Transcript Looking at the Global Marketing Environment

Globalization, Liberalization and Privatization
Dr. Shaker Turki Amin
Globalizaion
 Integration of National economies with international
Economy. The closer integration of the economies of
the world as a result of the reduction of transportation
and communication costs and the reduction of
manmade barriers to the movements of goods,
services and capital throughout the world.
Globalization refers to the shift toward a more
integrated and interdependent world economy
 Globalization of Market refers to the merging of
historically distinct and separate national markets into
one huge global marketplace. Falling barriers to crossborder trade have made it easier to sell internationally.
Globalization of production refers to the sourcing of
goods and services from locations around the globe to
take advantage of national differences in the cost and
quality of factors of production (such as labor, energy,
land and capital )
Privatization
 The term “Privatization” refers to “The transfer of
ownership of property or businesses from
government to a privately owned entity.”
a
 The transition from a publicly traded and owned
company to a company which is privately owned and
no longer trades publicly on a stock exchange. When a
publicly traded company becomes private, investors
can no longer purchase a stake in that company.”
 The process of converting or "selling off"
government-owned assets, properties, or
production activities to private ownership. After
several decades of increasing government control
over productive activities, privatization came into
vogue in the 1980s, along with business
deregulation and an overall movement toward
greater use of markets.”
 Privatization is frequently associated with
industrial or service-oriented enterprises, such as
mining, manufacturing or power generation, but
it can also apply to any asset, such as land, roads,
or even rights to water. In recent years,
government services such as health, sanitation,
and education have been particularly targeted for
privatization in many countries.”
Privatization helps establish a "free market", as well
as fostering capitalist competition, ‫تعزيز المنافسة الرأسمالية‬
which its supporters argue will give the public
greater choice at a competitive price. Conversely,
socialists view privatization negatively, arguing
that entrusting private businesses with control of
essential services reduces the public's control
over them and leads to excessive cost cutting in
order to achieve profit and a resulting poor
quality service.”
Liberalization
The term “Liberalization” stands for “the act of making less
strict”.
 Liberalization in Economy stands for “The process of
making policies less constraining of economic activity."
And also “Reduction of tariffs and/or removal of non-tariff
barriers.”
 Economic liberalization is a very broad term that usually
refers to fewer government regulations and restrictions in
the economy in exchange for greater participation of
private entities; the doctrine is associated with neoliberalism. The arguments for economic liberalization
include greater efficiency and effectiveness that would
translate to a "bigger pie" for everybody.
 In developing countries, economic liberalization
refers more to liberalization or further "opening
up" of their respective economies to foreign
capital and investments. Three of the fastest
growing developing economies today; Brazil,
China and India, have achieved rapid economic
growth in the past several years or decades after
they have "liberalized" their economies to foreign
capital.
 Most first world countries, in order to remain
globally competitive, have pursued the path of
economic liberalization: partial or full
privatization of government institutions and
assets, greater labor-market flexibility, lower tax
rates for businesses, less restriction on both
domestic and foreign capital, open markets, etc.
that: "Success will go to those companies and
countries which are swift to adapt, slow to
complain, open and willing to change. The task of
modern governments is to ensure that our
countries can rise to this challenge
 Globalization
Globalization of Market refers to the merging of
historically distinct and separate national markets into
one huge global marketplace. Falling barriers to crossborder trade have made it easier to sell internationally.
Globalization of production refers to the sourcing of
goods and services from locations around the globe to
take advantage of national differences in the cost and
quality of factors of production (such as labor, energy,
land and capital )
 Globalization Advocates of Globalization see not only
the increases in incomes but also the spread of
democratic values. Opponents of the globalization
worry not just about the loss of jobs but about loss of
local culture.
 Agent/Facilitator of Globalization World Trade
Organization (WTO) Rule based international
Organization deals with free and fair trade among
member nations. Currently, there are 153 members in
WTO Established in 1995, successor of General
Agreement of Tariffs and Trade (GATT) GATT was
formed in 1947.
 Agent/Facilitator of Globalization United Nations
(UN)- Although the UN is perhaps best known for its
peacekeeping role, one of the organization’s central
mandates is the promotion of higher standards of
living, full employment, and conditions of economic
and social progress and development all issues that are
central to the creation of a vibrant global economy.
 World Bank World Bank is taken as a lending institution,
development agency, think tank, forum for international
governmental politics and economic diplomacy. Formed in
1944 as International Bank of Reconstruction and
Development (IBRD). From 1970’s bank started the process
called ‘Structural Adjustment’ program, under which
infrastructure, telecommunications and some social
services are privatized, labour, the civil service and
judiciary are revamped. Other facets are lowering deficits
and tariff barrier, opening the economy to short term
capital flows. In return IMF and World Bank provides
assistance to the economies. It offers highly leveraged loan
to poor countries.
 International Monetary fund (IMF) Its an organization
that oversees the global financial system by following
the macroeconomic policies of its member countries,
in particular those with an impact on exchange rates
and the balance of payments. Designer of Structural
Adjustment Program. (Sister Org. of World Bank).
IMF is often seen as the lender of last resort to nation
state whose economies are in turmoil and currencies
are losing value against those of other nations
 A free trade area occurs when a group of countries
agree to eliminate tariffs between themselves but
maintain their own external tariff on imports from the
rest of the world. The north American free trade area
(NAFTA), South Asian Free Trade Area (SAFTA) are
FTA’s. A regional Economic integration agreement is
the next step to Regional Economic Agreement (RTA),
it can include the free movement of capital as well as
goods and services, a common currency and a common
economic policy. European Union.
 Effects of Globalization Industrial- Movement of material and
goods between and within national boundaries. International
Trade in manufactured goods increased more than 100 times
(from $95 billion to $12 trillion) in the 50 years since 1955.
Financial- It is the world where $1.2 billion in foreign exchange
transactions are made everyday. Current economic crisis is the
example of financial integration Economic- Four Indians were
among the world's top 10 richest in 2008, worth a combined $160
billion. In 2007, China had 415,000 millionaires and India
123,000. 300 million Indians lifted up from poverty during 1991 to
2008. On the global scale, health becomes a commodity. In
developing nations under the demands of Structural Adjustment
Programs, health systems are fragmented and privatized
Political- China and India are emerging as a political power.
Their rapid economic growth provided them space in global
arena.
 Effects of Globalization The most popular language is
Mandarin (845 million speakers) followed by Spanish
(329 million speakers) and English (328 million
speakers). About 35% of the world's mail, telexes, and
cables are in English. Approximately 40% of the
world's radio programs are in English. About 50% of all
Internet traffic uses English.
 Effects of Globalization WHO estimates that up to
500,000 people are on planes at any one time, in 2008.
The IOM estimates there are more than 200 million
migrants around the world today. Newly available data
show that remittance flows to developing countries
reached $328 billion in 2008. Around 2.5 millions
people are working abroad. Remittance inflow per year
is around 209 bn.
 Effects of Globalization Farmers are loosing market
due to cheaper (subsidized) products coming from
outside, mainly in developing nations Globalization
has led to exploitation of labor. Prisoners and child
workers are used to work in inhumane conditions. Job
insecurity, Increased job competition has led to
reduction in wages and consequently lower standards
of living.
 Effects of Globalization Companies have set up
industries causing pollution in countries with poor
regulation of pollution The benefits of globalization is
not universal. The rich are getting richer and the poor
are becoming poorer. 20 percent of rich people
utilizing 80 percent of resources.
 Effects of Globalization Poorer countries suffering
disadvantages : The main export of poorer countries is
usually agricultural goods. Larger countries often
subsidies their farmers (like the EU Common
Agricultural Policy), which lowers the market price for
the poor farmer's crops compared to what it would be
under free trade.
 Effects of Globalization Bad aspects of foreign cultures
are affecting the local cultures through TV and the
Internet Local industries are being taken over by
foreign multinationals Multinational Companies and
corporations which were previously restricted to
commercial activities are increasingly influencing
political decisions
Meaning and Definition of
Multinational Company
A multinational corporation/company is an organization doing business in more
than one country. 'In other words it is an organization or enterprise carrying
on business in not only the country where it is registered but also in several
other countries.
According to the United Nations a multinational corporation is "an enterprise
which owns or controls production or service facilities outside the country in
which it is based".
"Multinational Corporations or Companies are those enterprises whose
management, ownership and controls are spread in more than one foreign
country".
Thus a multinational company carries on business operations in two or more
countries. Its headquarters are located in one country (home country) but its
activities are spread over in other countries (host countries). MNC's may engage
in various activities like exporting, importing, manufacturing in different
countries. It may also lend its patents, licenses and managerial services to firms in
host countries.
Characteristics of
Multinational Companies
(MNCs)
The distinctive features of multinational companies are
as follows.
1. Large Size:
A multinational company is generally big in size. Some
of the multinational companies own and control assets
worth billions of dollars. Their annual sales turnover is
more than the gross national product of many small
countries.
2. Worldwide operations:
A multinational corporation carries on business in
more than one country. Multinational corporations
such as Coco cola has branches in as many as seventy
countries around the world.
3. International management:
The management of multinational companies are
international in character. It operates on the basis of
best possible alternative available any where in the
world. Its local subsidiaries are managed generally by
the nationals of the host country. For example the
management of Hindustan Lever lies with Indians. The
parent company Unilever is in The United States of
America.
4. Mobility of resources:
The operation of multinational company involves the
mobility of capital, technology, entrepreneurship and
other factors of production across the territories.
5. Integrated activities:
A multinational company is usually a complete
organization comprising ‫ تضم‬manufacturing, marketing,
research and development and other facilities.
6. Several forms:
A multinational company may operate in host
countries in several ways i.e., branches,
subsidiaries ‫الشركات التابعة‬, franchise, joint ventures. Turn
key projects ‫ تحويل المشاريع الرئيسية‬.
Aims
Multinational companies make investments in different
countries with the following aims.
(a) To take tax benefits in host countries;
(b) To exploit the natural resources of the host country;
(c) To take advantage of Government concessions ‫ تنازالت‬in
host country;
(d) To mitigate ‫ تخفيف‬the impact of regulations ‫ االنظمة‬in the
home country;
(e) To reduce cost of production by making use of cheap
labour and low transportation expenses in the host country.
(f) To gain dominance ‫ لكسب الهيمنة السيطرة‬in foreign markets;
(g) To expand activities vertically
Merger and Acquisition
 A general term used to refer to the consolidation of
companies. A merger is a combination of two
companies to form a new company, while an
acquisition is the purchase of one company by another
in which no new company is formed.
Distinction
 Distinction
between Mergers and Acquisitions
Although they are often uttered in the same breath and
used as though they were synonymous ‫ مرادفة‬, the terms
merger and acquisition mean slightly ‫ قليال‬different things.
‫التمييز بين عمليات االندماج واالستحواذ؟ على الرغم من أنها غالبا ما تلفظ في نفس الوقت واستخدامها كما‬
‫ ؟‬.‫ واالندماج واالستحواذ حيث تعني أشياء مختلفة قليال‬،‫لو كانت مرادفا‬
When one company takes over another and clearly
established itself as the new owner, the purchase is called
an acquisition. From a legal point of view, the target
company ceases to exist, the buyer "swallows" the business
and the buyer's stock continues to be traded.
 In the pure sense of the term, a merger happens when
two firms, often of about the same size, agree to go
forward as a single new company rather than remain
separately owned and operated. This kind of action is
more precisely referred to as a "merger of equals ‫اإلندماج‬
‫ "بين نظراء‬Both companies' stocks are surrendered ‫تلغى‬
and new company stock is issued in its place. For
example, both Daimler-Benz and Chrysler ceased
‫ توقفت‬to exist when the two firms merged, and a new
company, Daimler Chrysler, was created.
،‫كل من دايملر بنز وكرايسلر لم تعد موجودة عندما اندمجت الشركتان‬
.،‫ دايملر كرايسلر‬،‫وشركة وتم انشاء شركة جديدة‬
 In practice, however, actual mergers of equals don't happen very often. Usually,
one company will buy another and, as part of the deal's terms, simply allow the
acquired firm to proclaim that the action is a merger of equals, even if it's
technically an acquisition. Being bought out often carries negative
connotations, therefore, by describing the deal as a merger, deal makers and
top managers try to make the takeover more palatable.
A purchase deal will also be called a merger when both CEOs agree that joining
together is in the best interest of both of their companies. But when the deal is
unfriendly - that is, when the target company does not want to be purchased it is always regarded as an acquisition.
Whether a purchase is considered a merger or an acquisition really depends on
whether the purchase is friendly or hostile and how it is announced. In other
words, the real difference lies in how the purchase is communicated to and
received by the target company's board of directors, employees
and shareholders.
 Synergy
Synergy is the magic force that allows for enhanced cost efficiencies of the new
business. Synergy takes the form of revenue enhancement and cost savings. By
merging, the companies hope to benefit from the following:
Staff reductions - As every employee knows, mergers tend to mean job losses.
Consider all the money saved from reducing the number of staff members from
accounting, marketing and other departments. Job cuts will also include the
former CEO, who typically leaves with a compensation package.
 Economies of scale - Yes, size matters. Whether it's purchasing stationery or a
new corporate IT system, a bigger company placing the orders can save more on
costs. Mergers also translate into improved purchasing power to buy
equipment or office supplies - when placing larger orders, companies have a
greater ability to negotiate prices with their suppliers.
 Acquiring new technology - To stay competitive,
companies need to stay on top of technological
developments and their business applications. By buying a
smaller company with unique technologies, a large
company can maintain or develop a competitive edge.
 Improved market reach and industry visibility ‫ رؤية‬-
Companies buy companies to reach new markets and grow
revenues and earnings. A merge may expand two
companies' marketing and distribution, giving them new
sales opportunities. A merger can also improve a company's
standing in the investment community: bigger firms often
have an easier time raising capital than smaller ones.
 Varieties of Mergers
From the perspective of business structures, there is a whole host of different
mergers. Here are a few types, distinguished by the relationship between the
two companies that are merging:
Horizontal merger - Two companies that are in direct competition and share
the same product lines and markets.
 Vertical merger - A customer and company or a supplier and company. Think of
a cone supplier merging with an ice cream maker.
 Market-extension merger - Two companies that sell the same products in
different markets.
 Product-extension merger - Two companies selling different but related
products in the same market.
 Conglomeration ‫ خليط‬- Two companies that have no common business areas.
Common goal

All mergers and acquisitions have one common goal:
they are all meant to create synergy that makes the
value of the combined companies greater than the sum
of the two parts 2+2= 5
 The success of a merger or acquisition depends on
whether
this
synergy
is
achieved.
The Global Marketplace
Learning Objectives
After studying this chapter, you should be able to:
1. Discuss how the international trade system, economic,
political-legal, and cultural environments affect a
company’s international marketing decisions
2. Describe three key approaches to entering international
markets
3. Explain how companies adapt their marketing mixes for
international markets
4. Identify the three major forms of international
marketing organizations
19-2
Global Marketing Today
A global firm is one that, by operating in more than
one country, gains marketing, production, R&D,
and financial advantages that are not available to
purely domestic competitors
The global firms sees the world as one market
19-4
Global Marketing Today
Global firms ask a number of basic questions
•
What market position should we try to establish in our
own country, in our economic region, and globally?
•
Who will our global competitors be, and what are their
strategies and resources?
•
Where should we produce or source our product?
•
What strategic alliances should we form with other firms
around the world?
19-5
Looking at the Global Marketing Environment
The International Trade System
Restrictions on trade between nations include:
•
Tariffs
•
Quotas
•
Exchange rate controls
•
Non-tariff trade barriers
19-6
Looking at the Global Marketing Environment
The International Trade System
Tariffs are taxes on certain imported products designed to
raise revenue or to protect domestic firms
Quotas are limits on the amount of foreign imports a
country will accept in certain product categories to
conserve on foreign exchange and protect domestic
industry and employment
19-7
Looking at the Global Marketing Environment
The International Trade System
Exchange controls are a limit on the amount of
foreign exchange and the exchange rate against
other currencies
Nontariff trade barriers are biases against bids or
restrictive product standards that go against
American product features
19-8
Looking at the Global Marketing Environment
The International Trade System
The World Trade Organization and GATT
The General Agreement on Tariffs and Trade
(GATT) is a 59-year-old treaty designed to
promote world trade by reducing tariffs and
other international trade barriers
•
Uruguay Round reduced merchandise tariffs by
30 percent and set up the World Trade Organization to
enforce GATT rules
19-9
Looking at the Global Marketing Environment
The International Trade System
The World Trade Organization and GATT
World Trade Organization
• Enforces GATT rules
• Mediates disputes
• Imposes trade sanctions
19-10
Looking at the Global Marketing Environment
The International Trade System
Regional Free Trade Zones
Economic communities are free trade zones
created by nations to work toward common
goals in the regulation of international trade
•
•
•
•
European Union (EU)
North American Free Trade Agreement (NAFTA)
Caribbean Free Trade Agreement (CAFTA)
South American Community of Nations (CSN)
19-11
Looking at the Global Marketing Environment
Economic Environment
Economic factors reflect a country’s
attractiveness as a market
•
Industrial structure
•
Income distribution
19-12
Looking at the Global Marketing Environment
Economic Environment
Industrial Structure
•
•
•
•
Subsistence economies
Raw material exporting economies
Industrializing economies
Industrial economies
19-13
Looking at the Global Marketing Environment
Economic Environment
Industrial Structure
Subsistence economies have a large majority of people
engaged in agriculture. They consume most of their
output and barter the rest for simple goods and
services. They offer few market opportunities.
Raw material exporting economies are rich in one or
more natural resources. They are good markets for
large equipment, tools, supplies, and trucks. If there
is a wealthy upper class, then they are also a market
for luxury goods.
19-14
Looking at the Global Marketing Environment
Economic Environment
Industrial Structure
Industrializing economies have manufacturing that represents
10 percent to 20 percent of the economy and needs imports of raw textile
materials, steel, and heavy machinery and fewer imports of finished textiles,
paper products, and automobiles. These economies create a rich upper class
and a small but growing middle class that demand new types of imported
goods.
Industrial economies are major exporters of manufactured goods, services, and
investment funds. They trade among themselves and export to other
economies. They represent an attractive market for all types of goods and
services.
19-15
Looking at the Global Marketing Environment
Economic Environment
Income Distribution
•
•
•
Low-income households
Middle-income households
High-income households
19-16
Looking at the Global Marketing Environment
Political-Legal Environment
•
•
•
•
Country’s attitude toward international buying
Government bureaucracy
Political stability
Monetary regulations
19-17
Looking at the Global Marketing Environment
Political-Legal Environment
Country’s attitude toward international buying
involves the country’s receptiveness to foreign
business
Monetary regulations involve the stability of
exchange rates and currency limitations
19-18
Looking at the Global Marketing Environment
Political-Legal Environment
Countertrade is a non-cash payment
•
Barter is the exchange of goods or services
•
Compensation or buyback is the sale of a
plant or equipment and the payment in
resulting products
•
Counterpurchase is when the seller receives
payment and agrees to spend some of the
money in the other country
19-19
Looking at the Global Marketing Environment
Cultural Environment
Impact of Culture on Marketing Strategy
•
•
Business norms
Cultural preferences, traditions, and behaviors
19-20
Deciding Whether to Go Global
Factors to consider
•
Global competition in the home market
•
Stagnant or shrinking home market
•
Foreign markets with more opportunity
•
Expansion of customers to international markets
19-21
Deciding Which Markets to Enter
Define international marketing objectives and
policies
•
Foreign sales volume
•
How many countries to market to
•
Types of countries to market to based on:
•
•
•
Geography
Income and population
Political climate
19-22
Deciding Which Markets to Enter
Rank potential global markets based on:
•
Market size
•
Market growth
•
Cost of doing business
•
Competitive advantage
•
Risk level
19-23
Deciding How to Enter the Market
•
•
•
Ways to enter global markets include:
Exporting
Joint venturing
Direct investment
19-24
Deciding How to Enter the Market
Exporting is when the company produces its goods
in the home country and sells them in a foreign
market. It is the simplest means involving the
least change in the company’s product lines,
organization, investments, or mission.
•
Indirect exporting
•
Direct exporting
19-25
Deciding How to Enter the Market
Exporting
Indirect exporting is when the firm works through an independent
international marketing intermediary. This requires less investment
and risk since the firm does not require an overseas organization or
network.
Direct exporting is when the firm handles its own exports. This requires
a greater investment and risk.
•
Domestic export department
•
Send home-based salespeople abroad
•
Use of foreign distributors
19-26
Deciding How to Enter the Market
Joint venturing is when a firm joins with foreign
companies to produce or market products or services
•
Licensing
•
Contract manufacturing
•
Management contracting
•
Joint ownership
Joint venturing differs from exporting in that the
company joins with a host country partner to sell or
market abroad
19-27
Deciding How to Enter the Market
Joint Venturing
Licensing is when a firm enters into an
agreement with a licensee in a foreign
market. For a fee or royalty, the licensee
buys the right to sue the company’s process,
trademark, patent, trade secret, or other
item of value
19-28
Deciding How to Enter the Market
Joint Venturing
Contract manufacturing is when a firm
contracts with manufacturers in the foreign
market to product its product or provide its
service. Benefits include faster startup, less
risk, and the opportunity to form a
partnership or to buy out the local
manufacturer.
19-29
Deciding How to Enter the Market
Joint Venturing
Management contracting is when the domestic firm
supplies management skill to a foreign company that
supplies capital. The domestic firm is exporting
management services rather than products.
Joint ownership is when one company joins forces with
foreign investors to create a local business in which
they share joint ownership and control. Joint
ownership is sometimes required for economic or
political reasons.
19-30
Deciding How to Enter the Market
Direct investment is the development of foreign-based
assembly or manufacturing facilities and offers a
number of advantages:
Lower costs
•
Raw material
•
Labor
•
Government incentives
•
Logistics
•
Control
19-31
Deciding on the Global
Marketing Program
Standardize marketing mix involves selling the
same products and using the same marketing
approaches worldwide
Adapted marketing mix involves adjusting the
marketing mix elements in each target
market, bearing more costs but hoping for a
larger market share and ROI
19-32
Deciding on the Global
Marketing Program
Product Strategies
Straight product extension means marketing a product
in a foreign market without any change
Product adaptation involves changing the product to
meet local conditions or wants
Product invention consists of creating something new
for a specific country market
•
Maintain or reintroduce earlier products
•
Create new products
19-33
Deciding on the Global
Program
Marketing
Promotion Strategies
Companies can either adopt the same
communication strategy they use at
home or change it for each market
19-34
Deciding on the Global
Marketing Program
Price Strategies
Uniform pricing is the same price in all markets but
does not consider income or wealth where the price
may be too high in some markets or not high enough
in other markets
Market-based pricing is the price that markets can pay
but does not consider actual costs
Standard markup pricing is a price based on a
percentage of cost but can cause problems in
countries with high costs
19-35
Deciding on the Global
Marketing Program
Distribution Strategies
Whole-Channel View
Seller’s headquarters organization supervises the
channel and is also a part of the channel
Channels between nations move the products to the
borders of the foreign nations
Channel within nations move the products from their
foreign point of entry to the final customers
19-36
Deciding on the Global
Program
Marketing
Distribution Strategies
Differences Within Countries
•
•
Numbers and types of intermediaries
Size and character of retail units
19-37
Deciding on the Global
Organization
Marketing
Typical management of international marketing
activities include:
•
Organize and export department with a sale
manager and staff
•
Create an international division organized by
geography, products, or operating units
•
Become a complete global organization
19-39
 The advantages of globalisation (an economic view)
The economic benefits that greater openness to
international trade bring are:
♦ Faster growth: economies that have in the past been
open to foreign direct investments have developed at a
much quicker pace than those economies closed to
such investment e.g. communist Russia
♦ Cheaper imports: this is down to the simple fact that
if we reduce the barriers imposed on imports (e.g.
tariffs, quota, etc) then the imports will fall in price
 ♦ New technologies: by having an open economy we can bring in
new technology as it happens rather than trying to develop it
internally
♦ Spur of foreign competition: foreign competition will
encourage domestic producers to increase efficiency. Carbaugh
(1998) states that global competitiveness is a bit like golf, you get
better by playing against people who are better than you.
♦ Increase consumer income: multination will bring up average
wage levels because if the multinationals were not there the
domestic companies would pay less.
♦ Increased investment opportunities: with globalisation
companies can move capital to whatever country offers the most
attractive investment opportunity. This prevents capital being
trapped in domestic economies earning poor returns.
 Disadvantages of globalisation
The negative drivers of globalisation included culture
which is a major hold back of globalisation. An example of
how culture can negatively affect globalisation can be seen
in the French film industry. The French are very protective
of this part of their culture and provide huge grants to help
its development. As well as government barriers market
barriers and cultural barriers still exist.
Also a negative aspect to a countries development is war
e.g. tourism in Israel fell by 40% due to the latest violence.
Corporate strategy can also be a negative driver of
 globalization as corporation may try to locate in one particular
area.
Another negative driver of globalisation is “local focus” or
“localisation” as it is termed in Richard Douthwaite’s book “Short
Circuit”. Douthwaite (1996) believes that globalisation can and
should be reversed. He also believes that localisation is the way
to do this. He defines localisation as “not meaning everything
being produced locally but it means a better a balance between
local, regional, national and international markets and thus
bring less control to multinational corporations”. Another step to
reverse globalisation would be for governments to club together
to curb the power of multinational by negotiating new trade and
treaties that would remove the subsidies powering globalisation
and give local production a chance.
 Douthwaite also states that the global economy is itself nothing less
than a system of structural exploitation that creates hidden slaves on
the other side of the world and also
that the North should allow the South to produce for itself and not just
for us (North). So it can be seen that Douthwaite is very opposed to
globalisation especially that part of it
exploited by multinational corporations.
Further arguments put forward against globalisation by Mr. Lawton
include that it actually destroys jobs in wealthy advanced countries.
This is due to the lower costs of wages in developing countries.
Multinationals will move to areas of lower wage levels at the drop of a
hat e.g. Fruit of the Loom. Also this ability to relocate has meant that
wage levels of unskilled workers in developed countries has actually
fallen relatively speaking. This is down to the fact that one now needs
skill and knowledge in developed economies to survive.
 Also there is the loss of sovereignty that globalisation brings. Many antiglobalisation believers state that nations are loosing their identity and selling
their soul.
Then there are environmental factors of globalisation as described earlier.
These are becoming more and more controversial.
Technology, though usually viewed as a positive aspect of globalisation, also has
some negative points. Jeffry Sachs (The Economist, June 24th 2000) argues that
technology is now what divides the world. Sachs states that 15% of the world’s
population account for nearly all the world’s technological advances. This has
to be a concern if developing economies are ever going to catch up. Many
countries, almost 30% of the world’s population, are technologically excluded
(this means not only that they do not innovate but also that they cannot adopt
new technologies). In recent years some countries, such as Taiwan, South Korea
and Israel, have become top rank innovators and with this their economies
have flourished. This would indicate that perhaps the best way to tackle world
poverty is to provide aid through education and technology.