Globalisation

1

• Globalisation
• The growing integration of the worlds economy

2
International Dimension of Business

• The type of competition (perfect, monopoly,
  monopolistic or oligopoly) that the business
  faces in its domestic and overseas market.
• Trade barriers
• Costs of production
• Trading agreement
• - World Trade Organisation
• - Mercosur
• - G8 countries

3
Factors Affecting Globalisation

• Liberalisation
• Technological change
• Growing market and competition
• Deregulation of business
• Cost of transportation
• Consumer tastes

4
Impact on Local Businesses by International Events

• Consider consumer needs
• Choice of location
• More competition
• Economies of scale

5
Factors to Consider to Trade Internationally

• Impact of host countries in inviting this
  business to set up and trade
• Incentives provided by the parent country to set
  up and trade in the host countries
• Impact of the business activities on customers,
  competitors, suppliers and on the business itself
  in the various countries
• The effectiveness of the business presence
  internationally eg wider than simply profit,
  consumers views in home and host countries.

6
Factors Influencing International Location

• Legislation and bureaucracy
• Corruption
• The introduction of a single currency
• Corporate image
• Protectionism

• Financial incentives
• Mark opportunities
• The labour force
• Globalisation
• Environmental factors drought/war etc

7
Reasons for International Marketing

• Increase sales revenue and hence profitability
• Achieve unit sales or revenue growth targets
• Increase share of market
• Achieve enhanced oligopolistic position
• Preserve oligopolistic position
• Reduce dependence upon mature or stagnant markets
• Increase demand to allow spreading overhead in
  existing plants
• Increasing demand to exploit economies of scale

8
Advantages of Multinational Businesses (an
organisation which owns or controls production
outside the country in which it is based)
In a position to offer better wages
Ability to create jobs
Transfer Pricing can avoid taxes
Technology transfer
9

• Methods of entering the overseas market
• Exporting
• Licensing
• Franchising
• Direct investment
• Mergers
• Joint ventures

10
International Marketing Strategies

• Consideration examples
• Company resources and capabilities
• International competitors
• International Culture
• Creating competitive advantage
• Coping with political risk and uncertainty
• Profiling international product markets
• Exporting
• Business Alliances
• Foreign direct investment
• Channels of international distribution
• Pricing in international markets
• International marketing negotiations
• Assessing international marketing performance

11
Disadvantages of Multinational Businesses

• EU and its rules and regulations, eg trade,
  subsidies for farmers, taxes
• World Trade Organisation (WTO) and its rules and
  regulations on the sector (s) of your business
• The cost implications of not meeting
  international agreements (free trade rules be
  they in retaliation form or fines or loss of
  value in not standing shoulder to shoulder with
  trade partners)
• The dangers that exist alongside the
  opportunities for business and consumers of
  increasing international trade eg child labour,
  pollution, protectionism, double standards.

12
Effects from Eastern Europe on Western Countries

• e.g. Communist regimes overthrown and democracies
  put in place
• Lowering inflation
• Lowering unemployment
• Transfer of ownership
• Skills to making a profit
• Establishing the system
• - finances, transport
• - buying
• - selling markets

13
India as a Market Place

• Stable democratic environment
• Large market size with middle class population
  with increasing purchasing power
• Access to regional international markets through
  membership of regional integration frameworks
  such as SAARC
• Foreign investment welcome in almost all sectors
• Large and diversified infrastructure spread
  across the whole country
• Thrust on technology, innovation and knowledge
  base
• Large manufacturing capability, spanning almost
  all areas of manufacturing activities
• Vibrant capital market of stock exchanges and
  listed companies

14
India as a Market Place(continued)

• Legal protection for intellectual property rights
• Import regime in conformity with WTO commitments
  removal of remaining quantitative restrictions
  on imports of goods into India barring certain
  items on grounds of national security, defence
  and health
• Rupee is fully convertible on current account and
  is being progressively liberalized on capital
  account
• Availability of skilled manpower and professional
  managers
• Well developed capital market, banking
  infrastructure, insurance and financial services
  sector
• Well developed accountancy, legal, actuarial and
  consultancy profession
• Well-established legal system with an independent
  judiciary

15
An example of a SPECIAL INVESTMENT PROGRAMMES
(Electronic Hardware and Software) in India

• Salient features of investment in Electronic
  Hardware and Software Technology parks
• Licensing is required only for manufacturing
  electronic aerospace and defence equipment
• 100 percent foreign investment under automatic
  route is allowed in electronics and software
  industries set up exclusively for exports
• Bonded factories set up under these programs are
  eligible to import, free of duty, their entire
  requirement of capital goods, raw materials and
  components, spares and consumables, office
  equipment etc

16
SPECIAL INVESTMENT PROGRAMMES continued

• Deemed export benefits are available to suppliers
  of these goods from the Domestic Tariff Area
  (DTA)
• Relaxation is there to sell a part of the
  production from such units in the Domestic Tariff
  Area depending upon the level of the value
  addition achieved
• After 2 years of import of or indigenously
  procured items like computers and computer
  peripherals can be donated to recognised
  non-commercial educational institutions,
  registered charitable hospitals, public
  libraries, public funded research and development
  establishments, governmental organisation or to
  government of states or union territory without
  payment of any duties
• Capital goods are allowed to be re-exported

17
China facts

• Domestic policies encourage exports
• Chinese financial system does not encourage the
  countrys citizens to consume more
• A lot of air and water pollution problems
• Chinese banking system does not lend itself to
  new investment
• Natural resource scarcity e.g. water and energy.
  It imports a lot of oil
• Very densely populated
• A lot of minorities that are not well integrated
  into the majority culture- inequality still quite
  prominent
• Local governments have few sources of revenue to
  finance physical infrastructure
• Chinese degree of urbanisation is low
• Lacks energy-efficient standards for building,
  cars and fuel
• Still a major aid recipient especially from the
  USA
• It is a major economic powerhouse as it is
  accumulating hundreds of billions of dollars in
  foreign currency reserves

18
For Business in Singapore Examples

• Anyone including foreigners can set up and
  operate a business
• Setting up a business is easy all you have to do
  is register your firm with The Registry of
  Companies and Business in Singapore city
• It does not take very long to set up a business
• It has a complex infrastructure and a well
  regulated economy
• Singapore is a zero-tax haven for a number of
  non-resident controlled companies
• Singapore only taxes companies sourced within the
  country or foreign sourced income that is
  remitted into Singapore
• In Singapore resident companies take advantage of
  the fact that Singapore has an extensive double
  tax network treaty

19
Against Business in Singapore Examples

• The most expensive country in the world to live
  in
• When choosing a company name for your business,
  proper approval is required. All company names
  must end with Private limited or Pte Limited.
  
• Annual accounts and annual returns are required
  to be filed by all businesses
• Annual returns have to be filed with both the
  Companies Registry as well as with the Income Tax
  authorities
• To set up an LLC two directors are required, one
  of whom must be a Singapore resident, a native
  Singaporean, or someone who has a Singapore
  Employment Pass

20
Against Business in Singapore Examples continued

• The directors of an LLC must be individuals
• There must be at least two individuals, or one
  corporate shareholder for a business to be set up
• Every foreign company registered in Singapore
  must have two agents acting on its behalf in the
  country. These agents must be native
  Singaporeans, permanent residents of the country
  or must have a Singapore Employment Pass
• A resident, qualified Singapore auditor must do
  the business' accounts
• A general meeting must be held on an annual basis
  
• People who have declared bankruptcy cannot be
  nominated as directors