Globalization Of World Economy

University:
California State University, Northridge
Course:
BUS 104 | Introduction to Business
Academic year:

2023
Views:

166

Pages:

1
Author:

JJIssac

GLOBALISATION OF WORLD ECONOMY The world economy has been transforming into a global or transnational economy, transcending national borders and restrictions. Globalization integrates the world into a single economic unit through free flow of trade and factors of production across countries. Peter Drucker argues the world economy changed from international to transnational in the 1970s. Key features of the transnational economy include: money flows shaping it more than trade; management as the decisive production factor; market maximization over profit maximization; trade following investment; decisionmaking power shifting from national states to regions; an autonomous world economy of money, credit and investments; and the pervasiveness of transnational corporations viewing the world as a single market. Economic integration Economic integration is occurring through trade liberalization, capital flows, and regional blocs. Globalization involves adopting a global corporate mindset, locating facilities based on global dynamics, developing products for the global market, globally sourcing factors of production, and having an organizational culture and structure aligned to global operations. A global corporation sees the world as a single, borderless market with no distinction between domestic and foreign markets. It tries to be equidistant from all key customers. Production, marketing, finance, and logistics are integrated globally. Toyota, Honda, Mazda exemplify this integrated approach. Globalization has occurred in earlier periods like 1870-1913, but the current phase since the late 1980s is more widespread and driven by new markets, actors, rules, and communications tools. Firms typically evolve through export, foreign investment, multinational, and finally global stages. Achieving a global mode requires organizational transition and sharing values globally. Essential conditions for successful globalization It includes business freedom, infrastructure, government support, resources, competitiveness, and a global orientation. With these, companies can adopt globalization strategies to integrate their operations worldwide.