Globalisation (Ch1)

L1

Formal and Informal Rules of the Game (Ch 2-4)

Institutions, Culture and Ethics

The Global
Business
Environment

L3

Global Trade and Finance

Trade and Investment Ch 5-8

L2

The Global Financial System Ch 9-10

Global Business

Managing
Across
Borders

Global Architecture
How

Global Strategies
What (Ch 11)

Go Global
Why, Where, When How
(Ch12)

Functional Excellence (Ch 13-16)

HR, Marketing, Operations and Finance

Prof AJ Smit (UNISA)

Index

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Topic

Leadership in practice

Hill Chapters 1 to 4

Prof AJ Smit (UNISA)

Index

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Topic

Leadership in practice

Globalisation of Markets (Teodore Levitt. HBR, 1983)

A powerful force drives the world

towards a converging commonality,
and that force is technology
Shrinking time, space and distance

That the world is

becoming more
homogeneous

The 10% presumption

Semi-Globalised

Gone are the accustomed differences

in national or regional preferences
Distance matter less

That distinctions
between national
markets are fading

The World of CAGEs

Distance still matter very
much

Countries like Corporations geared to

this new reality ...... can decimate
competitors the old assumptions of
how the world works are forever
gone A new world order

This will splits the

world into winners
and losers.

The world and Countries

are closed systems
The old assumptions of
how the World works are
pretty much the same

The globalization of markets is at

hand. [the end of] the multinational
corporation The Global Corporation

The result is that,

globalisation is an
imperative for frims
and not just an
option

Globalisation is not an
imperative!
It must add economic
value

Prof AJ Smit (UNISA)

Index

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Topic

Leadership in practice

Multinational
approach

Shrinking Time, Space & Distance

Distance matter
LESS

Global approach

Distance still matter

very much!

To exploit the
differences

To adjust to the

To overcome the

differences

differences

Prof AJ Smit (UNISA)

Index

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Topic

Leadership in practice

No of countries with exports as %

GDP greater than 35%**
Estimate of re-exporting
percentage***
WORLD exports as % GDP
Estimate of value added exports as
% of GDP****
FDI as % of world Investment

The New World Order

(does not inclued the crisis
years)

Trade volumes
reached the
1930 levels

GLOBALISATION
years

Avg 60-70's

Avg 80-2000's

34.75
26.18

19.57
13.97

31.71
21.78

17.09
10.14

10.17
1.45

14.80
6.33

Before the
Great
depression 1
Avg 20's

Avg 60's

na

23

38

43

50

64

na
10

16.02
12.09

23.12
15.85

29.68
18.49

30.69
20.66

na
6

8.94
1.3

11.40
1.6

13.00
2.71

14.32
6.13

The GATT years

Avg 70's Avg 80's Avg 90's Avg 2000's*

* Excluding crisis years ** Excluding oil exporting countries ***Average of export % greater than 35% ****Ajusted by re-export percentage

Source: Smit, A.J. (2011). Management Perceptions about Globalisation of Markets and Production: Myth or Reality?

Exports % GDP
Domestic

FDI % Investment

Exports

7%

15%
85%

Domestic I

Domestic Investment
90%

FDI

93%

Prof AJ Smit (UNISA)

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Topic

Leadership in practice

Trading Industries

Exports as % of World GDP

Global
Industries

15%

85%

14%

1%

Local Industries
80%

5%

94%
FDI as % of World Investment

Multi-domestic
Industries

6%

Source: Smit, A.J. (2011). Management Perceptions about Globalisation of Markets and Production: Myth or Reality?
Prof AJ Smit (UNISA)
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Topic

Leadership in practice

Management
Research
1%

Patents
15%
Direct
Investment
6%

Private
Charity
7%
V-Add
Trade
16%

Telephone Calls
2%

Trade
26%

14.8%

Mail 1%
Students 2%

Immigration 3%
Tourist
arrivals

10 15

20

25

25
Shares
20%

Percentage Global

85 90 95

Percentage Local

Internet Traffic
17-18%

Source: World Bank, http://data.worldbank.org/indicator/NE.EXP.GNFS.ZS /1 Brakman, Garretsen, Marrewijk and Witteloostuijn (2006), Ghemawat
(2007 and 2011), Smit, A.J. (2011).

Prof AJ Smit (UNISA)

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Topic

Leadership in practice

(Source: Rugman and Verbeke, 2004) Fortune Global 500 ( sample 366): Of the 322
companies in the sample: 80% of their total sales (average) comes from the home region.
Only 9 companies had sales of 20% or more outside their home region

Exports as % of World GDP

Trading Industries

14%

15%

85%

Global
Industries

1%

Local Industries
80%

5%

(Source: Ghemewat 2007)

Wal-Mart (largest company in terms
of sales)
Sales in 2005 = $ 300 billion
USA sales = $204 billion (80%)
International sales $60 billion
(20%)

6%

94%
FDI as % of World Investment

Multidomestic
Industries

(Source: Peng 2008)

95% of all Businesses are SMEs
Producing 80% of world GDP
Provide 60-70% all employment
Prof AJ Smit (UNISA)
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Topic

Leadership in practice

-The World as a Closed System

-The Eternal Triangle
-The Political Economy of Trade and Investment

Prof AJ Smit (UNISA)

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Topic

Index

Topics

Leadership in practice

Globalisation of Markets and

Production

The Globalisation Debate

Socially responsive
awareness and
understanding

How to manage
Across Borders

Changes the
rules of the
GAME

Globalisation,
Jobs, Income and the
Worlds Poor

Globalisation and
Labour Policies,
Human Rights and
Global Justice

Globalisation and
National
Sovereignty

Globalisation,
and the
Environment

About Power, Politics and Special interest groups

Prof AJ Smit (UNISA)
Index

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Topic

Leadership in practice