International trade is an economic interaction among different nations involving the exchange of goods and services, that is, exports and imports. International marketing is a very broad activity, and it is expanding rapidly. International trade is one of the important components of globalization. Ancient Greeks had trade activities in 5th and 4th century B.C. They imported grains from South Russia, Sicily and Egypt and salt from Spain its warships were built of timber from Macedon, Asia minor and Arabia etc. International trade is described as only a'' supply of necessities '' or corn and grain trade''. T here were the so-called ''emporial laws'' in classical Athens. These emporial laws was called emporial suit and involved mainly foreigners. (Hasebroek , 1961) . Trade and commerce in the Roman Empire was regulated and protected not only by its ancient codes, but also by commercial treaties between the empire and other nations concluded from time to time. (Charlesworth,1961)
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After the 15th and 16th centuries, sea-borne traders and commerce were usually internationalized, moving from the Mediterranean sea to the Atlantic, motivated by the discoveries of the new continents. Finding new sea routes accelerated trade relations. The need of spices and need of raw materials also played an important role. It also resulted in the colonalisation of countries around the globe . In the 16th C the British courts also dealt with cases arising out of trade dealings abroad. 15th and 16th centuries witnessed the flourishing of international trade between colonial countries and colonized nations.17th and 18th century - colonization of land, movement of people , goods and ideas, 19th century developments of new forms of transportation, steamships and railroads, telecommunication, 20th century made transportation faster and easy road vehicles, airlines, , 21st century advent of mobile phones, internet connections connecting billions of people.(Ashley, 1966)
According to Friedman (1999), globalization is: "The inexorable 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 before, the spread of free-market capitalism to virtually every country in the world. . In view of the history of globalization, some authors focus on events since the discovery of the America in 1492, but long before 1492, people began to link together disparate locations in the world into extensive systems of communication, migration, and interconnections. This development of interaction between the global and the local has been a central driving force in the world history. Globalization is a process that has been going on for the past 5000 years (Tehranian, 2005), but it has drastically accelerated since the demolishing of the Soviet Union in 1991. the verb "globalize" was first attested by the Merriam Webster Dictionary in 1944
What is globalization
Economic Globalization means that world trade and financial markets are becoming more integrated. Globalization '' refers to the growing interdependence of countries resulting from the increasing amalgamation of trade, finance, people, and ideas in one global market place. International trade and cross border investment flows are the main elements of this assimilation.
Globalization started after World War2nd but has accelerated considerably since the mid-1980s, driven by two main factors .one involves technological advances that have reduced the costs of transportation to the extent that it is often economically viable for a firm to locate different phases of production in different countries. The other factors has to do with the increasing liberalization of trade and capital markets more and more governments are refusing to protect their economies from foreign competition or influence through import tariffs and non tariff barriers such as import quotas, export manacles and legal prohibitions. A number of international institutions established in the wake of World War 2nd - World Bank , IMF , Trade Blocks etc (World Bank.com, n,d )
According to Kongar, globalization has three dimensions. These are political, economic, and cultural aspects of globalism (www.kongar.org). Political dimension denotes that after breaking up of the Soviet Union,. On the other hand, economic aspect of the globalization denotes the economic sovereignty and domination of international capital globally. As the third dimension of globalization, cultural aspect, denotes two unrelated results of this observable fact: One of them is globalism of the consumer behaviors, such as consuming similar food, clothes, entertainment and similar products in any aspects of daily life.( International Research Journal of Finance and Economics - Issue 26) (2009)
The Emergence of Global Institutions
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Disintegration of USSR has a great impact on globalization
After the Russian Revolution in 1917, the Union of Soviet Socialist Republics (USSR), a
Federation of many countries including Russia had a planned socialist economy system.
The fall down of Communism in Eastern Europe in the late 1980s and the disbanding of the Soviet Union at the end of 1991 disrupted the close economic relations Russia had
formerly enjoyed with neighboring Communist nations and other Soviet republics such as the Ukraine and Georgia. Political turmoil and ambiguity inside the Russian
Government also contributed to the nation's economic difficulties.
Transition from socialist to capitalist economy; the government of Russian Federation implemented a sequence of radical reforms deliberate to transform the Russian economy from one that was centrally planned and controlled to one based on free enterprise and market forces. Major apparatus of the reforms included establishing privately owned industrial and commercial ventures, with foreign as well as Russian investment, and the privatization of state-owned enterprises .Russia is one nation that has been most exaggerated by the spread of globalization in the last20 years. (Horsely,2006)
As markets globalize and an increasing percentage of business activity transcends national borders, institutions need to help manage, regulate, and police the global marketplace, and to endorse the establishment of multinational treaties to govern the global business system. During the past years, a number of important global institutions have been fashioned to help perform these functions.
These institutions include the "General Agreement on Tariffs and Trade"(GATT) and its
successor, the "World Trade Organization" (WTO); the "International Monetary Fund" (IMF) and its twin sister, the "World Bank "; and the "United Nations" (UN). All these institutions were created by charitable agreement between individual nation-states, and their functions are enshrined in international treaties (Hill, ibid: 9). These organizations have loads of important roles in creating international business ethical rules and regulations. Especially, The World Trade Organization is primarily dependable for policing the world trading system and making sure nation states stick on to the rules laid down in trade treaties signed by WTO member states. Now it has over 145 nations, and the last member is the Republic of China. The WTO is also responsible for facilitating the establishment of additional multinational agreements between WTO member states (www.imf.org).
Globalization of the World Economy
"Globalization" is implicit here to mean major increases in worldwide trade and exchanges in an increasingly open, integrated, and borderless international economy. There has been noteworthy growth in such trade and exchanges, not only in traditional international trade in goods and services, but also in exchanges of currencies, in capital movements, in technology convey, in people moving through international travel and migration, and in international flows of information and ideas.
Globalization has drawn in greater openness in the international economy, an integration of markets on a worldwide basis, and a movement toward a borderless world, all of which have led to increases in global flows. There are several sources of globalization over the last several decades. Technological advances that have significantly lowered the costs of transportation and communication and dramatically lowered the costs of data processing and information storage etc. The latter stems from developments over the last few decades in electronics, particularly the microchip and computer revolutions. Electronic mail, the Internet, and the World Wide Web are some of the manifestations of this new technology.
A second source of globalization is trade liberalization and other forms of economic liberalization that have led to reductions in trade protection and to a more liberal world trading system. This process began in the last century, but the two World Wars and the Great Depression intervallic it. It resumed after World War II through the most-favored-nation approach to trade liberalization, as personified in the 1946General Agreement on Tariffs and Trade (GATT) that has evolved into the World Trade Organization (WTO). As a result, there have been significant reductions in tariffs and other barriers to trade in goods and services. Other aspects of liberalization have led to increases in the movement of capital and other factors of production. While there are some similarities in terms of trade and capital movements, the period of a century ago did not have some of the major technological innovations that have led to a globalized world economy today that is qualitatively different from the international economy of the last century
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A third source of globalization is comprised of changes in institutions, where technological changes and to them or wide-ranging horizons of their managers, empowered by advances in interactions. Thus, corporations that were mainly focused on local markets have extended their range in terms of markets and production facilities to a national ,multinational , international or even global reach. These changes in industrial structure have led to increases in the power, profits and output of those firms that can choose among many nations for their sources of materials, manufacture facilities and markets, quickly adjusting to changing market conditions. Virtually every major national or international enterprise has such a structure or relies on subsidiaries , With
the advent of such global firms ,international conflict has, to some extent, moved from nations to these firms, with the battle no longer among nations over territory but rather among firms over their share of world markets. Non government organizations, NGOs, have also taken a much broader standpoint that, as in the case of the global firms, is often multinational or global .Even international organizations, such as the United Nations, the International Monetary Fund and World Bank, and the World Trade Organization have new global roles. Overall, multinational enterprises and other such organizations, both private and public, have become the central agents of the new international globalized economy.
A fourth reason for globalization has been the global agreement on ideology, A major aspect of this convergence of beliefs is the attempt of the former socialist states to make a transition to a market economy. These attempted transitions, especially those in the former Soviet Union and in Eastern and Central Europe have, however, been only partially successful. The nations involved and their supporters in international organizations and advanced western market economies have tended to focus on a three-part agenda for transition, involving: 1) stabilization of the macro economy, 2) liberalization of prices, and 3) privatization of state-owned enterprise. Unfortunately, this "SLP "agenda fails to appreciate the importance of building market institutions, establishing competition and providing for an appropriate role for the government in a modern mixed economy.
A fifth reason for globalization is comprised of cultural developments, with a move to a globalized and homogenized media, the arts, and popular culture and with the widespread use of the English language for global communication. somewhat as result of these cultural developments, some, especially the French and some other continental Europeans, see globalization as an attempt at U.S. cultural as well as economic and political supremacy. In effect, they see globalization as a new form of imperialism or as a new stage of capitalism in the age of electronics. Some have even interpreted globalization as a new form of colonialism, seeing the U.S. as the new metro pole power and most of the rest of the world as its colonies. In this view, the rest of the world supplies the U.S. not only with raw materials and markets on a global basis, as in earlier forms of European colonialization, but also with technology ,production facilities, labor, capital, and other inputs to the production process. It is also clear that the technological, policy, institutional ,ideological, and cultural developments that have led to globalization are still very active. Thus, with the exception of a radical move in a different direction, these trends toward greater globalization will likely continue or even accelerate in the future. One important aspect of these trends will be the growth in international trade in services that has already increased substantially but promises even greater growth in the future, especially in such areas as telecommunications and financial services. The result will be continued moves toward a more open and a more incorporated world as it moves closer and closer to a planet without borders and to a more integrated, open, and inter-reliant world economy. The result will be even greater worldwide flows of goods, services, money capital, technology, people, information and ideas .(Michael D. Intriligator , 2006)
Impacts of Globalization on National Economies
Globalization has had significant impacts on all economies of the world, with manifold effects. It affects their production of goods and services. It also affects the employment of labor and other inputs into the production process. In addition, it affects investment, both in physical capital and in human capital. It affects technology and results in the dissemination of technology from initiating nations to other nations. It also has major effects on efficiency, productivity and competitiveness .Several impacts of globalization on national economies deserve particular mention. One is the growth of foreign direct investment (FDI) at a phenomenal rate, one that is much greater than the growth in world trade. Such investment plays a key role in technology transfer, in industrial reshuffle and in the formation of global enterprises, all of which have major impacts at the national level. A second is the impact of globalization on technological innovation. New technologies, as already noted, have been a factor in globalization, but globalization and the urge of competition have also stimulated further advances in technology and speeded up its dispersion within nations through foreign direct investment. A third is the growth of trade in services, including financial, legal, managerial, and information services and intangibles of all types that have become mainstays of international commerce. In1970, less than a third of foreign direct investment related to the export of services, but today that has risen to half and it is expected to rise even further, making intellectual capital the most important commodity on world markets. As a result of the growth of services both nationally and internationally, some have called this "the age of competence," underscoring the importance of lifelong education and training and the investment in human capital in every national economy.
Globalization is a powerful real aspect of the new world system, and it represents one of the most prominent forces in determining the future course of the planet. It has multiple dimensions: economic, political, security, environmental, health, social, cultural, and others. The focus here is on the concept of "globalization" as practical to the world economy. The term was coined in the 1980s, but the concept is an old one that has different interpretations to different people.(graduate textbook of Feenstra ,2003).
Developing countries benefited most from globalization than developed world
Why Companies go global
Companies take a more dynamic role because they have indomitable that it is to their gain to track foreign business export volume on an incremental basis. The profitability of a company can increase when fixed manufacturing costs are already committed and additional economies of scale are achieved. Marketing as the performance of business activities directing the flow of products and services from producer to consumer. A thriving performance of the marketing function by a firm is reliant upon the adoption of the marketing concept, consisting of (a) a customer orientation, (b) an integrated marketing organization, and (c) customer satisfaction's Marketing management is the execution of a company's marketing operation.
Companies move into foreign markets to get further volume. When a company's customers move overseas, many firms trail suit. Companies also enter the international arena for purely self-protective purposes. Whether companies participate for the pursuit of new opportunities or for any other reason, most have been able to boost their overall competitiveness as a result of pursuing foreign ventures. (Anton, 2005)
Global Business Strategies of a Global Company
Theodore Levitt (1983: 92-102) has states that, due to the dawn of modern communications and transport technologies, consumer tastes and preferences are becoming global, which is creating global markets for standardized consumer products. (Douglas and Wind, 1987). In order to contend in the international environment, firms can use four basic entry strategies: an international strategy, a multi-domestic strategy, a global strategy, and a transnational strategy (Bartlett and Ghoshal, 1989). Firms pursuing an international strategy transfer the skills and products resultant from unique competencies to foreign markets, while undertaking some limited local customization. Firms pursuing a multi-domestic tactic customize their product offering, marketing strategy, and business strategy to national conditions. Firms pursuing a global strategy focus on reaping the cost reductions that come from experience curve effects and location economies. Finally, firms pursuing a transnational strategy involves a concurrent focus on reducing costs, transferring skills and products, and boosting local sensitivity. Implementing this strategy is very difficult because of simultaneous pressures coming from price reductions and local responsiveness (Hill, ibid: 376).
Global Technological Revolution.
A global technology upheaval is leading to social, economic, political, and personal change throughout the world. Like the agricultural and industrial revolutions of the past, this technology revolution has the impending to transform human quality of life and lifespan, transform work and industry, rationalize wealth, shift power among nations and within nations. It has been argued that the accelerating pace of technological change may lead to a widening of the gap between rich and poor, developed and developing countries.
The revolution's effects on human health may be the most astounding as breakthroughs improve both the quality and length of human life. Information technology is already revolutionizing our lives, especially in the developed world, and is a major enabler of other trends. Materials technology will produce products, components, and systems that are smaller, smarter, multi-functional, environmentally compatible, more survivable, and customizable .In addition, smart materials, nimble manufacturing, and nanotechnology will change the way we produce devices and improve their capabilities. The technology revolution will not be uniform in its effect across the globe but will play out differently depending on its acceptance, investment, and a variety of issues such as bioethics, privacy, economic disparity, cultural invasion, and social reactions. There will be no turning back, however, since some societies will avail themselves of the revolution, and globalization will change the environment in which each society lives. However, increased global connectivity within the technology revolution may itself provide a vehicle for improved education and local technical capabilities that could enable poorer and less-developed regions of the world to contribute to and profit from technological advances via the "cottage industries" of the 21st century. Collective breakthroughs should improve both the quality and length of human life. (Friedman, 2000)
Technology's guarantee is here today and will march forward. It will have wide spread effects across the globe. Yet, the technology revolution will not be homogeneous in its effect and will play out differently on the global stage depending on acceptance, investment, and an array of other decisions. There will be no turning back, how ever ,since some societies will avail themselves of the revolution, and globalization will thus change the environment in which each society lives. The world is in for significant change as these advances play out on the global stage.(Irvin,1989)
As the World Economic Forum recently underlined in its Global Competitiveness Report,
"Education and training have emerged as key drivers of competitiveness, ensuring that the labor force has admittance to new knowledge and is trained in new processes and the latest technologies.â€¦ A country's aptitude to soak up new technologies, to produce goods and services that can reach standards of quality and performance acceptable in international markets, to engage with the rest of the world in ways that are value creating, is warmly linked to the quality of its schools, to the precedence given to training in mathematics and science, and to the existence and accessibility of specialized research and training centers. students need at least three essential skills: intelligence, creativity and courage. information and assess its sources, and the skills to synthesize, analyze and use it to make decisions. More and more schools are looking to build these broader skill sets in their students' use of information from data mining to analytics to decision making. They need this intelligence - particularly analytical and critical-thinking skills - to be able to live in a world saturated in information.
Policies must be focused on the goals of student access and success, workforce readiness, research and development infrastructure, global literacy, and essential disciplines progressively more competitive and knowledge-driven global economy. An increasing number of indicators-from trade balances in pharmaceuticals and shares of global pharmaceutical-industry output to higher education-show that expanded investment and policies deliberate to augment their life science industry have enabled several countries' life sciences industries to become competitive with that of the United States (Dr. Jim Goodnight).
Global marketers regard as the world as their market and different countries as gears of this world market
1. To survive and grow
2. Learn to satisfy consumers in diverse conditions.
3. obstruct or counter competitive attacks in more than one market.
4. Expand customer case to include urbanized and developing nations.
5. To spread product and market portfolios and improve competitiveness.
6. Diversification increases market size and enhances economies of scale
7.To get the most out of on the attractiveness of additional country markets.
8. Expand market size by escalating into other countries.
9. To activate within a global marketplace.
10. Goods, services, capital, technology and labor are going global.
11. Reduced government limitations are affecting global marketing
12. Bilateral and multilateral negations are reducing.
13. It influences product-choices of consumers.
14. influences standard of living
15. Influences job opportunities
16. influences the society. ( S. Pawelas Arso, 2008)
Countries take contradictory approaches to attracting and maintenance skilled science and technology staff. Most OECD countries see it as important in a milieu of retaining and attracting HRST talent and have policies to encourage and support mobility
It is obligatory to discriminate between global competition, global businesses and global Companies.
Global competition occurs when companies cross-subsidizes national market share battles in detection of global brand and allotment positions.
Global businesses - are those for which the least volume required for cost competence is not available in the company's home market.
Global companies - are those which have allocation systems in key foreign markets
that facilitate cross-subsidization, international retribution and world scale volume.
.Research and Developments ; are succeeding in every developed and developing nations, for more advanced technological inventions then only global companies can survive in the global markets . Both developed and developing nations are giving more back-up and support for these type research and development programs because now a days they are facing fierce competitions from rivals and understands only through new inventions a company or a country can become a superpower or get monopoly and hanker revenues. (Eleanor.M.1995)
Globalization is the most important outcome of international trade. International trade only cares about exchange of goods. But globalization makes the world into a global village. Even though globalization has advantages, disadvantages too . But compared to its advantages,disadvantages are minor. Globalization brings the whole world together by keeping its values . But one of the major acquisitions it facing is a treat to cultures some critics also argue that it is an indirect colonization.
Technological advancement made globalization more vital in the modern world through websites, E-commerce etc People are aware what happening in the other world people are going beyond their borders through migration, for work ,for business purposes etc. People are able to buy food or any other products in the world with the same quality, quantity and price now people are thinking globally . Companies are going globally and their competition benefits the people.
Through globalizing markets companies go beyond borders and it increases employment, not only to the local people but also the people who are working in different parts of the world and becomes a multicultural society. Lots of jobs being created, standard of living increases, international companies can make profit doing outside due to cheap labor. Now people are using costly cars importing from other continents. Companies can find out bright people anywhere in the world and can utilize them for the benefit of the company. People can share ideas, products and services anywhere in the world. Increasingly people exposed to similar services and products and adopt similar habits. This is largely a beneficial process. Recently several revolution were happened due to the globalization. Globalisation is the greatest achievement made by the world in the 21st century.