Globalization of Business Activities
“Earth is a perfect sphere, what goes around comes around,” the statement was once used to describe the manners and doings of a person. However the new economy has completely changed the meaning of such statements. The emergence of global economy has changed the face of our world. The so called new form of economy consists of “globalization, trade liberalization, and the information technology and communications revolution” (Passaris, p. 2, 2006). These elements ended traditional national boundaries, and a free trade economy has emerged. Definition Friedman (p. 8, 2000) describes globalization as “the inexorable integration of markets, nation-states and technologies to a degree never witnessed before. ”
The definition by Friedman also brings out the perspective of globalization in relation with politics, technological advancement as well as the business activities. Globalization is portrayed as a two way process where the individuals, corporations and nations try to reach farther and farther from their mother country. At the same time, the world itself tries to reach them enabling the process of globalization to accelerate. Globalization of Business Activities
The term globalization of business activities can refer to outsource off-shoring, off-shoring, global marketing strategies, and foreign direct investments. In words of Coach K (2007) “outsourcing
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In the 1990s, the shift to off-shoring occurred when activities were specialized in the countries best suited to them” (Desai, p. 6, 2008). Global marketing strategy, according to Akkaya (p. 13) means that the firm decides on a basic set of “strategic marketing principles” and applies them throughout its national and international market. It does not necessarily mean standardization of products rather it is when the firm “looks at the world market as a whole rather than at markets on a country-by-country basis which is more typical for multinational firms” (Akkaya, p. 13).
FDI is a business activity in which a “company from one country makes a physical investment in another country” (Graham, Spaulding, p. 1, 2004). Globalization of marketing and markets is when diverse and unrelated local market merges into one “global marketplace” on the other hand production globalization is defined as conducting manufacturing and production processes around the world in order to gain an advantage in “cost and quality of factors of production” (Hill, McKaig, chapter 1, 2009). History of Globalization of Business Activities
Globalization itself is not a new phenomenon, however, the rapid increase and the speed with which globalization is entering each and every field of our life is rather new. Globalization took charge when the “silk road started in China, reached the boundaries of the Parthian empire, and continued onwards towards Rome. ” According to the author Muslims of that time took the responsibility of globalizing the trade of “crops, trade, knowledge and technology. ” The expansion of trading zones continued and the “Portuguese and Spanish Empires reached to all corners of the world” (p. 3, 2008).
The arrival of 17th marked the globalization of business with the establishment of Dutch East India Company. This firm is also referred to the first multinational corporation. As the imperialist powers took over the world the “First Era of Globalization” was marked with the noticeable growth international trade and investment. The early trade usually took place between imperialist powers and their colonies. The following graph represents the waves of business globalization (Fielding Group, p. 18)