Globalization: Impact, Culture, and Market Entry

Posted on Jan 10, 2025 in Social sciences

Chapter 3: Globalization

Defining Globalization

  • Globalization: The flow of goods and services, money, and knowledge across countries.
  • Friedman: “The integration of markets, nation-states, and technologies to a degree never witnessed before – in a way that is enabling individuals, corporations, and nation-states to reach around the world farther, faster, deeper, and cheaper than ever before.”
  • Yergin & Stanislaw: “A process marked by accelerating integration of national economies through the growing flows of trade, investment, and capital across borders. Those flows include technology, skills and culture, ideas, news, information, entertainment, and people.”

Globophobes vs. Globophiles

  • Globophobes: Individuals who are against globalization.
  • Globophiles: Individuals who are in favor of globalization.

Friedman’s Flat World Thesis

  • Economic activity used to be primarily national in scope.
  • Today, workers in China and India collaborate and compete with people in the West in real-time.
  • In a sense, the world is flat!

Measuring Globalization

  • Economic: International trade and investment flows.
  • Technological: Internet connectivity.
  • Personal Contact: International travel and tourism.
  • Political: International organizations, government money transfers.

Moore’s Law

  • Intel co-founder Gordon Moore noticed that the number of transistors per square inch on integrated circuits had doubled every year since their invention.

Douglas North’s Definition of Institutions

  • Humanly devised constraints that structure political, economic, and social interactions.
  • Formal Rules: Laws and regulations.
  • Informal Restraints: Taboos and customs.

Understanding Culture

  • A learned set of assumptions, values, and beliefs that members of a group have accepted.

Values vs. Norms

  • Values: Abstract ideas about what a group believes to be good and right.
  • Norms: Social rules and guidelines that dictate appropriate behavior.

Two Types of Norms

  • Folkways: Routine conventions of everyday life.
  • Mores: More serious standards of behavior.

Hofstede’s Cultural Dimensions

  • Power distance
  • Individualism/collectivism
  • Masculinity/femininity
  • Uncertainty avoidance
  • Long-term/short-term orientation

Emerging Economies: BRICS and CIVETS

  • BRIC: Brazil, Russia, India, China
  • CIVETS: Colombia, Indonesia, Vietnam, Egypt, Turkey, South Africa

Guanxi

  • Chinese for relationships or connections.

International Market Entry Strategies

  • Exporting: Manufacturing products in a firm’s home country and shipping them to foreign markets.
  • Licensing: Arrangements establishing how to allow a local firm in the new market to manufacture and distribute its product.
  • Strategic Alliance: A cooperative arrangement between two firms in which they agree to share resources or capabilities.

Managing International Subsidiaries

  • Globally: Invest primary authority for major strategic decisions in the home office.
  • Regionally: Primary authority for determining competitive strategy rests with the management of the international subsidiary based in a region of the world or a specific country.
  • Transnational: Strives to be simultaneously centralized and decentralized.

High vs. Low Context Cultures

  • High Context: People pay closer attention to the situation and its various elements.
  • Low Context: Contextual variables have much less impact on the determination of appropriate behaviors.

Multicultural Teams

  • Geographically dispersed across country borders.

Global Mindset

  • A set of cognitive attributes that allows an individual to influence individuals, groups, and organizations from diverse sociocultural and institutional environments.