GLOBALISATION

GLOBALISATION

1. REASONS FOR:

   • Resources
   • Cost
   • Tarriffs
   • Specialisation
   • ABSOLUTE ADVANTAGE:
     • Only the best country should produce -Adam Smith
   • COMPETITIVE ADVANTAGE:
     • Should produce their specialty

2. COMPETITIVE ADVANTAGE

   • PRIMARY
     • Raw Materials
   • SECONDARY
     • Manufacturing
   • TERTIARY
     • Services

3. THE PATH TOWARDS GLOBALISATION:

   • 1. Establish a presence in overseas markets to become mulitnational
   • 2. Trade across many borders with operations in multiple countries to become transnational
   • 3. Whole world a single market

4. THREE APPROACHES TO GLOBALISATION:

   • ETHNOCENTRICITY
     • When doing business abroad, do not change anything
       • In regard to their location
   • POLYCENTRICITY
     • Company adopts the host country perspective
   • GEOCENTRICITY
     • Company acts completely independent of geography and adopts global perspective

5. DEFINITION:

   • Specialisation by each country based on their comparative advantage
   • Which country can produce a product with the least cost