The Effects Of Globalization On Boots Economics Essay

Globalization

Globalization is the system of interaction among the countries of the world in order to develop the global economy.

Globalization involves technological, economical and cultural exchanges made possible largely by advances in communication, transportation, and infrastructure.

Cultural aspects: – People from different parts of the world come to work in an organisation. This helps to combine various ideas which in turn help to enhance the performance of work in a better way.

Economic aspects: Due to globalization, the position of any organization is filled by diverse cultural workforce, due to this factor the HR gets various options for getting the work done and that to on a lower pay scale and this boost the performance of the company by getting the work done in estimated time.

The expanding scale, growing magnitude, speeding up and deepening impact of transcontinental flows and patterns of social interaction

(Held andMcGrew, Globalization/Anti-Globalization, p. 1)

Integration of national economies into the international economy through trade, direct foreign investment…short-term capital flows, international flows of workers and humanity generally, and flows of technology…” (Bhagwati, p. 3)

Eras of Globalization

First Era of Globalization (about 1850-1914)

Interwar Period (1920-1939)

Cold War Era (1945-1989)

Second Era of Globalization (1989-Present)

Boots UK

Boots UK limited is a leading pharmaceuticals and beauty product chain in the UK. It is a member of Alliance Boots, an international pharmacy health and beauty product. Boots products are aliable in USA, Canada, Netherland, Norway, Sweden, Bahrain, Kuwait, Qatar, UAE, Saudi Arabia, Thailand, UK and The Republic of Ireland.

Boots globalisation

The purchase of Sun Pharma an Indian third largest pharmaceuticals company, will add significance values to boots. The acquisition is consistent with Boots mergers and acquisition guidelines for revenue growth and expansion, niche, good synergies, access to new market and customer, ensuring growth potential and shareholder value adding.

Others news of Boots

Extension of pilots in the Netherland.

No 7 pilot in Finland

Increased our presence in Thailand.

Example of foreign pharmaceuticals company

AstraZeneca

In June 2003, the Anglo-Swedish pharmaceuticals company, AstraZeneca(AZ), Research facility in Bangalore, with a focus on new treatment for tuberculosis with more than 100 scientists with other AZ R&D centres, particularly those in Boston, USA and Cheshire, UK

AZ CEO, Sir Tom McKIllop, explained that the decision to conduct the R&D in India was because of the quality of Indian scientists.

GlaxoSmithKline and Ranbaxy

In October 2003, UK-headquartered pharmaceutical company, GlaxoSmithKline (GSK), and India’s largest pharmaceutical company, Ranbaxy Laboratories, announced a drug discovery. Under the agreement, the two companies divide the research and development work between them. GSK has special commercialisation responsibilities worldwide, while Ranbaxy takes the lead in the huge Indian market, with GSK’s consent, may co-promote in both the US and EU.

Example of other pharmaceuticals globalisation company.

Jubilant Organosys acquire Cadista Pharmaceuticals US company in 2005

Aurobindo Pharma acquires an manufacturing plant in Dayton, New Jersy in 2006.

Dr Reddys has MHRA approved manufacturing plant in the UK

Wockhardit has manufacturing plant in the UK, Ireland, and France

Advantages of Pharmaceuticals Company in India

Low cost manufacturing

Low wages rate

High quality research

Manufacturing facilities

Educated personal

Indian huge market

Benefit to Boots

When Boots produce a medicine and cosmetic product in India and sell to the European country and Middle East. Due to the Brand Name of Boots and Sun Pharma Boots can sell a medicine in India and Asian country. Net profit will increased to £ 950 million in next year which is £ 350 million more than 2010.

Production cost of Medicine in UK and India

Name of medicine

Production cost in UK

Production cost in India

Paracetamol 500 mg 10 tablet

£0.230

£0.020

Albendazole 400 mg 1tablet

£0.540

£0.025

Amoxycillin 500mg 10 capsule

£0.940

£0.390

Cipro 500 mg 10 capsule

£1.150

£0.540

Omeprazole 40 mg 10 capsule

£2.123

£0.440

Vitamin B complex 10 capsule

£0.650

£0.100

Metformin 500mg 10 tablet

£0.690

£0.110

Source: http://www.pharmaceutical-drug-manufacturers.com/pharmaceutical-industry/

All this above cost shows that manufacturing medicine in India is up to 5 times less than UK

Reason for increased globalisation

Boots has moved their business operation to foreign by going global. In order to remain competitive Boots move as fast to secure a strong position in emerging markets with different pharmaceuticals and beauty product for to customized for the need of the customer. Indian market is attracting Boots with new capital investments and very good incentivise. Some of the reasons for increased globalisation of business are:

Trade barriers

Customer demands

Regulation and restrictions

Globalisation of competitors

Boots is manufacturing their products in order to avoid the burden of traffic, the policy of buy-local, quotes and other restrictions that makes exports too expensive to foreign market. They are also responding to customer demand for effective operations and product reliability also logistical operation. In compare to India European laws and regulation has many restriction which are inconvenient and expansive. Globalisation of competitors is another reason. The aggressive reasons for globalisation are:

Growth opportunities

Resources asses and cost saving

Economic of scale

Incentives

Why globalisation in India?

The GDP growth also shows that there is no affected in India when there is an economic crisis in the world 2008 and 2009. In 2008 USA and UK has 3.0 and 0.5 representative but India has 7.3 and when there is crises in 2009 -0.8 in USA and -4.8 in UK. The crises has not affected more India still have 5.6. The GDP growth is more in 2010 USA has growth to2.7 and UK to 1.3 but India has increased up to 7.7. This forecasts by international monetary fund shows that developing Asian countries has not affected at the time of economic crises.

These GDP growths also encourage Boots to globalisation to India.

Disadvantages of globalisation

Guy Brainbant : The process of globalisation not only include opening up a world trade and more generally increased mobility of person, goods, capital, data and idea but also infection, diseases and population.

Disadvantages of globalisation are

Intense competition

Exploitation of worker.

Harder for small business to established themselves

Gap between rich and poor countries

Income generated in host countries may not be spend in same countries

Conclusion

There are more advantages of globalisation in developing countries India. Boots will create competitive strategy that will fulfil its corporate goals. Boots must allocate capital funds where they will be more effective and derived the highest return on our investment.

Bibliography

Globalisation and Poverty: Centre for International Economics, Australia.

WIDER ANNUAL LECTURE 6: Winners and Losers over two centuries of Globalisation: Jeffery G. Williamson