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Globalization and Multinational Firm

Meaning

• Globalization is integration of world economy and exchanging the ideas, products,


technology etc.
• The Globalization hit India late, but huge impact on the nations economic policies
and various other aspects.

• Definition
• Globalization is the process of international integration arising from the
interchange of world views, products, ideas and other aspects of culture.
• Globalization means rapid increase in the share of economic activities taking place
across national borders.
Integration of Economy
 The increasing reliance of economies on each other.

 The opportunities to be able to buy and sell in any country in the world.

 The opportunities for labor and capital to locate anywhere in the world.

 The growth of global market in Finance.


Aspects of Globalization
• Trade and transactions

• Capital and investment movement

• Migration

• Dissemination of knowledge
Dimensions of Globalization
• Economic Globalization

• Political Globalization

• Cultural Globalization

• Ideological Globalization
Reasons for Globalization
• Better resources

• Low cost of production

• Dilution of the local market

• Operating internationally

• Market expansion

• Increased profit
Impact of Globalization
• Positive Impacts Negative Impacts
• Increased productivity Take over of national firms

• High standard of living Brings instability

• Increased flow of foreign capital Impact on traditional industries

• Increased competition Affects small industries


Widens disparity
Cultural Impact
Major Policy Changes
• License abolishing
• Dilution of MRTP Act
• Foreign investment encouraged
• Fiscal Reforms
• External sector reforms
• Outward looking policy
• Public sector reforms
Impact of Globalization
• Rapid growth of business
• Opportunity to go global
• Introduction of various new technology
• Rise in access of new technology in rural area
• New technology in agriculture
• Literate farmers
• Rise in literacy rate
• Disparity in the society
• Ethical responsibility of business has been diminished
• The local business has perished
• High growth but problem of unemployment
Factors affecting Globalization
• Technological change
• Economies of scale
• Differences in tax system
• Less protectionism
• Growth strategies for Transnational and Multinational
companies
• Political factors

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