BBM-505_U-4_-_Modified.pdf - BBM 505 Unit 4 GLOBALISATION Globalization can be traced to times when Buddhism spread from India to China in Ist century

BBM 505 Unit 4 GLOBALISATION: Globalization can be traced to times when Buddhism spread from India to China in Ist century AD. That was when cultural links between both countries were established. By 1300 AD, the Song Dynasty in China linked Europe and China by land and sea across Eurasia and the Indian Ocean. The year 1300 saw the creation of the Ottoman Empire which spanned Europe, North Africa, and the Middle East, and connected the dynasties in Central Asia and India. This led to the expansion of trading activities between Europe and Asia. By 1300, networks of trade ran from England to China, France, Italy, across the Mediterranean to Egypt, and then to Central Asia (the Silk Route). The trade in commodities continued well into the 17th century. By 1800, the Atlantic and Indian Ocean systems were connected to one another through the flow of commodities and by the operations of the British, French, and Dutch overseas companies. The economic conditions that prevailed in the eighteenth century continued well into the nineteenth century. With the introduction of railways and steamships, transportation costs came down significantly, and this created new circuits of capital accumulation. In the twentieth century, technological developments were further reducing natural barriers like geographical distance. The cost of information processing and communication fell significantly in the last few decades, accelerating the pace of globalization. Firms go abroad for organizational and environmental reasons. Organizational factors are internal to the organization, while environmental reasons are external to the organization. Internal reasons might range from wanting to exploit worldwide market imperfections to opportunities that arise in different stages of the li fecycle of a firm’s product. There are six ways to enter a foreign market. They are: exporting, turnkey projects, licensing, franchising, setting up a joint venture with a host country firm, and setting up a wholly- owned subsidiary in the host country. An organization goes through five stages of evolution: domestic, international, multinational, global, and transnational stages before becoming a metanational corporation. The classification is based on the firm’s orientation at each stage. To be competitive, companies have to constantly innovate and make their own products obsolete. Competition has transformed the marketplace from a seller's market to a buyer's market where the customers' focus is on value. Metanational companies see the world as a place with specialized knowledge pockets: market intelligence, technology and capabilities, scattered around. These companies sense the untapped potential in these knowledge pockets, and try to exploit it to the fullest extent.