Five Major Drivers Of Globalization
Table of contents
1 Introduction
2 Drivers of Globalization
3 Theories and Models of Gobalization and International Trade
3.1 From mercantilism to Smith and Ricardo
3.2 Ricardo to the next step: Factor Proportions Theory and the Leontief Paradox
3.3 Vernon Life-Cycle Theory
3.4 Porter’s Diamond Approach
3.5 Monopolistic Advantage Strategy
3.6 Eclectic Theory
With loads of charts and graphs, Wolf talked about the five drivers of globalization, and the five threats to globalization, the latter all coming under the umbrella of 'the human capacity to screw up,' which in his fine British delivery he called 'nigh on infinite.' List The Major Drivers Of Globalization And Give Three Examples Of Each. What is globalization, and what are some of the traditional international trade theories that support the concept of globalization? V.B.Shah Institute of Management Subject: Business Environment Topic: Drivers & Hurdles of Globalization.
4. Discussion of Theories and Drivers
4.1 Ricardo-Mill and outsourcing
4.2 Dunning, Cantwell and the influence of technology
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5 Bibliography
1 Introduction
'Globalization is not something we can hold off or turn off . . . it is the economic equivalent of a force of nature -- like wind or water.'
Bill Clinton (American 42nd US president (1993-2001))
The first part of this research paper will define the major drivers of globalization and then introduce some of the basic and advanced theories of international trade and business.
With this foundations it will then try to integrate theories and drivers and compare them to the actual situation and discuss if they are appropriately describing what we are seeing today.
2 Drivers of Globalization
The media and almost every book on globalization and international business speak about different drivers of globalization and they can basically be separated into five different groups:
1) Technological drivers
Technology shaped and set the foundation for modern globalization. Innovations in the transportation technology revolutionized the industry. The most important developments among these are the commercial jet aircraft and the concept of containerisation in the late 1970s and 1980s. Inventions in the area of microprocessors and telecommunications enabled highly effective computing and communication at a low-cost level. Finally the rapid growth of the Internet[1] is the latest technological driver that created global e-business and e-commerce.
2) Political drivers
Liberalized trading rules and deregulated markets lead to lowered tariffs and allowed foreign direct investments in almost all over the world. The institution of GATT (General Agreement on Tariffs and Trade) 1947 and the WTO (World Trade Organization) 1995 as well as the ongoing opening and privatization in Eastern Europe are only some examples of latest developments.
3) Market drivers
As domestic markets become more and more saturated, the opportunities for growth are limited and global expanding is a way most organizations choose to overcome this situation. Common customer needs and the opportunity to use global marketing channels and transfer marketing to some extent are also incentives to choose internationalization. (Ferrier, 2004)
4) Cost drivers
Sourcing efficiency and costs vary from country to country and global firms can take advantage of this fact. Other cost drivers to globalization are the opportunity to build global scale economies and the high product development costs nowadays. (Ferrier, 2004)
5) Competitive drivers
With the global market, global inter-firm competition increases and organizations are forced to “play” international. Strong interdependences among countries and high two-way trades and FDI actions also support this driver.
3 Theories and Models of Gobalization and International Trade
Theories of International Trade extend to the 15th century and the age of mercantilism. This next paragraph will provide a brief summary of the most important theories and also cover two less popular theories, the monopolistic advantage theory (Kindleberger / Hymer) and the integrated eclectic theory (Dunning).
[..]
5 Drivers Of Globalization
[1] evolved from the military ARPA (Advanced Research Projects Agency) network 1969, which was extended to an university network 1986 and finally became public as the world wide web in 1990, due to Tim Berners-Lee at the CERN institution (Wikipedia, 2005)
Globalization is driven by four factors:
- Competition
Competition:
To remain competitive, global rivals have to intensify their marketing everywhere by attempting to sustain advantages that, if weakened, could make them susceptible to market share erosion worldwide. Competitive companies introduce, upgrade, and distribute new products faster than ever before. A company that does not remain ahead of the competition risks seeing its carefully researched ideas picked off by other global players.
Leading companies drive the globalization process. There is no structural reason why soft drinks should be at a more advanced stage of globalization than beer and spirits, except for the opportunistic behavior of Coca-Cola. Similarly, German beauty products maker Nivea is driving its business in a global direction by creating global brands, a global demand for those brands, and a global supply chain that helps the company meet those demands.
Nonetheless, the four global drivers have affected countries and industrial sectors differently. While some industries, including paper and soft drinks, are truly globally contested, some others, such as government procurement, are still closed. Commodities and manufactured goods are already in a globalized state, while many consumer goods are accelerating toward more globalization. Similarly, the leading trading nations display far more openness than low-income countries and that openness is advancing the positive state of globalization in general.
This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.
Download microsoft directx end user runtime offline installer. Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 92.
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