Drivers of Globalization

Drivers of Globalization



Drivers of Globalization

Introduction

Globalization is defined as a process of economic integration of the entire world through the removal of barriers to free trade and capital mobility, as well as through the diffusion of knowledge and information. It is a historical process moving at different speeds in different countries and in different sectors (Held 2000). One of the results is that firms, whose output was previously significantly more limited by the size of their domestic market, now have the chance to reap greater advantages from economies of scale by going global. Global firms rely on technological innovation to enhance their capabilities. In this sense, technology is both driven by and is a driver of globalization, so that it is possible to speak of the new technologically driven character of the global economy (Donald, 1994).

Analysis

There are four broad groups of industry globalization drivers - market, cost, Government and competition. Together, these four sets of drivers cover all the major critical industry conditions that affect the potential for globalization. Drivers are primarily uncontrollable by the worldwide business. Each industry has a level of Globalization potential that is determined by these external drivers.The Market Drivers Cost or Economic drivers are: ?Convergence of lifestyles & taste, Increased travel creating global consumer, ?Growth of global and regional channels, Establishment of world brands, Push to develop global advertising, Shortening product life cycle, Continuing push for economies of scale. Accelerating technological innovation, Advances in transportation, Emergence of NIC and ?Increasing cost of product development (Dunning, 1997).

The Government Drivers or Competitive Drivers are: Reduction of tariff barriers, Creation of trading blocks, Decline in role of government, Reduction in non-tariff barriers, Shift in open market economies, Increase in level of world trade, Increase in foreign acquires of corporation, Companies becoming globally centered, Increased formation of global strategic alliances and Globalization of financial markets (Held 2000). Those firms that seize new opportunities, on the other hand, are profitable and create value, as well as new products, services, and even industries. The market system rewards them with extra profits, more resources, and greater economic power, with prices signaling to these entrepreneurs what to produce. The disappearance of some firms and the emergence of others inevitably leads to changes in the structure of competition. The important points to stress are, first, that this is a dynamic and iterative process, taking place constantly; and second, that the whole process is, overall, a positive-sum game for society, reflecting Schumpeter's idea of creative destruction (Jones, 1999).

Drivers Of Globalization Industries

The major drivers of globalization are the people, technology, research, business opportunities and the complexity involved in global trade.

Tranport Manufacturing Industry

For example, Toyota is the premier automobile manufacturer in the world. Toyota continues to gobble up market share and punish Ford, General Motors and Chrysler in their own backyard. The Japanese economic model and management style has been studied and praised globally. Economic windfalls associated with Japanese research and technology is also a major driver of ...