DIMENSIONS AND STAGES

IN GLOBALIZATION-
KENICHI OHMAE MODEL
 GLOBALIZATION
• Globalisation refers to the integration of markets in the global economy, leading to the
increased interconnectedness of national economies. Markets where globalisation is
particularly significant include financial markets, such as capital markets, money and credit
markets, and insurance markets, commodity markets, including markets for oil, coffee, tin,
and gold, and product markets, such as markets for motor vehicles and consumer
electronics. Globalization is a social, cultural, political, and legal phenomenon.
• Socially, it leads to greater interaction among various populations.
• Culturally, globalization represents the exchange of ideas, values, and artistic expression
among cultures.
• Globalization also represents a trend toward the development of a single world culture.
• Politically, globalization has shifted attention to intergovernmental organizations like
the United Nations (UN) and the World Trade Organization (WTO).
• Legally, globalization has altered how international law is created and enforced.
FEATURE OF GLOBLISATION

1.new market
2.new actor
3. new rules and norms
4.new tools of communication.
 GLOBLISATION OF BUSINESS
Globlisatio
n
Technology Improved transport

MNCs Lower tariff Labour mobility Capital mobility

ESSENTIAL CONDITIONS FOR GLOBALIZATION

 Removal of quota and tariffs

 Liberalization of govt rules and regulation
 Freedom to business and industry
 Removal of bureaucratic formalities and procedure
Competition is the basis of quality, price, display, and
customer service.


 Autonomy of public sector undertaking

 Incentive for research and development
 Administration and govt support industry
 Development of money market and capital market
 TECHNOLOGICAL DRIVERS OF GLOBLISATION
DRIVER SOCIAL DRIVERS
 Transport  Consumerism
revolution  Education and skill
 Information and  Global consumer
communication GLOBLISATION OF INDUSTRIES  Ecological
 Social media Awareness
AND MARKET
platform  Economic development  Changing
 Employment opportunity demographics
 Spread of technology  Growing leisure
ECONOMIC  New market society
DEMOGRAPHIC
DRIVER  Political, social and economic
 Increasing DRIVERS
effect  Population increase
income POLITICAL DRIVERS  Changing age
 Global trade  Reduced trade
 World financial structure
barrier  Increase social
trade  Intellectual property
 Market forces mobility
right  Spread of
 Capital mobility  Privatisation
education
 Regional trading  Urbanisation
block-
ADVANTAGES OF GLOBLISATION
Wider market: Globalization offers larger market to domestic
producer. Domestic firm can export their surplus output.
Rapid industrialization : Globalization helps in the free flows
of capital and technology btw countries global firms can
acquire finance at lower cost of capital.it helps the developing
countries to boost up their industrialization
Greater specilisation
Competitive gains: Globalization increase competition for
domestic firm through import and MNCs.
Higher production: Globlisation leads to spread up to
manufacturing facilities in different countries. firm With
worldwide contacts can outsource funds technology
distribution and other function from anywhere in the world.
Price stabilization
Increase in employment and income
Higher standard of living
International economic cooperation
World peace: Globalization provides cultural exchange
and mutual understanding among different nation.
International cooperation and brother hood contributes
to peace and prosperity in the world.
THE DISADVANTAGES OF GLOBALISATION
• The over-standardisation of products through global branding is a common criticism of globalization. Clearly,
standardising of products creates considerable benefits, but critics argue that this leads to a lack of product
diversity, as well as presenting barriers to entry to small, local, producers. Large multinational companies can also
suffer from diseconomies of scale, such as difficulties associated with coordinating the activities of subsidiaries
based in several countries.
• The increased power and influence of multinationals is also seen by many as a considerable disadvantage of
globalization. MNCs can operate as local monopsonies of labour, and push wages lower than the free market
equilibrium.
• Critics of globalization also highlight the potential loss of jobs in domestic markets caused by increased, and in
some cases, unfair, free trade. This view certainly accounts for the some of the rise in nationalist movements in
many developed economies, along with the push for increased protectionism.
• Globalization can also increase the pace of deindustrialization, which is the slow erosion of an economy’s
manufacturing base.
• Jobs may be lost because of the structural changes arising from globalization. Structural changes may lead
to structural unemployment and may also widen the gap between rich and poor within a country.
• One of the most significant criticisms of globalization is the increased risk associated with the interdependence of
economies. As countries are increasingly dependent on each other, a negative economic shock in one country can
quickly spread to other countries.
DIMENSIONS OF
GLOBALISATION
• Economic globalization is the intensification and stretching of economic interrelations around the globe. It encompasses such
things as the emergence of a new global economic order, the internationalization of trade and finance, the changing power
of transnational corporations, and the enhanced role of international economic institutions.
• Political globalization is the intensification and expansion of political interrelations around the globe. Aspects of political
globalization include the modern-nation state system and its changing place in today's world, the role of global governance,
and the direction of our global political systems.
• Military globalization, as subdomain of political globalization, is defined as the intensification and stretching of military power
across the globe through various means of military power (nuclear military weapons, radiation weapons simply weapons of
mass destruction). This form of globalization occurs across offensive and defensive uses of power and survival in international
field. Beyond states, global organizations such as the United Nations also extend military means globally through support given
by both Global North and South countries.
• Cultural globalization is the intensification and expansion of cultural flows across the globe. Culture is a very broad concept and
has many facets, but in the discussion on globalization, Steger means it to refer to “the symbolic construction, articulation, and
dissemination of meaning.” Topics under this heading include discussion about the development of a global culture, or lack
thereof, the role of the media in shaping our identities and desires, and the globalization of languages.
• Ecological globalization include population growth, access to food, worldwide reduction in biodiversity, the gap between rich
and poor as well as between the global North and global South, human-induced climate change, and global environmental
degradation.
STAGES OF
GLOBALISATION
Typically, the process of globalization of companies evolves through distinct stages.
1. In the first stage of globalization, companies normally tend to focus on their domestic markets. They
develop and strengthen their capabilities in some core areas.
2. In the second stage of globalization, companies begin to look at overseas markets more seriously but
the orientation remains predominantly domestic. The various options a company has in this stage are
exports, setting up warehouses abroad and establishing assembly lines in major markets. The company
gets a better understanding of overseas markets at low risk, but without committing large amounts of
resources.
3. In the third stage of globalization, the commitment to overseas markets increases. The company begins
to take into account the differences across various markets to customize its products suitably. Different
strategies are formed for different markets to maximize customer responsiveness. This phase can be
referred to as the multinational or multi-domestic phase. The different subsidiaries largely remain
independent of each other and there is little coordination among the different units in the system.
4. In the final stage of globalization, the transnational corporation emerges. Here, the company takes into
account both similarities and differences across different markets. Some activities are standardized
across the globe while others are customized to suit the needs of individual markets.
KENICHI OHMAE MODEL
• Kenichi Ohmae, a renowned Japanese management consultant,
proposed a model of globalization in his book "The Borderless
World." Ohmae's model of globalization. He outlines an organizational
response that proposes five stages of globalization. This is illustrated by examining
how the business system needs to change as the organization becomes increasingly
global.
• The business system approach adopted by Ohmae is a variant of the value chain
concept. He describes his stages approach in terms of the reconfiguration of the
business system. Ohmae argues that in the Interlinked Economy, corporations and
consumers are more closely connected across boarders than ever, and politicians,
bureaucrats and the military are declining in importance.
• He also argues that as the organization seeks to internationalize, it increasingly
transfers key activities into its main foreign markets. Thus the stages can be outlined:
Stages of Globalization - Kenichi
Ohmae
• Stage one – Export-Orientated Company A company which expands from its home
production base to export markets using dealers, distributors or agents.
• Stage two – Overseas Branches The company starts to set up its own sales, marketing
and, perhaps, after-sales services in foreign markets.
• Stage three – Relocating Production The company relocates production to key markets.
• Stage four – Insiderisation The company creates complete ‘clone models’ of the parent
in overseas markets, enabling a complete local response to local consumers by being able
both to analyze consumers and tailor local products to their needs.
• Stage five – The Global Company Ohmae says that at this stage some common core
functions ‘consolidate back to the center’ to provide the business with ‘common shard
values’ – the global aspect – whilst maintaining the ability to provide a specific local
service. Operation remains ‘dedicated to local management’, but there is global control
of areas such as R&D, brand development and so on.
CONCLUSION
• Ohame ignores the role of nation states in controlling trade across
their boarders – the three biggest trading blocks of Japan, North
America and the EU, for example continue to restrict trade with
nations outside.
• He understates the role of military power in geo-politics. States not
only have a monopoly of violence in their own territories, the USA
and Russia have recently used military force abroad.
• According to global pessimists, he overstates the power of consumers
– global Corporations and bankers have more power.
Foreign Market Entry Strategies
• Exporting
• Licensing/ franchising
• Contract Manufacturing
• Management contract
• Assembly operations
• Fully owned manufacturing facilities
• Joint venturing
• Counter trade
• Mergers and acquisitions
• Strategic alliance
• Third country location
Is Globalization Good or Bad?
Indian Economy – Step towards
Globalization
Before 1991
• Deep crisis in 1991
• Inflation at 17%
• High fiscal deficit
• Lost confidence of NRIs and foreign investors
• After 1991
• Devaluation
• Disinvestment
• Dismantling of industrial licensing regime
• Allow FDI
• Non resident Indian scheme
• Throwing open industries reserved for public sector to private participation
• Abolition of MRTP act
• Removal on quantitative restriction on imports
• Reduction of peak customs tariff
• Wide ranging financial sector reforms
REGIONALISM vs
GLOBALIZATION
INTRODUCTION
• Regionalism and globalization are two conflicting forces that have
shaped the modern world. While regionalism emphasizes the
importance of local identity, culture, and economy, globalization
focuses on interconnectedness and integration of nations and regions
into a global network. In this essay, we will explore the differences
between these two concepts and their impact on the world.
• Regionalism is a concept that emphasizes the importance of local identity,
culture, and economy. It refers to the process of promoting and protecting the
interests of a particular region or group of regions. Regionalism often leads to
the creation of regional organizations, such as the European Union, ASEAN, and
NAFTA, that aim to promote economic integration and cooperation among their
member countries. Regionalism is often seen as a counterforce to globalization,
as it prioritizes the interests of the region over the global community.
• Globalization refers to the process of increasing interconnectedness and
integration of nations and regions into a global network. Globalization is driven
by technological advancements, trade liberalization, and the increasing
mobility of people, goods, and capital. Globalization has resulted in the
emergence of a global market, where goods and services can be traded freely,
and information can be exchanged instantly. While globalization has led to
economic growth and increased efficiency, it has also resulted in job loss,
income inequality, and cultural homogenization.
• The relationship between regionalism and globalization is complex
and often contradictory. While regionalism aims to protect local
interests, it also recognizes the importance of global economic and
political stability. Similarly, while globalization aims to promote
economic growth and interconnectedness, it also recognizes the
importance of local culture and identity.
• The impact of regionalism and globalization varies across different
regions and countries. In developed countries, globalization has led to
economic growth and increased standards of living, but has also
resulted in the loss of manufacturing jobs and increased inequality. In
developing countries, globalization has led to the emergence of new
industries, increased investment, and economic growth, but has also
resulted in the exploitation of workers and the depletion of natural
resources.
REGIONALISM
Pros of Regionalism: Cons of Regionalism:

1.Promotes regional stability and 1.Can lead to the fragmentation of the

cooperation. global economy and create trade barriers
between regions.
2.Helps to address local economic 2.Can lead to the exclusion of non-member
and social issues. countries from regional trade and
3.Provides a sense of identity and investment.
community for member countries. 3.May promote nationalism and conflict
between regions.
4.Encourages cultural exchange and
4.Can be difficult to implement and may
preservation of local traditions. require significant political will and
5.Helps to address regional security coordination.
concerns. 5.May not address global economic and
social issues that require global
cooperation.
GLOBALISATION
Pros of Globalization: Cons of Globalization:

1.Promotes economic growth and 1.Can lead to the homogenization of

development. cultures and the spread of Western
culture around the world.
2.Increases the flow of goods, 2.Can result in the exploitation of
services, and ideas across borders. developing countries by multinational
3.Encourages innovation and corporations.
creativity. 3.Can create inequality and a lack of
economic opportunities for some
4.Fosters cultural exchange and countries and groups.
understanding. 4.Can increase the risk of global economic
5.Helps to address global economic crises and destabilize national economies.
and social issues that require 5.Can lead to the erosion of national
global cooperation. sovereignty and democratic governance.
CONCLUSION
• Regionalism and Globalization represent two distinct approaches
to global integration and cooperation. While they may seem at
odds with each other, there are potential benefits and
drawbacks to both approaches. The challenge for policymakers
and leaders is to find a balance between the two and create a
global system that benefits all countries and people.
• Both have their pros and cons, and the debate between the two
approaches will continue. Policymakers and leaders must
carefully consider the potential benefits and drawbacks of both
approaches and find a balance that promotes global integration
and cooperation while addressing the needs of all countries and
people.