Globalization-Purposes, Various Forms

September 27th, 2008 Comments off
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Earlier article describe what’s International Business, its purposes and challenges, below article looks at globalization:

Globalization:

  • The International Monetary Fund(IMF) defined globalization as a growing economic interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services, free international capital laws and more rapid and widespread diffusion of technology.

Purposes/Motive of Globalization:

  • Sales expansion
  • Acquisition of resources like labour, capital, components, land, technology and information
  • Diversification of sales and supply of sources so as to minimize swings in sales and overdependence on suppliers
  • To minimize competitive risks for defensive purpose.

Globalization can be in the following forms:

  • Industrial globalization-rise and expansion of multinational companies(MNCs)
  • Financial globalization-emergence of worldwide financial markets and better access to external financing for corporate, national and sub-national borrowers
  • Political globalization-the spread of political interests to the regions and countries outside the neighbourhood
  • Informational globalization-the increase in information flow between geographically remote locations
  • Cultural globalization-the growth of cross-cultural contacts

Salient Point:

  • With globalization, countries are integrated and heavily dependent on each other for all sorts of transactions.
  • Globalization results in economic, cultural, technological and legal changes in the global market.

 

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