The End of Global Strategy

CIMA gratefully acknowledges the contributions of Gary Ashworth, Philip Barden, Peter Brewer, Gavin Lawrie, Bernard Marr, Professor Bob Scapens, Dr Mostafa Jazayeri-Dezfuli, and Francesco Zingales. Contact: liz.murby@cimaglobal.com Copyright © CIMA 2005 First published in 2005 by: The Chartered Institute of Management Accountants 26 Chapter Street London SW1P 4NP Printed in Great Britain The publishers of this document consider that it is a worthwhile contribution to discussion, without necessarily sharing the views expressed. No responsibility for loss occasioned to any person acting or refraining from action

The world we live in today is going through enormous changes in economics, technology, culture, politics, etc. The effects of the changes are not so clear, since it is hard to predict how each sector would affect the other and how society will be affected. However, analyzing past and present occurrences provides some information for experts to interpret society’s reaction in the future to different transformations. Globalization can be seen as a process in which societies around the world come together and expand through the combination of different forces. This paper will explore the effects of globalization on US companies, US society and economy, and the implications for other countries in the post-industrial world.

Globalization is a process which involves the establishment of economic, cultural, and socio-economic relations between nations around the world. It is a concept that has fascinated me for quite some time because of it’s influence on topics such as; why one country gains while another loses, why certain people thrive while others diminish, how technology impacts human labor and workforce, etc. Specifically, I have always been drawn to the economic consequences of globalization and how they impact the United States and our relations with other nations. After extensive research, I have concluded that globalization can drastically improve the American economy `only when it is properly monitored and subjected to barriers. These barriers restrict the overall role it has played in the past and the role it will play in the future regarding the success of our economy.

Globalization is a power that affects everyone on the world. Globalization is when companies expand internationally. Globalization offers a great deal of opportunities such as opening up new trade routes and new technology. Globalization is seen differently by different people. M. Khan (2004) argues, “for the economist, globalization is essential the emergence of a global market. Sociologists see globalization as the celebration of diversity and the convergence of social preferences in matters of lifestyle and social values”. In a way all of these perspectives are true.

Globalization is the rapidly developing process of complex interconnections between societies, cultures, institutions and individuals world-wide (Tomlinson, 1997). The term “globalization” often became used since the second half of the 1980s with the radical increase of foreign direct investment by MNCs. This phenomenon was facilitated by the triumph of market-oriented economic ideology represented as deregulation, privatization, and a decreased role for the state in the economy over communism in collapsing of the Soviet Union (Gilpin, 2001). Since then, there is a widespread acknowledge that increasing global interconnection results in cultural standardization and homogeneity driven by Americanism or Westernization, which may have been regarded

First of all, it is important to understand how the world has evolved through globalization. According to Friedman, he argues that the world is becoming “flat”. Friedman introduces the concept that we are currently living in the era which he calls Globalization 3.0. Globalization 1.0 developed since Columbus set foot into

WikiMart is a Russian online marketplace operating for Russia and Russian speaking countries. Two Stanford MBA students founded the startup company was founded in 2008, their by two Stanford MBA students with the strategy to reach the young and technologically savvy and young consumers in Russian speaking countries. Twith the founders’ goal of dominating in Russia and other countries of the former Soviet Union is well on its way as WikiMart . that has evolved into a large competitor in the e-commerce industry for that part of the world. The startup company was founded in 2008 by two Stanford MBA students with the strategy to reach the technological and young consumers with the goal of dominating in Russia and other

New York Times columnist Thomas Friedman defines globalization as “the inexorable integration of markets, transportation systems, and communication systems to a degree never witnessed before – in a way that is enabling corporations, countries, and individuals to reach around the world farther, faster, deeper, and cheaper than ever before.” (Friedman, 2002). Corporations can no longer operate exclusively in one or two countries. Today’s markets are far too complicated and interdependent for that. As globalization expands managers spend more and more time navigating the world to conduct business.

Globalisation: Globalisation is an external influence that aids a business in achieving a competitive advantage. Globalisation refers to an increasing amount of economic integration between economies and is characterised by an increasing integration between national economies and a high degree of transfer of capital, labour, intellectual capital and ideas, financial resources and technology. Globalisation provides a source of market opportunities, but it can also act as a threat to business as businesses that effectively apply cost leadership principles can undercut the market and dominate. An example where globalisation has provided opportunity for a business is within the LEGO company. The opening of markets has been of great benefit to lego, This has helped the company develop a global brand making LEGO the largest toy company in the world. By having an understanding of Globalisation it aided LEGO to structure its operations in a way which allowed it to access resources at lower costs whilst gaining proximity to markets around the world hence allowing it to gain a competitive advantage over other toy companies..

Karl Nagra Karl Nagra Lecturers Name: Graham Orr Management & eBusiness Due Date: 27 April 2012

Klaus E. Meyer Professor of Business Administration Box 218, University of Reading Business School Whiteknights, Reading, Berkshire, RG6 6AA, UK km.cees@cbs.dk

Companies in the trading blocs therefore have to compete to attract foreign direct investment from large multinational companies which have been responsible for holding an ever increasing share of global outputs. Multinationals are companies which own assets and produce in more than one country, hence increasing international trade within globalization. MNCs can therefore achieve benefits from specialization, exploit cost advantages that different countries offer at different markets. Recently, there is an ever increasing trend in outsourcing.

Thus, the multinational corporation is intrinsically a force for progress in the sense that its very existence participates in the maximisation of profits by eliminating or reducing the harmful effects of market imperfections. Internalisation theory, and other mainstream theories of the multinational firm such as eclectic theory are useful in this analysis since they establish the nature of MNCs as behaving in a way that is the most efficient, and thus beneficial to them. If we accept that firms are beneficial to the world in that they create wealth, then MNCs are a force for progress. However, the buck stops here for these theories. Although they provide insight into the nature and behaviour of firms, mainstream theories of economics and international business do not provide any analysis of the consequences firms’ behaviour has on less developed countries (LDCs) and the world order . As we expand our definition of progress, or the field of the visible in terms of the harm that MNCs can cause, then a different picture is painted.

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A fundamental shift is occurring in the world economy. We are moving progressively away from a world in which national economies were relatively isolated from each other by barriers to cross-border trade and investment - by distance, time zones, language, national differences in government regulation, culture and business systems. And we are moving toward a world in which national economies are merging into an interdependent global economic system, commonly referred to as globalization.