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- University Of South Africa (Unisa)
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MNB3701NOTES
, PRINCIPLES OF GLOBAL BUSINESS MANAGEMENT
(MNB370-1)
LEARNING UNIT 1: CHAPTER 1: GLOBALISATION AND INTERNATIONAL BUSINESS
1.3 DEFINING GLOBALISATION
Globalisation refers to the increasing integration of production, development and
communication amongst nations on a worldwide/international scale.
Globalization is a process of interaction and integration among the people , companies ,
and governments of diferent nations , a process driven by international trade and
investment and aided by information technology . Globalisation is the process by which
businesses or other organisations develop international infuenceess or start operating on
an international scale.
The key interlinked factors infuencing the tendency towards globalisation are as follows:
- GATT eGeneral Agreement on Tarifs and Trade eGATTs Definition: Multilateral
international trade treaty first created in 1947 and frequently amended. ... GATT was
active under that name from 1947 until 1994, when WTO was founded. The records of
GATT are now managed by WTO in Genevas and WTO eThe World Trade
Organization eWTOs is the only global international organization dealing with the rules
of trade between nations . At its heart are the WTO agreements , negotiated and
signed by the bulk of the world's trading nations and ratified in their parliaments.s
- Structural shift in the world economy
- Integration and operational velocity of financial markets
- Difusion of computer-based technologies and information systems
- The “agile” corporation
- Competitiveness based on supply chains
WTO – The World Trade Organisation and GATT – General Agreements on Tarifs
and Trades
WTO is the only global international organisation feeling with the rules of trade between
nations . It's purpose is to ensure that global trade commences smoothly , freely and
predictably . It creates and embodies the ground rules for global trade among member
nations , ofering a system of international commerce . At its heart are the WTO
agreements, negotiated and signed by the bulk of the world's trading nations.
GATT – mainly deals with trade in goods, it is used for ordering international trade
relationships which brought the WTO into being.
Perspectives of globalisation
Culture- process of transformation in the spatial organisation of social relations and
transactions that generate fows and networks of activity.
Economic- the growing, interdependence of countries worldwide through the increasing
volume and variety of cross -boarder transactions in goods and services , international
capital fows and technological advances.
Forces of globalisation
, 1. Political forces – factors such as trade barriers , recognition of intellectual
property rights , move towards privatisation as well as establishing common
technical structures.
2. Economic forces – includes increasing world trade, rising income levels, efcient
financial markets , increasing competition and trafcking government
involvement.
3. Social forces – includes growing consumerism, conveying consumer tasks and
improving lifestyles, education and skills.
4. Technological forces – includes industrialisation of nations , improved
transportation and networks and the infuence of the information and
telecommunication revolution, including the internet and e-commerce.
The face of globalisation eCapitalist globalisations
Globalisation involves:
- economic integration
- the transfer of policies across borders
- the transmission of knowledge
- cultural stability
- the reproduction, relations and discourse of power
- it is a global process, a concept, a revolution and an establishment of the global
market free from socio-political control
This suggests a free society where the invisible interchange of supply and demand
regulates sales and purchases.
MNCs – multinational corporations
A corporate organisation that own/ controls production of goods or services in atleast one
country other than is home country . MNCs see both benefits and furnaces of
globalisation . Globalisation gives businesses access to markets that would have been
difficult to react in the past, access labour at cheap prices.
The good
Globalisation has collapsed the world into a small village . The tremendous increase in
world exports is in line with the increase in firms taking advantage of location -specific
advantages . Improvements in world exports have contributed to employment creation,
trade-creation, national prosperity and human prosperity.
Globalisation has helped improve life expectancy from 52.5 years in 1960 to 71.2 years in
2013. Almost every country has benefited from medical advances that are stimulated by
globalisation.
The distribution of technology has helped reduce associated costs and has improved
accessibility to state-of-the-art technology by less privileged communities in the world.
Cost reduction and accessibility have transformed the way people communicate and
interact . The advancement of transport technology has made it faster , safer and more
comfortable to travel across global geographies at a relatively cheaper rate.
The concept of location -specific advantages has helped create sustainable jobs in some
ofshore locations that were previously unattractive for locating production facilities. The
, multiplier efects of economic gains have trickled down to the greater number of the
population and have helped reduce the household poverty level.
The bad
Unfortunately, globalisation is not impervious to weaknesses, fiduciary risks, crookedness
and malignity . The allotment of the proceeds is lopsided and the level of
underdevelopment in less privileged societies has worsened . Labour maltreatment has
been challenged.
Prominent among the arguments levied against globalisation is the unintended
consequence of job losses . The pressure created by international competition has
necessitated the relocation by MNC ’s of their production facilities to lower cost
production centres, thereby depriving the higher cost facility.
Africa has not really benefited from economic globalisation . The dependence on its
resources has been worsened by globalisation . Many manufacturing firms have been
forced to close operations while existing ones are producing far below capacity as a result
of intense competition from MNC’s from advanced economies. The dumping of goods on
developing markets by MNC ’s from advanced economies has worsened market
development in the less -privileged communities . Culprits of dumping are agricultural
producers from USA and UK due to lopsided regulatory provisions per the General
Agreement on Tarifs and Trades eGATTs . Agricultural tarifs from the Uruguay Round
hurt less privileged countries which the frameworks were meant to help emancipate from
abject poverty. Raw materials from Africa attract no import duties yet it is a crime if any
beneficial material is exported from Africa to European Union. As far as tarif barriers are
concerned, explains why more than 90% of the global coca-producing countries produce
less than 4% of global chocolates.
The main injustice adopted by Western countries and strictly enshrined in the Dispute
Settlement Understanding eappendage of the WTO’s frameworks says it is fair to
subsidise agricultural produce in the advanced economies at the expense of less-
equipped farmers in the developing world. Farm produce from Africa is deemed inferior
and inadmissible to Western markets except for products regarded as raw materials. The
ugly
With the current form of globalisation, millions of avoidable losses of livelihood are being
recorded among smallholder farmers globally especially in the developing world. Within
its current form, globalisation advances the interests of capitalism at the expense of the
globally poor and the working class . Anti -globalisation in this context stands for the
dislike towards the current form of corporate personhood and all forms of economic
suppression of the less privileged community and its members.
The world has witnessed various socioeconomic mishaps over the past few years proving
anti -globalisation protesters right . All dissensions towards the current form of
globalisation have a single goal – to seek a globally inclusive solution to unfair global
trade and unfavourable capital market systems.
The journey ahead – new thinking
Across the world advocates of reforms to the current formula of economic globalisation
have suggested a rewrite of guiding principles of the allotment of global goods in an
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