Factors of globalization

presentation made by our professor sunil malhotra

1. GLOBALIZATION
FACTORS

2. International business
International business is a term used to collectively
describe all commercial transactions    
(private and governmental, sales, investments, logistics ,
and transportation) that take place between two or
more regions, countries and nations beyond their
political boundary

3. Factors For Globalization
Technology is expanding, especially in 
transportation and communications.
Governments are removing international business 
restrictions.
Institutions provide services to ease the conduct of 
international business.
Consumers know about and want foreign goods
 and services.

4. Factors For Globalization
Competition has become more global.
Political relationships have improved among some 
major economic powers.
Countries cooperate more on transnational issues.
Cross-national cooperation and agreements.

5. Studying international business is
important
Most companies are either international or compete 
with international companies.
Modes of operation may differ from those used 
domestically.
The best way of conducting business may differ 
by country.
An understanding helps you make 
better career decisions.
An understanding helps you decide 
what governmental policies to support.

6. Factors in choice of which overseas
market(s) to enter
Size of the market (population, income)
Economic factors (state of the economy)
Cultural linguistic factors (e.g. preference for 
countries with similar cultural background)
Political stability (there is usually a preference for 
stable areas)
Technological factors (these affect demand and the 
ease of trading)

7. Constraints and difficulties in
entering overseas markets
•Resources
•Time
•Market uncertainty
•Marketing costs
•Cultural differences
•Linguistic differences
•Trade barriers
•Regulations and 
administrative 
procedures
•Political uncertainties
•Exchange rates 
(transactions costs & 
risks)
•Problems of financing
•Working capital 
problems
•Cost of insurance
•Distribution networks

8. Fast Moving Consumer Goods
(FMCG)
Fast Moving Consumer Goods (FMCG), also known a
 Consumer Packaged Goods (CPG), are products that
have a quick turnover and relatively low cost. Though
the absolute profit made on FMCG products is
relatively small, they generally sell in large numbers 
and so the cumulative profit on such products can be
large.

9. International Standard Industrial
Classification (ISIC) :
Supplier industries for FMCGs include 1511 meat and
meat products, 1512 fish and fish products, 1513 fruit
and vegetables, 1514 vegetable and animal oils and
fats, 1520 dairy products, 1531 grain mill products,
1532 starches and starch products, 1533 animal feeds,
1541 bakery products, 1542 sugar, 1543 cocoa,
chocolate and sugar confectionery,

10. International Standard Industrial
Classification (ISIC)
1544 macaroni, noodles, couscous, 1549 other food
products, 1551 spirits; ethyl alcohol, 1552 wines,
1553
malt liquors and malt, 1554 soft drinks, mineral
waters,
1600 tobacco products, 2101 pulp, paper and
paperboard, 2102 corrugated paper, containers, 2109
other articles of paper and paperboard, 2424 soap and
detergents, cleaning preparations, perfumes.

11. Main Characteristics Of Fmcgs
From the consumers' perspective:
•Frequent purchase
•Low involvement (little or no effort to choose the item –
products with strong brand loyalty are exceptions to this
rule)
Low price

12. Main Characteristics Of Fmcg
From the marketers' angle:
•High volumes
•Low contribution margins
•Extensive distribution networks
•High stock turnover.

13. Exporting
Exporting is one method of doing business
Internationally
We normally think of overseas trade in terms of
exporting and importing goods and services
This involves transporting goods and selling them
across national boundaries.

14. Exporting
Direct exporting implies that the domestic firm is
actively involved in selling the goods abroad.
Indirect exporting means that the marketing of goods
is delegated to export agents and the UK manufacturer
concentrates on production.
But exporting involving the movement of goods is
only one method of engaging in international business.

15. Other methods of market entry
Overseas product an/or assembly (producing goods
abroad)
International alliances and joint ventures (working
with foreign companies)
International M&A (mergers and acquisitions across
frontiers)
International franchising and licensing allowing
foreign based firms to produce, market and
distribute goods in specified areas abroad)

16. Exporting meat
India ranks top in animal and cattle population.
 The meat and meat processing industry is still to come
up.
Some top players in the meat processing industry like
Venkateswara Hatcheries, Godrej Agrovet, Vista
Processed Food, Al Kabeer, Allanasons etc., with
modern state-of-the-art slaughter and processing
plants,have changed the entire scenario, making the
industry grow at almost 10%.

17. Frame A Right Strategy
 Urgent need to frame a right strategy for the
development of meat and poultry production in the
country this will certainly bring prosperity to millions of
our rural citizens and create employment in rural India.
Having achieved the Green Revolution, the White
Revolution and the Blue Revolution, it a question “can
the Pink Revolution be far behind?” Certainly this will
require large investment in infrastructure, mainly in
cold storages, and modern meat processing plants.

18. Exports Of Meat
Export of sheep and goat meat in terms of quantity
is very small.
Export is restricted to countries primarily
in the Middle East, with large ethnic Indian population
who prefer it.
Poultry products export is also not quite
good.

19. Exports Of Meat
India's poultry product exports are mainly confined to
eggs and egg powder, which are growing due to cost
competitiveness and logistical advantages. Poultry meat
exports are negligible due to high costs, inadequate
meat processing facilities and infrastructure bottlenecks.
In recent years, some South India-based integrators
have been exploring the possibility of exporting poultry
meat to the Middle East and South-East Asian markets.

20. Exports Of Meat
Meat exports have been growing at close to 30% per
annum in terms of quantity, which is largely driven
by
poultry, buffalo, sheep and goat meat. Exports of
value
added meat products are insignificant. In the domestic
market, the growing number of fast food outlets in the
country has had a significant impact on the meat
processing industry.

21. Major markets
Sheep/goat Meat - Saudi Arabia, UAE, Oman,
Bahrain, Kuwait
Animal Products - Portugual, France, UK, Spain,
Netherlands
Processed Meat - Seychelles, Germany, Oman,
Congo, Sri Lanka
Future Market: India can predominantly play a
major role in South East Asia, Africa and East
Europe.

22. Exports Of Basmati Rice
India is the leading exporter of the Basmati Rice to the
global market. The country has exported 21,83,501
MT of Basmati Rice to the world for the worth of Rs.
10578.68 crores during the year 2010-11.
Areas of Cultivation:
The areas of Basmati Rice production in India are in
the states of J & K, Himanchal Pradesh, Punjab,
Haryana, Delhi, uttarakhand and western Uttar
Pradesh.

23. PROBLEMS OF RICE EXPORT FR
OM INDIA
1.As per the state Govt. policy, various taxes are imposed
on rice exports, such as the states are imposing Purchase
Tax (on indirect export), Market Fees, Rural
Development Fund, Administrative Charges etc. These
taxes are rendering the pricing of rice internationally in
Competitive.
2.There is lack of proper infrastructural facilities.
3. The major rice producing nations have decreased the price
to capture the international markets .

24. PROBLEMS OF RICE EXPORT
FROM INDIA
4.Rice production meant for export purpose is having
subsidy in other countries, which reduces the cost of
production and thereby reducing the cost of rice.
5.Rice mills have not been fully modernized to ensure
high milling recovery and reduce the percentage of
broken rice.
6.Lack of proper arrangements for production of
sufficient quantity of quality seeds needed for
cultivation of rice for export purposes.

25. EXPORT PROMOTION POLICY
1.Production of quality seeds and ensuring its
availability to farmers at subsidized rates.
2.Low cost production technology may be
developed to reduce the cost of production and
making Indian rice more competitive in the
international markets.
3.Survey may be conducted to identify contiguous
zones for cultivation of export quality rice.

26. EXPORT PROMOTION POLICY
•Quality of rice may be maintained keeping in view
the requirements of the international markets.
•Breeding programme may be initiated to develop
high yielding export quality rice both for basmati
and non-basmati rice to enable the exporters to
compete in the world's markets.
•Production, procurement and processing of basmati
rice may be organized in a systematic manner for
maintaining its quality for export purposes.

27. SUGGESTIONS FOR 
SUSTAINING RICE EXPORT
•Survey may be conducted to identify export quality
belts/zones for production of rice to meet the
requirement of exports.
•Extension activities may be strengthened to educate
the cultivators for production of quality rice to
match the standards of international markets.
•Low cost production technology may be developed
to bring down the cost of production to enable the
exporters to compete with competing countries in
the international markets.

28. SUGGESTIONS FOR 
SUSTAINING RICE EXPORT
•Proper arrangements may be made for procurement
and processing of rice export purpose as per the
requirement of international markets.
•Proper arrangements may be made for production of
pure quality seeds and making them available to the
farmers at subsidized rates.
•In case of basmati varieties, there should be proper
water management in the field.

29. Major Export Destinations
Saudi Arabia, United Arab Emirates, Iran,
Kuwait, United Kingdom, Yemen Republic,
United States, Iraq, Jordan, Netherland and
Canada.