4 Dimensions of Globalization
- Economic Integration: Increased dependence between countries economy.
- Technological development: IT and network allows for globalization.
- Political integration: International relations, politicians and agreements.
- Cultural dimensions
Who is against Globalization?
Developed Countries due to loss of low-paid jobs. Usually protectionist countries.
Developing Countries:
- Import of products/services from the outside threatens local culture, identity and economy.
Scpetics vs Globalists
SCEPTICS:
- Globalization is not a new phenomenon
- The world is not flat (meaning that cross-border integration is close to complete), but characterized by persistent differences despite partial integration (Gaps in culture, institutions, trust etc.)
- In a semi-globalized world, firms must therefore pay more attention to the differences between cultures than to similarities.
- DISTANCE STILL MATTERS (EVEN ONLINE!!!)
GLOBALIST
- The world is flat
- Global integration
- One global popular culture rather than more cultures.
Laws of semi-global business world
The law of semiglobalization: International interactions are much less intense than domestic interactions, yet non-negligible.
The law of distance: International interactions are ‘dampened’ by external/objective distance.
CAGE Framework
The analytical framework used to understand country and regional differences along the distance dimensions of culture, administration, geography, and economics
4 differences
Cultural: Language, etnicity, religion etc.
Economic: Income per capita, cost of labor, GDP etc.
Geographic: Time zones, climate, transportation etc.
Administrative: Currency, trade agreements, legal systems etc.
Aggregation, Adaption and Arbitrage
Aggregation strategy:
Exploit similarities across countries, while side-stepping some differences to gain increasing returns to scale. (tensions between integration and responsiveness become salient (fremtrædende)).
Adaption strategy:
Create value by adapting elements of company (e.g. products) to local preferences/requirements.
Arbitrage strategy
(The strategy of difference):
Exploit differences between countries by taking advantage of variations, e.g. in costs and willingness-to-pay (by locating different parts of the value chain in different countries).
