygiene factors) and design policies address hygiene work to create positive factors. Kaizen, job rotation, satisfiers ( motivators) and built in feedback support motivators.External motivation theories( splashy reward system)
Myth Vs Reality of TPS Myth Reality What TPS is not What TPS isA tangible recipe for success A consistent way of thinkingA management project or program A total management philosophyA set of tools for implementation Focus on total customer satisfactionA system for production floor only Quality built in processImplementable in short or mid term A never ending search for a better wayperiod
McDonalds Corporation• Emblem of Globalization• World’s Largest Chain of Fast Food Restaurants• Serves Nearly 47 million Customers Daily• 119 Countries & Territories• 31,000 Restaurants & 1.5 m Employees• Hamburgers, Cheeseburgers, Chicken Products, French Fries, Breakfast items, Soft drinks, Milkshakes & Desserts
Types of Restaurant• Drive-Thru, Auto-Mac, Pay and Drive, or McDrive• Solid Gold McDonalds• McCafé• McExpress• McStop
First Mcdonalds Restaurant• On May 15th 1940, San Bernardino, California.• Menu of 25 Items (mostly Barbeque)• 20 Employees• Popular and highly profitable teen hangout
• 1948: Innovative ‘Speedee Service System’• Only Hamburgers, Milkshakes & French fries• Introduced ‘Speedee’ as their mascot
• 1953: Franchised restaurant in Arizona & Michigan• 1954: Mr Ray Kroc proposed to Franchise Mcdonalds outside Arizona & Michigan• 1955: ‘Mcdonalds Systems Inc’ Legal Structure of planned franchises• 1958: 100 millionth Hamburger• 1959: 100th Mcdonalds Restaurant & Billboard Advertising• 1960: Renamed as Mcdonalds Corporation• 1963: 500th Mcdonalds Restaurant, Introduced ‘Ronald’ as their new Mascot• 1967: First restaurant outside US
1970-1980 U.S. Virgin Puerto Rico Guam IslandsJapan (5000th) Netherlands PanamaGermany (Beer) Australia France El Salvador Sweden Guatemala England Hong Kong Bahamas New Zealand Switzerland Ireland Austria Belgium Brazil Singapore
1981-1990 Spain Denmark Philippines Malaysia Norway Taiwan Andorra Wales Finland Thailand Aruba LuxembourgVenezuela Italy Mexico Cuba Turkey Argentina Maca Scotland YugoslaviaSouth Korea Hungary Soviet Union China Chile
1991-1995 Indonesia Portugal Northern Ireland Greece Uruguay Martinique Czechoslovakia Guadeloupe Poland Monaco Brunei MoroccoNorthern Marianas Iceland Israel Slovenia Saudi Arabia Botswana Kuwait New Caledonia Oman Egypt Bulgaria Bahrain Latvia United Arab Emirates Estonia Romania Malta Colombia Slovakia South Africa Honduras Qatar Saint Martin
1996-2008 Croatia Western Samoa Fiji Islands Liechtenstein Lithuania Cyprus India Peru Jordan Paraguay Dominican Republic French Polynesia Belarus Ukraine Yemen(100th Country) Republic of Ecuador Réunion Macedonia Isle of Man Suriname Moldova Nicaragua Lebanon Pakistan Sri Lanka Georgia San Marino Gibraltar Azerbaijan French GuianaAmerican Samoa Mauritius Kazakhstan Montenegro Algeria
Business Model• Earns Revenue as an Investor in Properties• Only 15% of the restaurants are operated by the company itself• UK Business model is different• One out of eight workers in the U.S. has been Employed with Mcdonalds
Break-up of Outlets (2008) Type of Outlet No. Of Outlets Company operated 6,502Conventional Franchises 18,402Developmental Licenses 2,926 Foreign Affiliated 4,137 Markets TOTAL 31,967
Controversies• Often a Target of Criticism for its Menu• The McLibel Trial, also known as McDonalds Restaurants v Morris & Steel• In 2001, Eric Schlossers book Fast Food Nation included criticism of the business practices of McDonalds• In 2002, misrepresention of French fries as vegetarian• Morgan Spurlocks 2004 documentary film Super Size Me• Soya supplied by agricultural giant Cargill
Manager‟s global vision is shaped by several factors• Global mindset "Think Local Act Global".• Adaptation to local conditions
External forces which drive global mindset• Leadership View of the world• Administrative Heritage• Organizational Structure• Industry forces
Global Manager‟s thought process• Multicultural approach to reflect global operations• Shift of focus on "soft tools" - Vision, process and people to achieve objectives• Collaboration with a network of vendors, partners & customers• Recruitment from global talent pool - to get best set of people• Global transfer of human resources - global learning/training process• Creating a learning Organization• Focus on big picture - respond rapidly to global business environment changes.
Roles of a Global Manager• Select & Implement Foreign Market Entry – Select Countries, Mode of Entry etc• Perform Local Marketing Abroad – Promote Products and Services – Conduct Market Research – Manage Advertising Campaign• Manage Global Operations
Skills of Global Manager Skills Foreign Entry Local marketing Global ManagementMarket Analysis Market Research Local Customer Global Barriers to Entry Behavior Segmentation, Local Market Targeting, Research PositioningStrategy Modes of Entry Local Marketing Global Marketing Expansion Paths Strategy StrategyImplement Finding the right Marketing in Meeting Goals,& Execution Agent New Countries Motivating & E-Commerce
Culture & Managerial Skills• Successful mangers tend to be good at acceptable behaviors and avoid unacceptable behaviors• Lessens from past managerial experience in other countries has little value in other cultures.• Success & Failures in the past will be repeated elsewhere, before learning the local implications
Managerial Styles• Cultures tend to generate different managerial styles. Management styles is heavily influenced by home country culture. – Japan High Context culture influences mangers to read body language while in US, a low context culture tends to ignore body language• Managers are usually inadequately trained to handle different cultures. – Time, Money pressure compromise training.
Cultural Dilemmas• Managers face cultural dilemmas due to differences in cultures – Universalism Vs Particularism : Doing the right thing or doing things right? – Individualism Vs Collectivism in decision making – Neutral Vs Emotional – Specific Vs General : Is it just business or the whole person, individual or the entire firm – Attitudes towards Time – Attitudes towards Environment
• Born November 19, 1935 is the former Chairmen and CEO of General Electrics between 1981 and 2001.• Graduating in 1957 with a Bachelor of science degree in chemical engineering.• Welch went on to receive his M.S and Ph.D at the University of Llinois at Urbana - Champaign in 1960.
• Welch joined General Electric in 1960. He worked as a junior engineer in Pittsfield, Massachusetts, at a salary of $10,500 annually.• Welch was named a vice president of GE in 1972.• He moved up the ranks to become senior vice president in 1977 and vice chairman in 1979.• Welch became GEs youngest chairman and CEO in 1981
Welch strategies• Welch worked to eradicate inefficiency by trimming inventories and dismantling the bureaucracy that had almost led him to leave GE in the past.• Each year, Welch would fire the bottom 10% of his managers.• He would reward those in the top 20% with bonuses and stock options.• He is also known for destroying the nine-layer management hierarchy and bringing a sense of informality to the company.
• Delegating far greater authority to empowered employees.• Welch adopted Motorolas Six Sigma quality program in late 1995.• Welch launched the effort in late 1995 with 200 projects and intensive training programs
Achievement: Worlds largest steelmaker, he is among the worldsrichest person and richest personin the UK with personal wealth ofUS$19.3 billion
The steel tycoon, Lakshmi Mittal• Founder of Mittal Steel• Chairman and CEO of ArcelorMittal.• Member of the Foreign Investment Council in Kazakhstan, International Investment Council in South Africa.• Member of the World Economic Forum‟s International Business Council.
Introduction• Born: June 15, 1950.• Commerce graduate from St. Xaviers in Kolkata.• He split from his father and two younger brothers in 1994 and took the international arm.• Lakshmi Mittal is married with two children Aditya Mittal and Vanisha Mittal.
Success Story• Began his career working in the familys steelmaking business in India.• In 1976, Mittal founded Mittal Steel Company• 1989: Acquisition of Iron & Steel Company of Trinidad & Tobago.• In 1994, he set out to establish its international division – buying of a run- down plant in Indonesia.• Purchased of International Steel Group for $4.5 billion .
Success Story contd….• 2003: He acquired the Kensington mansion, said to be the worlds most expensive home, from Formula One racings Bernie Ecclestone for £70 million ($128 million).• 2005: Investment of $9 billion in Jharkhand, India announced.• 2006: Merger between Mittal Steel and Arcelor.• 2006: Investment for 12 million tonnes capacity steel plant announced in Orissa, India.
Success Story contd….• Today, Mittal Steel is global steel producer in the world with operations on 14 countries, spanning 4 continents.• Mittal holds steel assets in South Africa, Poland, Indonesia, and Kazakhstan, Romania, Bosnia Herzegovina, Ukraine and other nations.
Mittal merger ArcelorOne of the most controversial business dealsever- the acquisition of Arcelor Steel by MittalSteel led to the creation of Arcelor-Mittal, thelargest steel maker in the world.
Mittal Steel Company N.V. was formed by the merger of – LNM holdings & ISPAT International – International Steel Group Inc. CEO Lakshmi Mittal’s family owned 88% of L.N. the company and its headquarter was in Mittal Rotterdam, Netherlands . The company was the world’s largest steel producer by volume and also the largest in turnover and is now a part of ArcelorMittal. Steel, Flat Steel products, Coated Steel, Tubes and Pipes.
Arcelor was created through the merger of – Arbed (Luxembourg) – Aceralia (Spain) – Usinor (France) Merger was launched on 19 February 2001. Guy Dolle Choice of Arcelor name was anounced on 12 December 2001. It was a major player in all its main markets: automotive, construction, metal processing, etc. Guy Dolle was the CEO of Arcelor and its headquarter was in Luxembourg city.
The big deal In January 2006, Mittal Steel launched a $22.7 billion offer to Arcelor‟s shareholders. The deal was split between Mittal Shares (75 percent) and cash (25 percent) . Under the offer, Arcelor shareholders would have received 4 Mittal Steel shares and 35 euros for every 5 Arcelor shares they held .
End result- the final deal On 25th June, 2006 the deal finally clinched when the shareholders of Arcelor agreed to Mittal Steel‟s offer. Mittal had to considerably sweeten the initial offer-by raising its valuation of Arcelor to $32.9 billion. The Mittal family holds 43 percent of the combined group. The combined company holds 10 percent of the global market for steel.
Criticism and allegations• Slave-labour allegations.• Controversial self-bonus.• Environmental damage.
Awards & Recognition• Laxmi Mittal has achieved several awards and accolades for his contribution to the steel manufacturing industry : Steelmaker of the Year in the year 1996 by New Steel in the USA . European Businessman of the Year 2004 by Fortune magazine. Willy Korf Steel Vision Award in the year 1998. Business Person of 2006 by the Sunday Times. International Newsmaker of the Year 2006 by Time Magazine. Person of the Year 2006 by the Financial Times. „Padma Vibhushan Award‟ in 2008.
Strengths of Indian Managers• Analytical skills.• Resilience.• Adaptability to unknown terrain.• Good interpersonal skills.• Trustworthy.• Can work in complex and diverse scenarios.• Willingness to learn.• Job knowledge.
Areas of Improvement• Open-mindedness, ability to build juniors.• Vision, values, strategic thinking, decision making skills, risk taking.• Learning orientation, self renewal efforts, cross cultural sensitivity.
Which industries are looking for Indian Managers? • Information Technology • Consulting • Investment Banking
What do they command in the global market?• 30% of IIM A students (2007 batch) accepted offers from abroad.• Packages were as high as $225,000 to $300,000 per annum.• Average entry-level salary stood at $115,300
At home in the worldAnchored in India andcommitted to itstraditional values ofleadership with trust, theTata group is spreadingits footprint globallythrough excellence andinnovation.
Introduction• Born on December 28, 1937.• Graduated with a degree in Architecture and Structural Engineering from Cornell University.• Also completed advanced management programme at Harvard Business School.• Appointed the Director-in-Charge of The National Radio & Electronics Company Limited (Nelco) in 1971.• Became the Chairman of Tata Industries in 1981.• Took over as Tata Group Chairman in 1991.
Tata Chemicals Titan TQMSTata Power Tata Share Registry TSMGTata international Tata Fin AMEX Tata IndustriesTata Steel Tata Home Finance TAL AutomationTata Tea Tata Technologies NELCOTata Motors Tata Refractories Tata Tele ServicesTata Consultancy TAYO Rolls Tata Auto plasticsServices Tata Coffee Tata Johnson ControlsRallis Telcon Tata InteractiveIndian Hotels Tata Services SystemsTata Finance Tata SSL TCE Consulting Engrs.Tata InfoTech TRF Tata Investment CorpnVoltas Trent TECSTata Interactive TACO TFSSystems
Personality• Very dignified.• Ethical.• Dependable.• Believes in keeping promises.• Loyal and believes in relationships.• Questioning the unquestionable.• Risk taker not a speculator.• Exemplary leadership qualities and a tremendous motivator.
Ratan Tata - Going Global• 1998: Tata Motors came up with Tata Indica, the first truly Indian car.• 2000: Tata Tea acquired the Tetley group of the UK for pounds 271 million ($435 million) - the biggest acquisition in the history of Indian Companies.• 2003: Stepped down from executive position. Bought the truck unit of South Korea‘s Daewoo Motors. A stake in one of Indonesias biggest coal mines, and steel mills in Singapore, Thailand, and Vietnam
Ratan Tata - Going Global• 2004: Takeover of Tony hotels including New Yorks Pierre, the Ritz-Carlton in Boston, and San Franciscos Camden Place. Purchase of Tyco Internationals undersea telecom cables.• 2007: Tata Sons successfully acquired Corus Group for an estimated £6.7 billion. “A defining moment for Tata Steel” – Tata said
The man and his dream machine • Year 2008: “A promise is a promise” A mini 4-seater priced, as promised five years ago, at Rs 1,00,000 (dealer price)
March 2008:Tata Motors under RatanTata bought over Jaguar &Land Rover from Ford MotorCompany. The icons ofBritish Luxury, Jaguar andLand Rover were acquired for£1.15 billion ($2.3 billion).
Future prospects• Priority markets: Tata group is focusing on a clutch of priority countries, which are expected to be of strategic importance in the years ahead.• The regions are North America, UK, China, the Netherlands, Germany, South Africa, members of the Gulf Cooperation Council, Brazil, Vietnam, Thailand and Sri Lanka.
Vision One hundred years from now, I expect the Tatas to be much bigger than it is now. More importantly, I hope the Group comes to be regarded as being the best in India.. best in the manner in which we operate, best in the products we deliver, and best in our value systems and ethics. Having said that, I hope that a hundred years from now we will spread our wings far beyond India.”
Globalisation• Definition: – An economic phenomenon. – A social phenomenon. – A cultural phenomenon.• The movement towards the expansion of economic and social ties between countries through the spread of corporate institutions and the capitalist philosophy that leads to the shrinking of the world in economic terms.
Globalisation Globalisation could involve all these things!
Issues • Accountability of Global businesses. • Increased gap between rich and poor fuels potential terrorist reaction. • EthicalThere are plenty of people who believe thatglobalisation is a negative development,protests at the G8 summits, pollution, poverty responsibility ofand concern over GM crops are just some ofthe issues. business. • Efforts to remove trade barriers.
Corporate Social Responsibility• The integrity with which a company governs itself, fulfils its mission, lives by its values, engages with its stakeholders, measures its impact and reports on its activities.• Includes Non polluting environment.• Demand from civil society, consumers, governments, and others for corporations to conduct sustainable business.• Being ethical while running their daily operations.
BIBLIOGRAPHY AND WEBLIOGRAPHY• International Business – By V.K. Bhalla & S.Shiva Ramu.• www.tata.com• www.mittalsteel.com• www.arcelormittal.com• www.ge.com