To some the word “Globalization” may seem a cliché. To others, it may appear an end in itself. Competitive pressures are creating the need for most companies to become Global.
Globalization is one means for becoming and remaining a world-class competitor — a goal encased in the mission statements of most corporations.
When developing a globalization strategy, it is clear that the emerging markets present the greatest opportunity. The growth projections for Europe, Japan and the United States pale in comparison to some of the emerging markets.
Throughout the emerging markets an unprecedented consumer market boom is driving up demand for western-style goods and services. The largest segment of consumers in these markets is a decade short of its peak spending years. In India alone, sales of consumer goods are rising at 14% per year, while China is growing at almost 20% per year. Couple the consumer-spending boom with the still burgeoning need for infrastructure improvements and you’ll have a range of opportunities that extends into the trillions of dollars. Projects are planned or underway in many of these countries to upgrade transportation and telecommunication systems, explore energy resources, build power generation facilities and provide health care facilities.
In addition, the privatization efforts are presenting an incredible range of opportunities for investors, lending institutions, service providers and manufacturers.
Four key trend influence emerging market potential
There are four key trends that are influencing the emerging market potential:
Overall world population growth is now concentrated in the developing world. Where industrial nations are facing an increasingly older population, the emerging markets remain young. The developed world comprises only 11% of the world’s population.
Many countries that once relied on centrally planned economies are becoming market-driven. Industries that governments previously restricted to foreign companies are now opening to foreign investment.
Access to the emerging markets is increasing due to huge developments in communications technology such as the Internet and electronic commerce. Cyberspace represents a profound shift in the nature of communications as well as our perception of distance.
As infrastructure improvements are made, urban growth in the emerging markets will continue to explode. Estimates indicate that the emerging markets’ share of world imports will double by the year 2010, rising to over 38%. Companies dazzled by the magnitude of these numbers must be equipped with the appropriate knowledge, information, and strategy to make its market forays successful.
MACRO LEVEL Industry Globalization
is due to such factors as :
• Level of international trade
• Intensity of international competition
• Worldwide product standardization
• Presence of key competitors in all key international markets.
• Intra-firm trade
• Technological intensity
• International linkages of value-added activities among countries
•International integration of value-added activities among countries
• WORLDWIDE FREETRADE AGREEMENTS
• WORLDWIDE ECONOMIC REFORMS
• WORLWIDE FINANCIAL REFORMS
• REMOVAL TARIFF BARRIERS BY COUNTRIES
• REMOVAL OF SUBSIDIES COUNTRIES
• ETC ETC
THE PUSH FACTORS OF GLOBALIZATION
• Per capita income converging among industrial nations
• Convergence of lifestyles and taste
• Growth of global and regional channels
• Establishment of world brands
• Spread of global and regional media
• Continuing push for economies of scale ( but offset by flexible manufacturing) • Accelerating technological innovation
• Advances in transportation (e.g., use of FedEx to deliver urgent supplies from one continent to another) • Emergence of newly industrializing countries with productive capability and low labor costs (e.g., China, India and Indonesia)
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