THE STRUCTURES OF GLOBALIZATION  Organizations now operate in much closer

proximity than ever before to a greater number

 The phenomenon of Globalization is a fact of life. and range of customers, competitors, suppliers,
 The daily press is filled with reminders of how the and government regulators.
world organizations have been taken on a global  Today’s telecommunications technology allows
focus. people around the world to share voice, video, and
 International and national news reports frequently facsimile (duplicate) information in minutes.
mention such matters as international trade,  The increasing technological and managerial
foreign exchange rates, losers and gainers in the capabilities of people around the globe are
stock market, currency fluctuations and oil price another aspect of proximity. Managers find
hike. themselves competing – or even collaborating –
WHAT GLOBALIZATION MEANS with new cast of global players.
 (Example: Honda moved nearly 60 American
 Globalization as an economic process: specialists to Japan for several years to work with
 Usually related to global management and market their Japanese counterparts on design for the 1994
integration Honda Accord.)
 Economically, it is the recognition by organizations
that business must have a global, not local focus. LOCATION
 Globalization as an economic process: The location and integration of an organization’s operations
 It refers to a new perspective, or attitude, about across several international boundaries is part of
relationships with other people in other nations. globalization.
 It also refers to the unprecedented (unique) scope,
shape, number, and complexity of business Example:
relationship conducted across international
boundaries. Nokia cellular phones are designed and manufactured in
Finland and sold worldwide to customers who use the
According to Manfred Steger (for Gen. Ed. curr), equipment to connect with anyone.
globalization is the expansion and intensification of social
relations and consciousness across world - time and across ▪Toyota, Nissan, and Honda operate auto assembly plants in
world -space. the US. Samsung and LG are products of South Korea and
both have worldwide distribution centers.
WHAT GLOBALIZATION MEANS
LOCATION
 EXPANSION may refer to the creation of the
international marketplace including the This new organizational scheme is termed transnational
international cultural environment where management to describe this growing practice of spreading
education, social institutions, material elements an organization’s operations across many nations (Barlett
are connected and occur at different levels. and Ghoshal, 1995)
 (NGO and Int’l. orgs involved in global warming ATTITUDE
and Save the Earth movements)
Globalization refers to a new, open attitude about
WHAT GLOBALIZATION MEANS practicing management internationally. This attitude
 INTENSIFICATION refers to the expansion, combines a curiosity about the world outside one’s national
stretching, and acceleration of the networks. borders with a willingness to develop the capabilities for
 (Ex: impact of the international trade and participating in the global economy. “Nothing is ‘overseas’
investment in one country to another and foreign anymore.”
policy responses to trade problems have GLOBALIZATION AND COMPETITIVENESS
intensified trade relations between and among
countries in the world – import export promotions)  Competitiveness has become a prominent business
 Politically and Economically Globalization is the and government concern in the era of global
process through which an increasingly flow of business as a contest among nations.
ideas, people, goods and services, technology and  It is a direct consequence of the unprecedented
capital leads to the integration of economics and proximity among nations in the global marketplace
societies at a speed unprecedented (unique) in as defined by the International Monetary Fund
effect and outcomes (cited by Danug and (IMF).
Campanilla, 2004)
International Monetary Fund (IMF)
The phenomenon of globalization according to Stoner et.al.
(1995) consists of three interrelated factors – proximity  is an organization of 189 countries, working to
(closeness), location, and attitude which confront the foster global monetary cooperation, secure
contemporary society. financial stability, facilitate international trade,
promote high employment and sustainable
PROXIMITY economic growth, and reduce poverty around the
world.
RELATIVE STANDING TODAY, LOOKING FORWARD  Political globalization – measures the diffusion of
government policies in terms of the number of
 Competitiveness can refer to a country’s embassies and consulates in a country,
preparedness for future competitive interactions. membership in international organization, likewise
 Example, Philippine Airlines – tagged as Asia’s first participation of a country in United Nations peace
airline known to its Mabuhay Class (1st airline to missions and similar advocates.
offer sky bed in long haul flights) needs to stay
competitive against two Asian giants – Singapore The KOF Index of Globalization is an index of the degree of
Airlines and Cathay Pacific Airways to win for a globalization of 122 countries. It was conceived by Axel
number of industry players who faced higher Dreher at the Konjunkturforschungsstelle of ETH Zurich, in
airfare and maintenance costs (Abelos, et.al., Switzerland. It was first published in 2002 and covered the
2006) period from 1970 until that year.

Several measures for the criterion: AN OVERVIEW OF THE WORLD ECONOMY

 Cost of labor in a country  The world economy has changed profoundly since
 Example: questionable competitiveness of US labor WWII (Drucker, 1986).
costs in relation to lower wage rates in other  Perhaps, the most fundamental change is the
countries such as the Philippines, Mexico, Vietnam, emergence of global markets; responding to new
and Indonesia. opportunities, global competitions have steadily
 This creates some controversy and ethical dilemma displaced or absorbed local ones.
for global managers when companies seeking
lower wage personnel close factories in the US and Organizations stand a better chance of achieving success
move production facilities to China, Vietnam, when plans and strategies are based on the new realities of
Thailand, and the Philippines the changed world economy (Simon & Schuster, 1997).
 Education level of a country’s workforce  Capital movements rather than trade have become
 government representatives who seek to attract the driving force of the world economy. (Dollar
new investors in their economics like to cite value of the world trade is greater than even
literacy rates and skilled training. before)
 Example: English proficiency as a factor in the US  Production has become a source of generating
companies establishing plants and facilities in employment.
other nations. (included to this is the lack of 2  (Productivity continues to grow even if
years in the BEC of the OFWs – creation of K-12). employment in manufacturing remains steady or
HOW GOVERNMENTS INFLUENCE COMPETITIVENESS had declined; blue -collar jobs in manufacturing)
 The world economy dominates the scene.
 It is common wisdom that the US has been slow to Individual economies play a subordinating role.
recognize and adapt to the globalization of  (Success of Germany and Japan is due to their
business. business leaders and policy makers who focused
 Japan has become the most visible competitor on the world economy and world markets and not
nation although South Korea is heading into the on their domestic objectives and priorities only)
same direction.
 Example: although home technology was originally ECONOMIC SYSTEMS
developed in the US, no one video cassette  There are three types of economic systems:
recorder has been manufactured in this country. capitalist, socialist, and mixed.
Japan now controls the world’s $15 billion market  This classification is based on the dominant
for audio/video market. method of resource allocation: market allocation,
 The Japanese have taken over a large portion of command allocation, and mixed allocation
the semiconductor market, once an American respectively.
monopoly, and have assumed leadership in the
development of new drugs (Porter, 1990). Market Allocation System

MEASURING GLOBALIZATION Characteristics of a Market Economy

 There are many alternatives on how to measure - Private Property

globalization per country in the world. - Freedom of Choice
 The KOF Swiss Economic Institute offers a useful - Competition
ranking into three broad categories as follows: - Limited Government
 Economic globalization – measures long distance
flow of goods, capital, and services as well as  It relies on households and firms to allocate
information and perception that accompany resources.
market exchanges;  Consumers decide what goods they desire, and
 Social globalization – measures the spread of firms determine how much is made.
ideas, information, images, and people.
  The market system is an economic democracy  It means all market systems have a command
where people have the option to buy according to sector and all command systems have a market
their choice and budget. sector which means they are mixed.
 The role of the state is to promote competition and  The function of the government in modern market
ensure consumer protection. economies varies widely.
 Philippine Standard (PS) Quality And/or Safety  Example, in Sweden, 2/3 of all expenditures are
Mark And Import Commodity Clearance (ICC) controlled by government, the economic system is
 Examples: North America, Western Europe, Japan more “command” than “market.”

Command Allocation System

 The country or nation has broad powers to serve

the public interest on what is appropriate based on
their judgment.
 These powers include deciding which products to
make and how to make them.
 Consumers are free to spend their money on what
is available, but government planners make
decisions about what is produced, and therefore,
what is available.

 There is little reliance on product differentiation,

advertising, and promotion; distribution is handled
by the government to cut out “exploitation” by
intermediaries.
 Examples: China, Former Soviet Union, India –
most populous countries

Mixed Allocation System

 It stems on the principle that there is no “pure

market or command allocation systems among the
world’s economies.”