Dr.

Sunil Kumar
Professor of International Business
 To understand globalisation
 To analyse drivers of globalisation
 To understand phases and stages of
globalisation
 To analyse advantages of
disadvantages of globalisation
 To analyse international business
environment (PESTLE Analysis)
 Globalization is a process of interaction
and integration among the people,
companies, and governments of different
nations, a process driven by international
trade and investment and aided
by information technology.
 This process has effects on
the environment, on culture, on political
systems, on economic development and
prosperity, and on human physical well-
being in societies around the world.
 Technological
drivers

Market drivers Political drivers

The Drivers of
Globalization

Competitive
Cost drivers
drivers
 Technology shaped and set the foundation for
modern globalization. Innovations in the
transportation technology revolutionized the
industry.
 The most important developments among these
are the commercial jet aircraft and the concept
of containerisation in the late 1970s and 1980s.
 Inventions in the area of microprocessors and
telecommunications enabled highly effective
computing and communication at a low-cost
level.
 Finally the rapid growth of the Internet is the latest
technological driver that created global e-
business and e-commerce.
 Liberalized trading rules and deregulated
markets lead to lowered tariffs and allowed
foreign direct investments in almost all over
the world.
 The institution of GATT (General Agreement
on Tariffs and Trade) 1947 and the WTO
(World Trade Organization) 1995 as well as
the ongoing opening and privatization in
Eastern Europe are only some examples of
latest developments.
 As domestic markets become more and more
saturated, the opportunities for growth are
limited and global expanding is a way most
organizations choose to overcome this situation.
 Common customer needs and the opportunity
to use global marketing channels and transfer
marketing to some extent are also incentives to
choose internationalization.
 Sourcing efficiency and costs vary from
country to country and global firms can take
advantage of this fact.
 Other cost drivers to globalization are the
opportunity to build global scale economies
and the high product development costs
now-a-days.
 With the global market, global inter-firm
competition increases and organizations
are forced to “play” international.
 Strong interdependences among
countries and high two-way trades and
FDI actions also support this driver.
 Domestic stage: market potential is limited to the home
country production and marketing facilities located at
home
 International stage: exports increase company usually
adopts a multi-domestic approach
 Multinational stage: marketing and production facilities
located in many countries more than 1/3 of its sales outside
the home country
 Global (or stateless) stage: making sales and acquiring
resources in whatever country offers the best opportunities
and lowest cost ownership, control, and top management
tend to be dispersed
 Free flow of capital, technology
 Industrialization
 Production facilities throughout the world
 Increase in production and consumption
 Lower prices and high quality
 Jobs and Incomes
 Higher standard of living
 Balanced Human development
 Welfare and prosperity
 Kills domestic business
 Exploits human resource
 Unemployment and underemployment
 Widening gap between rich and poor
 Transfer of natural resources
 National sovereignty at stake
 Commercial and political colonialism
 International
business is management of
business operations conducted in more than
one country
 Fundamental tasks do not change
 Basicmanagement functions are the same -
domestic or international
 Greater difficulties and risks when performing
on an international scale
 P – Political
 The current and potential influences from political pressures

 E - Economic
 The local, national and world economic impact

 S - Sociological
 The ways in which changes in society affect the project

 T - Technological
 How new and emerging technology affects our project /
organization

 L - Legal
 How local, national and global legislation affects the project

 E - Environmental
 Local, national and global environmental issues
 Government type and stability
 Freedom of the press, rule of law and
levels of bureaucracy and corruption
 Regulation and de-regulation trends
 Social and employment legislation
 Tax policy, and trade and tariff controls
 Environmental and consumer-
protection legislation
 Likely changes in the political
environment
 Stage of a business cycle
 Current and projected economic growth,
inflation and interest rates
 Unemployment and supply of labor
 Labor costs
 Levels of disposable income and income
distribution
 Impact of globalization
 Likely impact of technological or other
changes on the economy
 Likely changes in the economic
environment
 Cultural aspects, health consciousness,
population growth rate, age distribution,
 Organizational culture, attitudes to work,
management style, staff attitudes
 Education, occupations, earning capacity,
living standards
 Ethical issues, diversity,
immigration/emigration, ethnic/religious
factors
 Media views, law changes affecting social
factors, trends, advertisements, publicity
 Demographics: age, gender, race, family size
 Maturity of technology, competing
technological developments, research
funding, technology legislation, new
discoveries
 Information technology, internet, global and
local communications
 Technology access, licensing, patents,
potential innovation, replacement
technology/solutions, inventions, research,
intellectual property issues, advances in
manufacturing
 Transportation, energy uses/sources/fuels,
associated/dependent technologies, rates of
obsolescence, waste removal/recycling
 Current home market legislation, future
legislation
 European/international legislation
 Regulatory bodies and processes
 Environmental regulations, employment law,
consumer protection
 Industry-specific regulations, competitive
regulations
 Ecological
 Environmental issues, environmental
regulations
 Customer values, market values,
stakeholder/ investor values
 Management style, staff attitudes,
organizational culture, staff engagement