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Globalisation

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The type of competition (perfect, monopoly, monopolistic or oligopoly) that the ... imports of goods into India barring certain items on grounds of national ... – PowerPoint PPT presentation

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Title: Globalisation


1
  • Globalisation
  • The growing integration of the worlds economy

2
International Dimension of Business
  • The type of competition (perfect, monopoly,
    monopolistic or oligopoly) that the business
    faces in its domestic and overseas market.
  • Trade barriers
  • Costs of production
  • Trading agreement
  • - World Trade Organisation
  • - Mercosur
  • - G8 countries

3
Factors Affecting Globalisation
  • Liberalisation
  • Technological change
  • Growing market and competition
  • Deregulation of business
  • Cost of transportation
  • Consumer tastes

4
Impact on Local Businesses by International Events
  • Consider consumer needs
  • Choice of location
  • More competition
  • Economies of scale

5
Factors to Consider to Trade Internationally
  • Impact of host countries in inviting this
    business to set up and trade
  • Incentives provided by the parent country to set
    up and trade in the host countries
  • Impact of the business activities on customers,
    competitors, suppliers and on the business itself
    in the various countries
  • The effectiveness of the business presence
    internationally eg wider than simply profit,
    consumers views in home and host countries.

6
Factors Influencing International Location
  • Legislation and bureaucracy
  • Corruption
  • The introduction of a single currency
  • Corporate image
  • Protectionism
  • Financial incentives
  • Mark opportunities
  • The labour force
  • Globalisation
  • Environmental factors drought/war etc

7
Reasons for International Marketing
  • Increase sales revenue and hence profitability
  • Achieve unit sales or revenue growth targets
  • Increase share of market
  • Achieve enhanced oligopolistic position
  • Preserve oligopolistic position
  • Reduce dependence upon mature or stagnant markets
  • Increase demand to allow spreading overhead in
    existing plants
  • Increasing demand to exploit economies of scale

8
Advantages of Multinational Businesses (an
organisation which owns or controls production
outside the country in which it is based)
In a position to offer better wages
Ability to create jobs
Transfer Pricing can avoid taxes
Technology transfer
9
  • Methods of entering the overseas market
  • Exporting
  • Licensing
  • Franchising
  • Direct investment
  • Mergers
  • Joint ventures

10
International Marketing Strategies
  • Consideration examples
  • Company resources and capabilities
  • International competitors
  • International Culture
  • Creating competitive advantage
  • Coping with political risk and uncertainty
  • Profiling international product markets
  • Exporting
  • Business Alliances
  • Foreign direct investment
  • Channels of international distribution
  • Pricing in international markets
  • International marketing negotiations
  • Assessing international marketing performance

11
Disadvantages of Multinational Businesses
  • EU and its rules and regulations, eg trade,
    subsidies for farmers, taxes
  • World Trade Organisation (WTO) and its rules and
    regulations on the sector (s) of your business
  • The cost implications of not meeting
    international agreements (free trade rules be
    they in retaliation form or fines or loss of
    value in not standing shoulder to shoulder with
    trade partners)
  • The dangers that exist alongside the
    opportunities for business and consumers of
    increasing international trade eg child labour,
    pollution, protectionism, double standards.

12
Effects from Eastern Europe on Western Countries
  • e.g. Communist regimes overthrown and democracies
    put in place
  • Lowering inflation
  • Lowering unemployment
  • Transfer of ownership
  • Skills to making a profit
  • Establishing the system
  • - finances, transport
  • - buying
  • - selling markets

13
India as a Market Place
  • Stable democratic environment
  • Large market size with middle class population
    with increasing purchasing power
  • Access to regional international markets through
    membership of regional integration frameworks
    such as SAARC
  • Foreign investment welcome in almost all sectors
  • Large and diversified infrastructure spread
    across the whole country
  • Thrust on technology, innovation and knowledge
    base
  • Large manufacturing capability, spanning almost
    all areas of manufacturing activities
  • Vibrant capital market of stock exchanges and
    listed companies

14
India as a Market Place(continued)
  • Legal protection for intellectual property rights
  • Import regime in conformity with WTO commitments
    removal of remaining quantitative restrictions
    on imports of goods into India barring certain
    items on grounds of national security, defence
    and health
  • Rupee is fully convertible on current account and
    is being progressively liberalized on capital
    account
  • Availability of skilled manpower and professional
    managers
  • Well developed capital market, banking
    infrastructure, insurance and financial services
    sector
  • Well developed accountancy, legal, actuarial and
    consultancy profession
  • Well-established legal system with an independent
    judiciary

15
An example of a SPECIAL INVESTMENT PROGRAMMES
(Electronic Hardware and Software) in India
  • Salient features of investment in Electronic
    Hardware and Software Technology parks
  • Licensing is required only for manufacturing
    electronic aerospace and defence equipment
  • 100 percent foreign investment under automatic
    route is allowed in electronics and software
    industries set up exclusively for exports
  • Bonded factories set up under these programs are
    eligible to import, free of duty, their entire
    requirement of capital goods, raw materials and
    components, spares and consumables, office
    equipment etc

16
SPECIAL INVESTMENT PROGRAMMES continued
  • Deemed export benefits are available to suppliers
    of these goods from the Domestic Tariff Area
    (DTA)
  • Relaxation is there to sell a part of the
    production from such units in the Domestic Tariff
    Area depending upon the level of the value
    addition achieved
  • After 2 years of import of or indigenously
    procured items like computers and computer
    peripherals can be donated to recognised
    non-commercial educational institutions,
    registered charitable hospitals, public
    libraries, public funded research and development
    establishments, governmental organisation or to
    government of states or union territory without
    payment of any duties
  • Capital goods are allowed to be re-exported

17
China facts
  • Domestic policies encourage exports
  • Chinese financial system does not encourage the
    countrys citizens to consume more
  • A lot of air and water pollution problems
  • Chinese banking system does not lend itself to
    new investment
  • Natural resource scarcity e.g. water and energy.
    It imports a lot of oil
  • Very densely populated
  • A lot of minorities that are not well integrated
    into the majority culture- inequality still quite
    prominent
  • Local governments have few sources of revenue to
    finance physical infrastructure
  • Chinese degree of urbanisation is low
  • Lacks energy-efficient standards for building,
    cars and fuel
  • Still a major aid recipient especially from the
    USA
  • It is a major economic powerhouse as it is
    accumulating hundreds of billions of dollars in
    foreign currency reserves

18
For Business in Singapore Examples
  • Anyone including foreigners can set up and
    operate a business
  • Setting up a business is easy all you have to do
    is register your firm with The Registry of
    Companies and Business in Singapore city
  • It does not take very long to set up a business
  • It has a complex infrastructure and a well
    regulated economy
  • Singapore is a zero-tax haven for a number of
    non-resident controlled companies
  • Singapore only taxes companies sourced within the
    country or foreign sourced income that is
    remitted into Singapore
  • In Singapore resident companies take advantage of
    the fact that Singapore has an extensive double
    tax network treaty

19
Against Business in Singapore Examples
  • The most expensive country in the world to live
    in
  • When choosing a company name for your business,
    proper approval is required. All company names
    must end with Private limited or Pte Limited.
  • Annual accounts and annual returns are required
    to be filed by all businesses
  • Annual returns have to be filed with both the
    Companies Registry as well as with the Income Tax
    authorities
  • To set up an LLC two directors are required, one
    of whom must be a Singapore resident, a native
    Singaporean, or someone who has a Singapore
    Employment Pass

20
Against Business in Singapore Examples continued
  • The directors of an LLC must be individuals
  • There must be at least two individuals, or one
    corporate shareholder for a business to be set up
  • Every foreign company registered in Singapore
    must have two agents acting on its behalf in the
    country. These agents must be native
    Singaporeans, permanent residents of the country
    or must have a Singapore Employment Pass
  • A resident, qualified Singapore auditor must do
    the business' accounts
  • A general meeting must be held on an annual basis
  • People who have declared bankruptcy cannot be
    nominated as directors
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