Country Globalization

and Business Strategy

Syed H. Akhter
Marquette University
 Globalization
Defining globalization
Drivers of globalization
Measuring globalization
Impact of globalization
 Globalization
McDonaldization
Coca-Colonization
Nikification
 Globalization
Global Village
Global Pillage
World Government
Globalization & Unit of Analysis

Country
Industry
Firm
Consumer

Globalization
Country Globalization: A Multi-Dimensional Concept

Economic

Cultural Country
Social Technological
Globalization

Political
 Economic Globalization
 Definitions
 Drivers
 Degree
 Impact
 Economic Globalization

Increasingcross-country integration of
economic systems through trade and
investments
Economic Globalization Drivers
Richard Harris and Simon Fraser 1995

 Reduction in trade and investment barriers

 Rapid growth and increase in size of the
developing countries economies and their impact
on global production capacity
 Innovations in technologies involving transport
and communications
 Trade Barriers Removal

 Non-discrimination (The MFN principle)

 Reciprocity
 Transparency
 Fairness
 Declining Trade and Investment Barriers:
Average Tariff Rates on Manufactured Products

(% value)
1913 1950 1990 2000

France 21 18 5.9 3.9

Germany 20 26 5.9 3.9

Italy 18 25 5.9 3.9

Japan 30 - 5.3 3.9

Britain - 23 5.9 3.9

USA 21 18 5.9 3.9

 Globalization and the Global Economy (Changing
pattern in % share of world output and trade)
1963 (Output) 1997 (Output) 1998
( Exports)
United States 40.3 20.8 12.7
Japan 5.5 8.3 7.3

Germany
9.7 (West) 4.8 10

France 6.3 3.5 5.7

United Kingdom 6.5 3.2 4.5

Italy 3.4 3.2 4.5

Canada 3 1.7 4.0

China NA 11.3 3.4

South Korea NA 1.7 2.5

 Direction of World Exports, 1965-1995
(percentage of world total)
Between Developed- Between
Developed Developing Developing
Economies economies

1965 59.0 32.5 3.8

1975 46.6 38.4 7.2
1985 50.8 35.3 9.0
1995 47.0 37.7 14.1
Totals do not sum to 100 due to trade with Comecon countries, countries not otherwise classified and errors
Source: Calculated from IMF, Direction of Trade Statistics Yearbook, various years
 Falling Transport and Communication Costs
1930-1990 (constant 1990 US$)

Year: Sea Freight Air Transport Cross-Atlantic

Telephone
Call

1930 60 0.68 244.65

1960 27 0.24 45.86
1990 29 0.11 3.32

Average ocean freight and port charges per short ton of import and export cargo.
Average air transport revenue per passenger mile.
Three-minute New York-London call.
Source: HufBauer, 1991
 Measuring Economic Globalization

 Exports of goods / GDP

 Exports of goods and services / GDP
 Exports and Imports of goods / GDP
 Exports and Imports of goods and services / GDP
 Inflow of foreign direct investment / GDP
 Income receipt /GDP
 Income payment / GDP
Economic Globalization: Degree

Developed Countries

0.3
0.25
0.2
% value 0.15
0.1 xgdp
0.05 mgdp
0 fdigdp

Japan
France

UK

USA
Italy
Germany

Countries
Economic Globalization: Degree

Developed Countries

0.14
0.12
0.1
0.08
% Value
0.06
0.04 yrgdp
0.02 ypgdp
0
France

Japan
Germany

USA
Italy

UK
Countries
Economic Globalization: Degree

Developing Countries

1.4
1.2
1
0.8
% Value 0.6
0.4 xgdp
0.2
0 mgdp
-0.2 fdigdp
China

Indonesia

Malaysia
India
Brazil

Countries
Economic Globalization: Degree
Developing Countries

0.09
0.08
0.07
0.06
% Value 0.05
0.04
0.03
0.02 yrgdp
0.01 ypgdp
0
China

Malaysia
Indonesia
India
Brazil

Countries
Economic Globalization: Degree

Less Developed Countries

0.45
0.4
0.35
0.3
0.25
% Value xgdp
0.2
0.15 mgdp
0.1 fdigdp
0.05
0
Bangl ' Bolivia Kenya Uganda Zimbab
Contries
Economic Globalization: Degree
Less Developed Countries

0.07
0.06
0.05
0.04
% value
0.03
0.02 yrgdp
0.01 ypgdp
0

Uganda
Bangl '

Zimbab
Bolivia

Kenya

Countries
Economic Globalization: Degree
Emerging Countries

1.8
1.6
1.4
1.2
1
% value xgdp
0.8
0.6 mgdp
0.4 fdigdp
0.2
0
Hong K'g Korea Singapore
Countries
Economic Globalization: Degree
Emerging Countries

0.3
0.25
0.2
% Value 0.15
yrgdp
0.1 ypgdp
0.05
0
Hong K'g Korea Singapore
Countries
 Impact of Economic Globalization
 Economies
– Interdependent economies
– Integrated economies
– Complex economies
 Business
– Production--Rationalization
– Assembly--Outsourcing
– Marketing—Value proposition
 Technological Globalization
 Technological Globalization: The diffusion
of technologies (hardware and software)
that facilitate the flow of information
globally.
 Technological Globalization: Drivers
 Innovation
 Market Seeking Behavior (PLC)
 Increasing Market Potential
 Economies of Scale
 Economies of Scope
 Technological Globalization: Degree

 TV’s
 Radio
 Phones
 Fax
 Computer
 Internet
 Technological Globalization: Impact

 Easier Connectivity
 Information Overload
 Coordinated Business Activities
 Internet Business Model
 Cultural Globalization

 Culture refers to the social construction,

articulation, and reception of meaning
 Cultural globalization refers to the
movement of objects, signs and people
across regions and intercontinental space
(Weld, et. al. 1999)
 Cultural Globalization: Drivers

 Exposure
 Adaptation
 Change
 Learning
 Global Cultural Environment

 Power distance
 Uncertainty avoidance
 Masculinity
 Individualism
 Values Clustering of cultures

Hofstede
 Country Classification
Power Uncertainty Masculinity Individualism
distance avoidance

USA

Japan

France
 Country Classification & Strategies

Power Uncertainty Masculinity Individualism

distance avoidance

USA

Japan Entry and Marketing

Strategies
France
 Cultural Globalization: Degree

 Books
 Music
 Movies
 Magazines
 Games

UNESCO Statistical
Yearbook
 Cultural Globalization: Impact

 Harmonization and Differentiation

– Beliefs
– Values
– Practices
– Lifestyles
 Political Globalization
 Political globalization is the extension of
political relations (political power and
political activity) across time and space.
 Political Globalization: Drivers

 Systems (Communism, Fascism, etc)

failures
 Security
 Resource
 Performance expectations
 Political Globalization: Degree
 Bilateralagreements
 Regional agreements
 Multilateral agreements
 Political Globalization: Impact

 Sovereignty under question

 Bipolarization (east vs. west, civilizational
conflicts)
Transnationality index of host economies, 1997

 Developed Countries  Developing Countries

– New Zealand – Trinidad & Tobago
– Belgium/Luxembourg – Singapore
– Greece – Malaysia
– Netherlands – Hong Kong, China
– Ireland – Panama
 Implications of
Country Globalization
 Human Development Index
 Corruption
 Economic Growth
 Political Stability
 Market Attractiveness
 Market accessibility
 Globalization and Strategic
Actions—State Actors
 How much to globalize?
 What to globalize?
 How to globalize?
 When to globalize?
Thank You