Global presentataion

►Globalization : the expanding scale, growing
magnitude, speeding up and deepening impact of
transcontinental flows and patterns of social
interaction (Held and McGrew,
Globalization/Anti-Globalization, p. 1)

(Economic) Globalization: “…(the) integration
of national economies into the international
economy through trade, direct foreign
investment…short-term capital flows,
international flows of workers and humanity
generally, and flows of technology…”
(Bhagwati, p. 3)

 Globalization (PGE W05).pdf

http://www.bized.co.uk

Globalisation

Globalisation
could involve
all these
things!

Copyright 2007 – Biz/ed

Video: Emerging Powers: India
• What did you find informative
about this film?
• What is the basic argument that
the film presents about India and
about globalization?
• How does the film interpret such
things as India’s widespread
poverty and its periodic flare-ups
of ethnic and religious strife?
• Why are India and China so
important?

“Globalization in its current phase has
been described as an unprecedented
compression of time and space
reflected in the tremendous
intensification of social, political,
economic, and cultural
interconnections and
interdependencies on a global scale.”
Stegler, p. ix

• time-space compression
• deterritorialization and supraterritoriality

One way to
approach this: think
about the world
before globalization

• Distance mattered—space often measured in
time
• Territorial boundaries more or less kept
things in and out
• Society and culture had spatial referents
• Everything had its “place” (literally)

In a world of deterritorialization and
supraterritoriality:

•Distance becomes almost irrelevant (the end of
distance)
•Boundaries are increasingly permeable.
•Groups and cultures increasingly don’t have a
territorial basis
•A new kind of non-physical “place” is emerging

Bosworth and Gordon: A survey of
some key processes of globalization
• Technological advances
• Expansion of international commerce (exports
and imports)
• Rising importance of private capital flows
(stock markets and multinational corporations)
• Increasing travel and migration (international
tourism and domestic diversity)
• Increased communication and interaction
between peoples (through all sorts of media)


Integration of Economies
• The increasing reliance of
economies on each other

• The opportunities to be
able to buy and sell in
any country in the world
• The opportunities for
labour and capital to
                                              locate anywhere in the
world

                         • The growth of global
Stock Markets are now accessible markets in finance
from anywhere in the world!
Copyright: edrod, stock.xchng



Integration of Economies
• Made possible by:
– Technology
– Communication networks
– Internet access
– Growth of economic cooperation –
trading blocs (EU, NAFTA, etc.)
– Collapse of ‘communism’
– Movement to free trade



Trade versus Aid?
• Benefits of Trade:
– Increased choice
– Greater potential
for growth
– Increase
international
economies of
scale
– Greater
employment Trade has led to massive increases in wealth
opportunities for many countries.
Copyright: budgetstock, stock.xchng



Trade versus Aid?
• Disadvantages
of trade:
– Increase in gap
between the rich and
the poor
– Dominance of global
trade by the rich,
northern hemisphere
countries
– Lack of opportunities
for the poor to be able
to have access to How far does trade help children like
markets these?
– Exploitation of Copyright: clesio, stock.xchng
workers and growers



Corporate Expansion
• Multi-national
or trans-national
corporations
(MNCs or TNCs) –
businesses with
a headquarters
in one country but
with business
No matter where you go in the world, certain operations in a
businesses will always have a presence.
Copyright: mkeky, stock.xchng
number of others.



Corporate Expansion
• Characteristics:
– Expanding revenue
– Lowering costs
– Sourcing raw

materials
– Controlling key
supplies
– Control of
processing
– Global economies
Controlling supplies may be one reason
       of scale
for global expansion.




Copyright: rsvstks, stock.xchng











Corporate Domination
• Key Issues:
– Damage to the
environment?
– Exploitation of labour?
– Monopoly power
– Economic degradation
– Non-renewable
resources
– Damage to cultures
Shell and Nike’s activities have
come under severe criticism
in some quarters.
Copyright: Homsel, stock.xchng


Other Issues:
• Accountability
of Global businesses?
• Increased gap between
rich and poor fuels
potential terrorist reaction
• Ethical responsibility of
business?
There are plenty of people who believe that
• Efforts to remove trade
globalisation is a negative development,
protests at the G8 summits, pollution, poverty
barriers
and concern over GM crops are just some of
the issues.
Copyright: stock.xchng

Thomas Loren Friedman (born July 20, 1953) is an
American journalist, columnist and author. He
writes a twice-weekly column for The New York
Times. He has written extensively on foreign
affairs including global trade, the Middle East, and
environmental issues and has won the Pulitzer
Prize three times.

Ten flatteners
Friedman defines ten "flatteners" that he sees as
levelling the global playing field:
• #1: Collapse of the Berlin Wall – 11/9/89: Friedman called the flattener, "When
the walls came down, and the windows came up." The event not only symbolized
the end of the Cold War, it allowed people from other side of the wall to join the
economic mainstream. "11/9/89" is a discussion about the Berlin Wall coming
down, the "fall" of communism, and the impact that Windows powered PCs
(personal computers) had on the ability of individuals to create their own content
and connect to one another. At this point, the basic platform for the revolution to
follow was created: IBM PC, Windows, a standardized graphical interface for word
processing, dial up modems, a standardized tool for communication, and a global
phone network.
• #2: Netscape – 8/9/95: Netscape went public at the price of $28. Netscape and
the Web broadened the audience for the Internet from its roots as a
communications medium used primarily by "early adopters and geeks" to
something that made the Internet accessible to everyone from five-year-olds to
ninety-five-year olds. The digitization that took place meant that everyday
occurrences such as words, files, films, music and pictures could be accessed and
manipulated on a computer screen by all people across the world.

• #3: Workflow software: Friedman's catch-all for the standards and technologies
that allowed work to flow. The ability of machines to talk to other machines with
no humans involved, as stated by Friedman. Friedman believes these first three
forces have become a "crude foundation of a whole new global platform for
collaboration". There was an emergence of software protocols (SMTP – simple
mail transfer protocol; HTML – the language that enabled anyone to design and
publish documents that could be transmitted to and read on any computer
anywhere) Standards on Standards. This is what Friedman called the "Genesis
moment of the flat world." The net result "is that people can work with other
people on more stuff than ever before." This created a global platform for multiple
forms of collaboration. The next six flatteners sprung from this platform.
• #4: Outsourcing: Friedman argues that outsourcing has allowed companies to split
service and manufacturing activities into components which can be subcontracted
and performed in the most efficient, cost-effective way. This process became
easier with the mass distribution of fiber optic cables during the introduction of
the World Wide Web.

• #5: Offshoring: The internal relocation of a company's
manufacturing or other processes to a foreign land to
take advantage of less costly operations there. China's
entrance in the WTO (World Trade Organization)
allowed for greater competition in the playing field.
Now countries such as Malaysia, Mexico, Brazil must
compete against China and each other to have
businesses offshore to them.
• #6: Uploading: Communities uploading and
collaborating on online projects. Examples
include open source software, blogs, and Wikipedia.
Friedman considers the phenomenon "the most
disruptive force of all".

• #7: Supply-chaining: Friedman compares the
modern retail supply chain to a river, and points
to Wal-Mart as the best example of a company
using technology to streamline item sales,
distribution, and shipping.
• #8: Insourcing: Friedman uses UPS as a prime
example for insourcing, in which the company's
employees perform services – beyond shipping –
for another company. For example, UPS repairs
Toshiba computers on behalf of Toshiba. The
work is done at the UPS hub, by UPS employees.

• #9: In-forming: Google and other search engines are the prime example.
"Never before in the history of the planet have so many people – on their
own – had the ability to find so much information about so many things
and about so many other people," writes Friedman. The growth of search
engines is tremendous; for example take Google, in which Friedman states
that it is "now processing roughly one billion searches per day, up from
150 million just three years ago".
• #10: "The Steroids": Wireless, Voice over Internet, and file sharing.
Personal digital devices like mobile phones, iPods, personal digital
assistants, instant messaging, and voice over Internet Protocol (VoIP).
Digital, Mobile, Personal and Virtual – all analog content and processes
(from entertainment to photography to word processing) can be digitized
and therefore shaped, manipulated and transmitted; virtual – these
processes can be done at high speed with total ease; mobile – can be
done anywhere, anytime by anyone; and personal – can be done by you.

Bosworth and Gordon also point to some of the
key public controversies over globalization:
What are they?

“Can globalization be harnessed so that all citizens
and countries benefit and not just the lucky few?”

Frank Lechner: Empirical Debates
1. Process vs. Project
2. New Era vs. Nothing New (Globabaloney)
3. Hard vs. Soft
4. End vs. Revival of Nation State
5. Cultural Sameness vs. Difference

Amartya Sen: How to Judge
Globalization (Normatively)
1. 1. Is globalization
Westernization? Is it a threat
to non-western societies?
2. What is the right question to
ask about globalization and
the poor?
3. What are the “legitimate”
questions that “anti-
globalization” protestors ask?

“Our global civilization is a world
heritage... The idea of an immaculate
Western conception is an imaginative
fantasy.”
“Globalization has much to offer, but even
as we defend it, we must also, without
any contradiction, see the legitimacy of
many questions that the antiglobalization
protestors ask.”
“The world powers bear an awesome
responsibility for helping in the
subversion of democracy in Africa and ofr
all the far-reaching negative
consequences of that subversion.”

“Over the past decade globalization has
been driven by technological
advances…..But globalization has also
been driven by policies and ideas…”
Bosworth & Gordon

Next time: globalization as a neoliberal
project

Performance of acquisitions
 We used an event study methodology
► Sample - Indian companies had cross- border acquisitions
during 2002-2006.
►224 transactions: 127 different companies from 33 industries.
► We used BSE-500 (represents nearly 93% of the total market capitalization
on Bombay Stock Exchange Limited) as the market index for the
calculations.

 Calculating CAR
►Used the following formula to calculate the abnormal returns -
^ ^
ARit = Rit - α i - β i Rmt, (t = -7 to t= +7)

►The CAR was calculated using the following formula -
CAR = ∑ AR i
t = +7
it
t = -7

Copyright NUS Business School 2008

Summary
Acquisitions a prominent part of OFDI from India
► Good distribution across industries and regions
► Achieving an increased prominence, strong growth
► Important component to OFDI and strategy of MNCS from India

 Strategy and performance
► Performance strong on an absolute and a comparative basis

► Several market expansion motives related to good performance

► Market clearly rewarding international expansion strategy of
Indian firms
► Need comparative analysis to other modes
► Need deeper analysis of strategy and performance of acquisitions

Copyright NUS Business School 2008

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