Globalisation and Stages of Globalisation

Internationalization is the process by which a company expands its operations and influence beyond its domestic borders to engage in business activities in foreign markets. It includes Market Expansion, Product Adoptation, Supply Chain and Production, management and Culture.

1. GLOBALIZATION & It’s STAGES Mr.S.Sivanandham Assistant Professor Department of B.Com CMA Sri Ramakrishna College of Arts & Science (Autonomous) Coimbatore - 641006

2. GLOBALIZATION

3. Internationalization is the process by which a company expands its operations and influence beyond its domestic borders to engage in business activities in foreign markets. This expansion often involves adapting products, services, and business strategies to meet the needs and preferences of international consumers and to comply with local regulations, cultural norms, and market dynamics.

4. IT INCLUDES: Supply Chain and Production Product Adaptation Management and Culture Market Expansion

5. STAGE 5 Recentralize functions STAGE 4 Transfer of other head office functions abroad STAGE 3 Manufacturing abroad STAGE 2 Marketing abroad STAGE 1 Exporting STAGE 1 Exporting GLOBALISATION Stages

6. STAGE 5 Recentralize functions STAGE 4 Transfer of other head office functions abroad STAGE 3 Manufacturing abroad STAGE 2 Marketing abroad STAGE 1 Exporting GLOBALISATION Stages Exporting is the first stage and is also the least committed mode of entry into foreign markets. It is used by firms using an International or Global strategy where the local responsiveness is low. Domestic company moves into new markets overseas by linking up with local dealers and distributors.

7. Exporting is the first stage and is also the least committed mode of entry into foreign markets. It is used by firms using an International or Global strategy where the local responsiveness is low. Domestic company moves into new markets overseas by linking up with local dealers and distributors. STAGE 5 Recentralize functions STAGE 4 Transfer of other head office functions abroad STAGE 3 Manufacturing abroad STAGE 2 Marketing abroad STAGE 1 Exporting As a firm’s commitment to a market increases it will move to the second stage and introduce some marketing functions into country. This may now be associated with any of the other four modes, depending on the degree of commitment. It may also indicate that the firm is moving towards a multidomestic strategy.

8. Exporting is the first stage and is also the least committed mode of entry into foreign markets. It is used by firms using an International or Global strategy where the local responsiveness is low. Domestic company moves into new markets overseas by linking up with local dealers and distributors. STAGE 5 Recentralize functions STAGE 4 Transfer of other head office functions abroad STAGE 3 Manufacturing abroad STAGE 2 Marketing abroad STAGE 1 Exporting As a firm’s commitment to a market increases it will move to the second stage and introduce some marketing functions into country. This may now be associated with any of the other four modes, depending on the degree of commitment. It may also indicate that the firm is moving towards a multidomestic strategy. In the next stage, the domestic based company begins to carry out its own manufacturing in the key foreign markets. The licensing, joint venture or subsidiary mode may be used. E.g. Hyundai: Operates a significant manufacturing plant in Chennai, producing cars for both the Indian and export markets. Coca-Cola: Manufactures beverages in several facilities around India, managed both directly and through bottling partners.

9. As a firm’s commitment to a market increases it will move to the second stage and introduce some marketing functions into country. This may now be associated with any of the other four modes, depending on the degree of commitment. It may also indicate that the firm is moving towards a multidomestic strategy. STAGE 5 Recentralize functions STAGE 4 Transfer of other head office functions abroad STAGE 3 Manufacturing abroad STAGE 2 Marketing abroad In the next stage, the domestic based company begins to carry out its own manufacturing in the key foreign markets. The licensing, joint venture or subsidiary mode may be used. E.g. Hyundai: Operates a significant manufacturing plant in Chennai, producing cars for both the Indian and export markets. Coca-Cola: Manufactures beverages in several facilities around India, managed both directly and through bottling partners. In stage four, the company moves to a full insider position in these markets, supported by a complete business system including R&D and engineering. It forces them to extend the reach of domestic headquarters, which now has to provide support functions such as personnel and finance, to all overseas activities. The transfer of R&D, engineering, finance etc. may end up forming a smaller clone of the head office, so called insiderization .

10. In the next stage, the domestic based company begins to carry out its own manufacturing in the key foreign markets. The licensing, joint venture or subsidiary mode may be used. E.g. Hyundai: Operates a significant manufacturing plant in Chennai, producing cars for both the Indian and export markets. Coca-Cola: Manufactures beverages in several facilities around India, managed both directly and through bottling partners. STAGE 5 Recentralize functions STAGE 4 Transfer of other head office functions abroad STAGE 3 Manufacturing abroad In stage four, the company moves to a full insider position in these markets, supported by a complete business system including R&D and engineering. It forces them to extend the reach of domestic headquarters, which now has to provide support functions such as personnel and finance, to all overseas activities. The transfer of R&D, engineering, finance etc. may end up forming a smaller clone of the head office, so called insiderization . The fifth stage is to transfer functions back to the centre . The centre may not be the head office but a subsidiary that has shown a flair for a competence. The functions transferred back may be human resources, finance functions from a shared service operation, R&D back to a small number of site to better exploit synergies, etc. E.g. Microsoft has established Israel as a center for cybersecurity research and development due to the country’s expertise in this field.

11. In stage four, the company moves to a full insider position in these markets, supported by a complete business system including R&D and engineering. It forces them to extend the reach of domestic headquarters, which now has to provide support functions such as personnel and finance, to all overseas activities. The transfer of R&D, engineering, finance etc. may end up forming a smaller clone of the head office, so called insiderization . STAGE 5 Recentralize functions STAGE 4 Transfer of other head office functions abroad The fifth stage is to transfer functions back to the centre . The centre may not be the head office but a subsidiary that has shown a flair for a competence. The functions transferred back may be human resources, finance functions from a shared service operation, R&D back to a small number of site to better exploit synergies, etc. E.g. Microsoft has established Israel as a center for cybersecurity research and development due to the country’s expertise in this field.

12. Drivers of Globalization Technological Advancements Communication: Innovations like the internet, smartphones, and video conferencing connect people and businesses worldwide. Transportation: Faster and cheaper transport (e.g., container shipping, air freight) facilitates international trade Economic Integration Trade Liberalization: Reduction of tariffs and trade barriers encourages international commerce. Global Markets: Companies seek to expand markets for their products across borders.

13. Multinational Corporations (MNCs) MNCs drive globalization by operating across countries, integrating economies, and creating global supply chains. Political Policies Governments and international organizations (e.g., WTO, IMF) promote trade agreements and economic partnerships. Cultural Exchange Global media, entertainment, and education spread cultural products and ideas, fostering global awareness. Human Mobility Migration, tourism, and international education promote the exchange of cultures, skills, and knowledge. Global Challenges Issues like climate change, pandemics, and security threats require international cooperation, driving global connections.

14. Restrainers of Globalization Protectionism Tariffs, quotas, and trade restrictions imposed by governments to protect domestic industries. Political Instability Wars, conflicts, and unstable governments discourage foreign investments and international collaborations. Economic Disparities Unequal benefits of globalization lead to skepticism and resistance in less-developed regions. Cultural Preservation Fear of losing local identities and traditions resists the adoption of global cultures.

15. Environmental Concerns Critics argue that globalization promotes overexploitation of resources and environmental degradation. Health and Safety Risks Rapid global travel and trade can lead to the spread of diseases, as seen with COVID-19, prompting travel restrictions. Technological Gaps Digital divides between developed and developing nations limit equitable participation in globalization. Rise of Populism and Nationalism Movements advocating for sovereignty and anti-globalization policies hinder international integration.