Globalisation and International Trade

Here’s come to an end of my Business and Management lectures. However, here’s also the most impression topic I have ever had. This week’s topic is Globalisation. When I first heard this word, I will immediately think of the quota of HSBC “Think globally, act locally”. Globalisation has lots of definition. Even, when you ask different people, I believe they would give you different answers. Nevertheless, I believe there’s no a correct answers. In an organisation, they have different strategy, so, they also got different method to think globally. Even though there’s no a correct definition. I believe the following one is the clearest phrase to show how it works. Globalisation refers to a world in which societies, cultures, politics and economies have, in some sense come closer together. (Kiely, 1999)

 
To go international, there are lots of methods. For example, outsource, exporting/ importing, franchising, joint venture and E-commerce, etc. In the following, I would like to describe a bit for some of the elements.
 

Outsource (1/4):

It is a method to go international by lowering their cost, shifting their manufacturing to another place. Since the cost in China or India would be cheaper, most of the firm would like to move to there. For example, call centre, in old days, they are mostly in UK and Europe. However, nowadays, it’s in China and mostly in India. You might except that India has a very cheap cost, their quality might be very bad, and however, you are wrong. Those Indian has a very high education level, they can speak for about 3-4 languages for instance, Chinese, French and English, but of course there mother language. This is because in the above countries, they don’t need to pay for minimum wage, but need for another.

 

Exporting/ importing (2/4):

It has become the most important element nowadays. Selling your products in all over the world can help increase the market share and improve their well-known. This element is to sell oversea to find an agent to help your organisation. Since agent know the local needs.

Franchising (3/4):

Getting McDonald as an example, it has been very successful as it opened all over the world. By franchising, its revenue has increase rapidly every year. It was a well-known brand nowadays. There’s shop everywhere all over the world. Franchising can expand rapidly beyond their home market. The expanding firm sells the right to a company which allows them to use McDonald name to sell their products. And everyone take part of the profits.

 

 

E-commerce (4/4):

Technology has been an important element today. However, it is more useful for some industry. For example banking industry. They can provide online services to do transaction, to transfer money and buy insurance which is very convenient.

 

Globalisation and international trade are good to an organisation. There are some successful example. One of them are Starbucks. Starbucks is a very successful organisation is because it’s revenue amount increase sharply. It’s revenue is about $9.8 billion and profits to almost $900 million. Originally, Starbucks is not a franchising organisation. In 1971, it started its business. In 1981, it just got about 5 stores. However, after franchising, it got about 114 stores in 1987. Nowadays, it has over 16,000 retail stores and about 12,000 in US and 4,000 in more than 50 countries. Starbucks used joint ventures, licensing or wholly owned subsidiaries to enter new markets.

 

Nevertheless, you might think that acting globally or internationally must give benefits to a company, however, that’s not! It’s just a delusion that most of the company are successful. There is also a company which is not, Tesco. Tesco has want to become an international brand too in many years ago. They opened their first shop in China. However, it was not successful. They had used the same method and the taste of local people in UK for Chinese people. This is inappropriate. An organisation should satisfy the local needs and wants. Different countries and places have different needs. We should find more research and find an agent for help.

 

In the following, there will be more details about what are th pros and cons for globalisation. In the video, it also tells us what is TNC stands for. It would also provide you some example which the organisations has been acting globally.

After you have watched the video, I believe you would understand more what is TNC, it stands for Trans National coporation! They operate franchises all around the wrold.