GLOBALIZATION AND THE EMERGING BUSINESS /

Transcript:GLOBALIZATION AND THE EMERGING BUSINESS /:
GLOBALIZATION AND THE EMERGING BUSINESS / ENTREPRENEURIAL ENVIRONMENT Entrepreneurship Development and Industrial Consultancy (DBM-421) Globalization Globalization is “the growing economic interdependence of countries world wide through increasing volume and a variety of cross border transactions in goods and services and of international capital flows and also through the more rapid and wide spread diffusion of technology” (International Monetary Fund). Features of Globalization Expansion possibilities of business throughout the world. Differences between domestic and foreign markets are erased. Buying and selling product and service from / to any nation of the world. Establishment of production and distribution facilities based upon feasibility and economic considerations at optimum location anywhere in the world instead of considering national considerations. Product planning and development are dependent on market conditions of the whole world. Optimizing raw material sourcing from entire world. Global orientations in strategies, organizational structure, culture and managerial expertise. Viewing entire globe as a single market. Factors influencing globalization Dismantling of barriers to international economic transactions. Over capacity and over production. Technological developments. Emerging forms of industrial organizations. Political factors The intellectual revolution Globalization Strategy for Enterprise To establish global presence with minimum risk and maximum returns, the entrepreneur must address following questions: Which product line or product lines should be used for launching into global Markets. Which markets should be chosen for entry? Which optimal mode should be used for market entry? How rapidly should the enterprise expand globally? Market Entry As globalization has many risks associated with it. It is advisable to select only most profitable product/ product lines instead of introducing the entire product range. The choice of the market is decided by market potential. The extent of entry barriers and intensity of competition decides the market entry strategy. Lower entry barriers and less intensity of competition in a market are conducive to a firms entry in the market. The mode of market entry depends upon two factors. Enterprise’s policy of export versus local production. Extent of ownership control over locally performed activities. Government Measures Towards Globalization Scrapping the restrictive laws such as foreign exchange and regulation act (FERA) 1973. The foreign exchange management act (FEMA) has been passed by removing the classes which restricted the entry of multinational companies (MNCs) Allowing Indian companies to collaborate with foreign companies in the form of foreign joint ventures (FJVs) and there by many Indian companies have started their FJVs. Reduction of import tariff