The Structures of

Globalization
Learning Outcomes
At the end of the chapter, the student should be able to:
1. define globalization;
2. analyze the interrelated of globalization;
3. interpret how governments influence competitiveness;
and
4. explain why globalization is uneven based on the three
rankings.
Introduction
The phenomenon of globalization is a fact of life. The
daily press if filled with reminders of how the world
organizations have been taken on global focus. International
and national news reports frequently mention such matters
as international trade, foreign exchange rates, currency
fluctuations and oil price hike.
Today, it is not unusual for a global organization with
headquarters in Japan, US, Germany, and UK to oversee
manufacturing in Singapore, India, South Korea, and even in
Third World countries. For instance, Jollibee has expanded its
network in some parts of Asia and US.
What Globalization means?
• The view on globalization is taken primarily as an
economic process.
• It is usually related to global ,management and market
integration.
• In Economic, it is defined as the recognition by
organizations that business must have a global, not
local focus.
• It refers to a new perspective, or attitude, about
relationships with other people in the nations
What Globalization means?
• Economically, it also refers to unprecedented scope,
shape, number, and complexity of business
relationship conducted across international
boundaries.
• The phenomenon of globalization according to Stoner
et. Al. (1995), as cited by Abalos, et al. (206, pp. 78-81)
consists of three interrelated factors – proximity,
location, and attitude.
Proximity
• First, organizations now operate in much closer proximity than
ever before to a greater number and range of customers,
competitors, suppliers, and government regulators.
• This proximity, a function of the “shrinking globe”, is partly a
matter of time, as today’s telecommunications technology
allows people around the world to share voice, video, and
facsimile information in minutes.
• The increasing technological and managerial capabilities of
people around the globe are another aspect of proximity.
Location
• Second, the location and integration of an organization’s
operations across several international boundaries is part of
globalization.
• This new organizational scheme is termed transnational
management to describe this growing practice of spreading an
organization’s operations across many nations (Barlett and
Ghoshal, 1995 as cited by Abelos et al., 2006, p.79).
• Example, Nokia phones are made and designed in Finland and
sold worldwide. Samsung and LG are products of South Korea
and both have worldwide distribution center.
Attitude
• Third, globalization refers to a new, open attitude about
practicing management internationally.
• This attitude combines about the world outside one’s
national borders with willingness to develop the
capabilities for participating in the global economy.
• Ohmae (1990) as cited by Abelos, et al., (2006) makes this
point clear in the simple statement, “Nothing is ‘overseas’
anymore.”
Attitude
Manfred Steger Danug & Campanilla
- he described globalization as “the expansion - they described globalization as “the process
and intensification of social relations and through which an increasingly flow of ideas,
consciousness across world-time and across people, goods and services, technology and
world-space” capital leads to the integration of economics
Expansion – refers to the creation of the and societies at a speed unprecedented in
international marketplace. effect and outcomes”
Intensification – refers to the expansion,
stretching and acceleration of the networks of
the former (Claudio, 2018)
Globalization and Competitiveness
• Competitiveness is and idea that applies in a number of
different settings.
• SM and Robinsons are competitors for several decades
and perhaps have worried about the entry of new players
on the competitiveness of the prices.
• Competitiveness refers to the relative standing of one
competitor against competitors.
• Competitiveness has become a prominent business and
government concern in the era of global business as a
contest among nations.
• This meaning of competitiveness is part of the new
attitude of globalization.
Globalization and Competitiveness
Relative Standing Today, Looking How Governments Influence
Forward Competitiveness
- Competitiveness can refer to a country’s - These interpretations of competitiveness are
preparedness for future competitive interactions used by government officials around the world
who are aggressively scrambling to adjusts to
- To be competitive in this sense is to have a
global economy.
chance upcoming contests.
- According to Young (1995), the ability of US to
- Several measures of this criterion are commonly
compete in the world economy has declined over
discussed in business and politics. One is the
the past two decades. He concluded that both
cost of labor in the country and second is the
government and business need to place higher
education level of a country’s work force.
priority on international competitiveness
A Brief Modern History of Globalization
• International business has existed in some sense
since prehistory, when flint, banks, ceramics, and
other goods were traded cross great distances.
• Even during Roman Empire, traders carried goods to
consumer around the world.
• However, multinational enterprises– as we know
them today– were great rarities until the 19th
century.
A Brief Modern History of Globalization
The Aftermath of World War II
• When WWII ended, the US was the only major country that had not
been devastated by the war. The size of the US economy had
almost doubled during the war, and the US dominated the world
economically, politically, and militarily. American-owned
multinationals generally viewed the rest of the world as a source
of raw materials, cheap labor, and supplemental market.
• In the mid-1950s, US companies started to make substantial direct
investment in foreign manufacturing facilities.
• In the 1960s, it was American service firm-banks, insurance
companies, marketing consultants, and the like that expanded
overseas.
A Brief Modern History of Globalization
The Aftermath of World War II
• Today, they have taken the initiative in developing and improving technology, and this has furthered their
competitiveness (Palmer, 1997).
• When Europe’s firms—particularly in such industries as chemicals, electric gears, pharmaceuticals, and
tires – started to respond in late 1960’s with US affiliates.
• Japan trading companies particularly during the 1980s, when they were trying to circumvent protectionist
US legislation that would cut their access to the American market.
• As a result, international trade and competition have intensified in recent years. Moe than ¼ of all goods
produced in the world now cross international boundaries while nearly ¾ of the goods in US face foreign
competition (Young, 1995).
• In this global market, organizations must fight to capture overseas markets while defending their home
markets from foreign competition.
Measuring Globalization
• There is no doubt we now live in a global marketplace. In
scored of countries around the globe, the same products
and services are available to consumers and
organizations.
• But for many other product, brands, and companies, the
sense of identity with a particular country is becoming
blurred. Which brands are Japanese, or American, or
German?
• There are many alternatives on how to measure
globalization per country in the world. The KOF Swiss
Economic Institute offers a useful ranking into three
broad categories: economic globalization, social
globalization and political globalization.
Economic Globalization
• Measures long distance flow of goods, capital, and services
as well as information and perception that accompany
market changes.
Social Globalization
• Measured the spread of ideas, information, images, and
people
Political Globalization
• Measures the diffusion of government policies in terms of
the number of embassies and consulates in a country,
membership in international organization, likewise
participation of a country in UN peace missions and
similar advocates.