Globalization refers to the inexorable trend for business segments (or ecosystems) to extend across national borders.
Every ecosystem has a different geographical boundary. For hairdressing, the relevant border may be a single town. For an increasing number of industries, the only sensible market definition is global – for example investment banking, semiconductors and commercial aviation. Most businesses operate somewhere in-between.
Continuous reduction in transportation and communication costs, combined with a steady, though regrettably erratic reduction in trade barriers is widening the relevant geographical market definition for business after business.
International competitors show up, with their competitive advantage resting in global economies of scale. Over time, the companies that fit themselves to a geographically defined local ecosystem find themselves more and more marginalized.
Globalization has become an emotive term, laden with prejudice and misconception. Anti-globalisation protests come from unlikely bedfellows – protectionist capitalists, labour unions and left-wing activists. One need look no further than the 300 million people raised out of poverty in China over the last 30 years to see the beneficial impact of globalization on human welfare.
Yes, the cold competitive wind of globalization forces change – countries are on a continuous treadmill to build value added services and products that justify their standard of living. Isolation and protective measures may provide temporary relief, but only at the price of making the inevitable exposure traumatic rather than incremental.
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Kenichi Ohmae – The borderless world
Porter – the competitive advantage of Nations
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