- Globalisation increases competition, forcing firms to improve efficiency, reduce costs, and enhance quality.
- It helps developing countries by attracting foreign capital and technology, increasing exports, and improving productivity.
- It creates more employment opportunities and improves the efficiency of banking and financial sectors.
- However, it causes structural adjustments and redistribution of economic and political power, which may create instability.
- Globalisation may also expose economies to global downturns, protectionism, and challenges like high costs, infrastructure problems, and lack of international experience.
Definitions [1]
Definition: Globalisation
Integration of national economies and societies through cross-country flows of information, ideas, technologies, goods, services, capital, finance, and people.
Key Points
Key Points: Globalisation
- Globalisation means integrating a country’s economy with the world economy and treating the world as one single market.
- It involves free flow of goods, services, capital, technology, information, and people across national borders.
- Globalisation goes beyond trade and includes worldwide coordination in production, marketing, finance, and human resources.
- It increases economic integration and interdependence among countries.
- A global company views the entire world as one market and does not differentiate between domestic and foreign markets.
- Globalisation promotes free-market competition and benefits businesses and consumers, but also increases dependence among nations.
- Outsourcing is a result of globalisation, where foreign companies hire Indian firms for services like IT and BPO due to low cost and skilled labour.
Key Points: Nature of Globalisation
- Globalisation involves liberalisation of trade by reducing tariffs, quotas, and other trade barriers.
- It encourages free trade agreements and economic reforms to promote investment and economic growth.
- Businesses operate through global supply chains and expanded market access across countries.
- It leads to financial integration, foreign direct investment (FDI), and transfer of technology worldwide.
- Globalisation increases labour mobility and political interdependence, but may also create economic disparities among nations.
Key Points: Opportunities and Threats of Globalisation
Key Points: Transformation of Business by Globalisation
- Globalisation has led to the dominance of multinational companies in many industries worldwide.
- Countries have liberalised foreign investment policies, encouraging foreign direct investment (FDI).
- Competition has increased globally, leading companies to grow through mergers and acquisitions.
- Markets have become global, and companies now treat the entire world as a single market.
- Production has become global, with different stages of manufacturing located in different countries to reduce costs.
- Modern communication technologies, such as video conferencing and email, help firms manage global operations effectively.
