The term Globalization was first coined by Theodore Levitt in a Harvard Business Review article.. He mentioned that the future belonged at global corporations that adopted strategies.. Globalization refers to the increasing unification of the world's economic order through reduction of such barriers to international trade as tariffs, export fees, and import quotas.

1. International Business
◼ Brief History of
International
Business
◼ Globalization and its
Forces, Impacts and
Debates

2. Brief History of International
Business
◼International business as practice is relatively
old.
◼Early Traders
▪ Well before the Christ, Phoenician and Greek
merchants were sending representatives abroad
to sell their goods.
▪ Sea trade (Mediterranean)
▪ Silk Road
▪ Sea Routes

3. ◼Fall of Roman languished European Trade for
long.
◼European explored sea routes to reach far
east Asia.
◼In 1600, The British East India Company
established foreign branches throughout the
Asia,
◼Dutch Companies joined with East India
Company to expand operation in Asia.

4. ◼By the 17 century, Mercantilism was widely
accepted. Mercantilism accepted state as
supreme in the trade.
◼In 18th century principles of mercantilism was
challenged by French thinkers and argued
governments not to intervene the economy.
◼In 1776, Adam Smith (British) published
‘Wealth of Nations’ and argued against the
state interference in the economy and trade.
◼A number of MNCs were established by late
1800s.

5. ◼Again mercantilism underwent in 19th century
due to influence of J. M. Keynes and his
followers.
◼In middle of 19th century, the Smith Free
Trade ideas emerged as against mercantilism.
◼In 1846, Britain annulled the ‘Corn Laws’.
◼By end of 19th century, trend toward free
trade continued to gain momentum.

6. ◼First world war disrupted the World Trade
again.
◼World War II made world leaders to realize
what went wrong.
◼GATT to oversee Multilateral trade was
created in 1947, with 23 members.
◼During the 1990s - creation of WTO
◼Now in recent years the process of
globalization has speeded up

7. Globalization
◼ The term Globalization was first coined by
Theodore Levitt in a Harvard Business Review
article..
◼ He mentioned that the future belonged at global
corporations that adopted strategies..
◼ Globalization refers to the increasing unification of
the world's economic order through reduction of
such barriers to international trade as tariffs, export
fees, and import quotas.

8. Goal of globalization
◼ The goal is to increase material wealth, goods, and
services through an international division of labor by
efficiencies catalyzed by international relations,
specialization and competition.
◼ It describes the process by which regional
economies, societies, and cultures have become
integrated through communication, transportation,
and trade.

9. Background
Previously the national economies were self-contained
entities, isolated from each other by
▪ barriers to cross border trade and investment;
▪ by distance, time zones, and languages;
▪ and by national differences in government regulation,
culture and business system.
◼ There is a fundamental shift occurring in the world
economy

10. Globalization
Now the world is moving towards a world in which
◼ barriers to cross border trade and investment are tumbling,
◼ perceived distance is shrinking due to the advancement in
transportation and information and telecommunication
technology,
◼ material culture is starting to look similar all over the world;
and national economies are merging into an interdependent
global system.
◼ the process by which this is occurring is commonly referred to
as globalization.
◼ so, Globalization refers to the shift towards a more integrated
and interdependent world economy.

11. Globalization mean- Different for different
people
◼ Process of world becoming a global village and creating borderless world
◼ Process of becoming world an integrated and interdependent world
marketplace
◼ Process of freeing economy – free flow of goods, service, ideas, factors

12. ◼ Globalization is both old and new concept
– old in the sense of universalization of technology, like fire,
and of social institutions, like marriage, kinship, family and
war, which is as old as human civilization
– new in the sense of universalization of modern technology,
capital and labor, goods and services, and of dominance and
exploitation
◼ Blackwell Dictionary of Sociology ”Globalization is the
process in which social life within societies is increasingly
affected by international influences based on everything from
political to trade ties to shared music, clothing style, mass
media” and so on.

13. Globalization for International Business
context: Economic globalization
◼ Globalization at macro level – globalization of world
economy, which can be called Globalization of
Market
◼ Globalization at micro level – globalization of
business, which can be called – Globalization of
Production

14. Globalization for International Business
context
Globalization of Market:
◼ It refers to the merging of historically distinct and
separate markets into one huge global market place.
◼ Falling barriers to cross border trade have made it
easier to sell internationally.
◼ It has been argued for some time that the tastes and
preference of consumers of different nations are
beginning to converge on single global norms, thereby
helping to create a global marketplace. E.g. Coca Cola,
McDonald’s.

15. Globalization for International Business
context
Globalization of Production:
◼ It refers to 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 (land, labor, energy, capital).
◼ By doing this companies hope to reduce their overall
costs and improve their quality or functionality of their
product offering, thereby allowing them to compete
more effectively in the global marketplace.
◼ E.g. Boeing Company’s parts are produced in Japan,
Singapore, Italy, and so on, because they are the best
in world in their activities.

16. Globalization Broadly categorized
1) Economic globalization – increasing global linkages of the
markets in goods, service, capital, labor and so on – through
policies of deregulation, privatization, liberalization
2)Political globalization – many nations joining hands in the
form of unions, Macro political framework for development.
Exchange of views and experiences on the governance, legal
system, human and women rights, sustainable development,
fighting terrorism, HIV/AIDS and so on.

17. 3) Cultural Globalization – Assimilation of cultural values
globally. Cultural exchanges for understanding, peaceful co-
existence with harmony, and learning. Material culture is
another dimension. It can be through media, tourism,
communication, technologies and consumption pattern
4) Environmental globalization: - represented by global
environmental concerns. Aims at protection of global
environment and ecology. Aims at preventing and addressing
the global warming, ozone depletion, loss of biodiversity, and
growing pollution. Rational use of renewable and non-
renewable energy sources
Globalization Broadly categorized

18. Forces or Drivers of Globalization
The two major factors seem to be important
drivers of globalization process -
◼ The first factor is the decline in the barriers to
cross border flow of goods, services and capital
◼ The second factor is technological changes and
developments, particularly the dramatic
development in recent years in communication,
information processing and transportation
technologies.

19. 8/9/201
2
Contd..
◼ Decline in trade and investment barriers
▪ emergence of international institutions (GATT,WTO,IMF,
WB System, UN Agencies)
▪ Emergence of regional cooperation and trade blocs
▪ Revolutionary economic reforms and policies
(liberalization, privatization, deregulation)
◼ Development in the technology
▪ Telecommunication
▪ Information
▪ Transportation

20. Contd..
There are other forces or drivers-
◼ Quality and availability of resources
◼ Knowledge and technology transfer - Rising
aspirations and wants of global citizens.
◼ Competition – in attempt to defend from
competition; move due to lack of sufficient
market size
◼ Costs advantage of production – exploit
cheaper resources

21. 21
8/9/201
2
Ball, Donald A. (2002) identifies five major
forces of globalization
◼ Political – unification and socialization of global community
▪ Progressive reduction in barriers to trade and investment
▪ Privatization of state owned resources and enterprises
◼ Technological – Advancement in ICT
◼ Market – search for market due to competition in domestic
market and saturation of it
◼ Costs – to achieve economies of scale firms globalizes the
production
◼ Competition – increasing intensely; firms entered in global
market; firms are defending their home market by entering
into competitors market

22. Globalization and its Impacts
Globalization has various aspects which affect the
world in several different ways-
◼ Industrial- emergence of worldwide production
markets and broader access to a range of foreign
products for consumers and companies
◼ Financial- better access to external financing for
borrowers
◼ Economic- realization of a global common
market, based on the freedom of exchange of
goods and capital

23. Globalization and its Impacts
◼ Political- the creation of sub-state and supra-
state institutions, the state loses power of policy
making and thus sovereignty.
◼ Informational- technological change with the
advent of fiber optic communications, satellites,
and increased availability of telephone
and Internet.
◼ Language- the most popular second language is
undoubtedly English.
◼ Ecological- the advent of global environmental
challenges that might be solved with
international cooperation.

24. Globalization and its Impacts
◼Cultural- Growth of cross-cultural contacts.
◼Technical- the development of a Global
Information System, and greater trans-border
data flow.
◼Religious- interrelations of various religious
groups, ideas, and practices.
◼Cultural effects- patterns of human activity

25. ◼Economic Liberalization
According to Jagdish Bhagwati, a former
adviser to the U.N. on globalization-
“Although there are obvious problems with
overly-rapid development, globalization is a
very positive force that lifts countries out of
poverty”. According to him, it causes a virtual
economic cycle associated with faster
economic growth.

26. Globalization and its Impacts
◼ Jobs- Brain drains, Income inequality and
Sweatshops
◼ Natural resources
◼ Health
◼ Global Market- Expansion, financial
interdependencies , Drug and illicit goods trade.

27. Institutions and Globalization
The institutions involved in globalization mainly includes:
◼ International Bank for Reconstruction and Development
(the World Bank), and the International Monetary Fund
◼ Globalization has been facilitated by advances in
technology which have reduced the costs of trade, and
trade negotiation rounds, originally under the auspices of
the General Agreement on Tariffs and Trade (GATT), which
led to a series of agreements to remove restrictions on free
trade.
◼ Since World War II, barriers to international trade have
been considerably lowered through international
agreements — GATT and its successor, the World Trade
Organization(WTO).

28. Globalization and Nepal
◼ Nepal was not prepared for the waves of globalization
◼ After the restoration of democracy in 1990, Nepal’s
economy started to liberalise
◼ Nepal joined the WTO in 2003
◼ For a landlocked country such as Nepal, chances of
exchange of goods, people, knowledge, and ideas are
opportunities that globalization has brought to Nepal

29. Globalization and Nepal
◼ Nepal focusing on areas where there is an edge
for business and trade
◼ Should focus on its internal infrastructure to be
more competitive

30. Pros & Cons of Globalization
◼ Advantages
▪ Enhances productivity
▪ Offers benefits of
transfer of technology,
capital and knowledge
▪ Help increase trade
▪ Increases employment
opportunities
▪ Promotes newly
industrialized
economies
▪ Disadvantages
▪ Poses threats to socio-
cultural values
▪ Inequitable distribution
of benefits & resources
▪ Erosion of national
sovereignty
▪ Insecurity in jobs and
income
▪ Environmental
degradation
▪ Rise in unfair competition

31. 1. Is It Really Happening?
▪ Proclaim that “national economies” are
disappearing and companies no longer have a
nationality; only people do.
▪ However, critics argue that the globalization trend
has been really overstated.
▪ The economy is indeed becoming more
international but not more global.

32. 2. Does It Undermine the Authority of
Nation-States?
◼ Supporters argue that the spread of multinational
corporations creates “destructive political
tensions,” within and across nation-states.
◼ They argue that governments are losing control
◼ However, critics feel the international arena, far
from threatening states, actually fosters them.
◼ Globalization reinforces the importance of
domestic policies

33. 3. Is Globalization Different from
Modernity?
◼Some believe that there is nothing new since
globalization is in fact age-old capitalism
◼They argue that “modernity is essentially
globalizing.”
◼However, critics argue that globalization is a
“transformation, not a culmination.”
◼We are entering a "global age"

34. 4. Is there a rise of a Global Culture?
◼Globalization leads to cultural homogeneity
▪ interaction and integration diminish difference
▪ global norms, ideas or practices overtake local
traditions
▪ many cultural flows reflect exclusively Western
interests

35. ◼Heterogeneity that results from globalization
▪ interaction is likely to lead to new mixtures of
cultures and integration is likely to provoke a
defense of tradition
▪ global norms or practices are interpreted
differently according to local tradition, and one
such norm stresses the value of cultural difference
itself;
▪ cultural flows now originate in many places and
America has no dominant grasp on a world

36. Conclusion
◼Globalization is changing the nature of the
world. However, it is neither always a
civilizing force nor a destructive one.
◼Its impact varies across countries, societal
sectors, and time.
◼The complexity of globalization certainly
invites additional research.

37. ◼The End