CONTEMPORARY

WORLD

Dr. Diosdado P. Estimada

 TOPIC OUTLINE

• What is Globalization?
• Examples of Globalization
• The Three Categories and its Impact
• Advantages and Disadvantages
• The Bright and Dark Side
• Do You Think Globalization is Good or Bad? Its Your
Choice
 INTODUCTION
TO
GLOBALIZATION
 WHAT IS GLOBALIZATION?

• Globalization is defined by different authorities differently.

One of those are as follows:
• It is the process of international integration arising from
the interchange of world views, products, ideas, and other
aspects of culture. (Gupta, Nikhil)
• Is the networking and expansion of once local products,
belief, and practices into universal products, belief, and
practices often through technology.
 EXAMPLES OF GLOBALIZATION
Globalization in Economics

• Multinational corporations operate on a global scale, with satellite

offices and branches in numerous locations.
• Outsourcing can add to the economic development of a struggling
country, bringing much needed jobs.
• Some automobiles use parts from other countries, as in a car being
assembled in the United States with the parts coming from Japan,
Germany, or Korea.
• One shirt sold in the United States could have been made from
Chinese cotton by workers in Thailand. Then it could have been
shipped on a French freighter that had a Spanish crew.
 EXAMPLES OF GLOBALIZATION

Globalization in the Blending of Cultures

• Christian missionaries from Europe added to the globalization of
Christianity.
• Colonization all over the world was a major cause of globalization.
• Satellite television allows shows from one country to be broadcast
in many others, adding to cultural globalization.
 EXAMPLES OF GLOBALIZATION
Globalization in Technology

• The Internet is a major contributor to globalization, not only

technologically but in other areas as well, like in cultural exchanges
of the arts.
• Global news networks, like CNN, contribute to the spread of
knowledge.
• Cells phones connect people all over the world like never before.
Around 60 percent of all people in the world use cell phones.
 THE THREE CATEGORIES
• Globalization is often divided into three categories:
Economic, Political and Social.
• Though the three are interdependent, economic and
political forces are usually the driving factors of
globalization, while social changes generally occur as a
result of those activities.
• Social globalization pertains to human interaction within
cultural communities, encompassing topics like family,
religion, work and education.
 IMPACT
• Economic impact
– Improvement in standard of living
– Increased competition among nations
– Widening income gap between the rich and
poor
• Social impact
– Increased awareness of foreign cultures
– Loss of local culture
• Environmental impact
– Environmental degradation
– Environmental management
 ADVANTAGES

!Peaceful Relations
Most of the countries have resorted to trade relations with each
other in order to boost their economy, leaving behind any bitter
past experiences if any.

!Employment
Considered as one of the most crucial advantages,
globalization has led to the generation of numerous
employment opportunities. Companies are moving towards the
developing countries to acquire labor force.
!Education
• A very critical advantage that has aided the population is the
spread of education. With numerous educational institutions
around the globe, one can move out from the home country
for better opportunities elsewhere.
!Product Quality
• The product quality has been enhanced so as to retain the
customers. Today the customers may compromise with the
price range but not with the quality of the product. Low or
poor quality can adversely affect consumer.
!Cheaper Prices
Globalization has brought in fierce competition in the markets.

!Communication
• Every single information is easily accessible from almost
every corner of the world. Circulation of information is no
longer a tedious task, and can happen in seconds. The
Internet has significantly affected the global economy,
thereby providing direct access to information and products.
!Transportation
• Considered as the wheel of every business organization,
connectivity to various parts of the world is no more a serious
problem. Today with various modes of transportation
available, one can conveniently deliver the products to a
customer located at any part of the world.
!GDP Increase
• Gross Domestic Product, commonly known as GDP, is the
money value of the final goods and services produced within
the domestic territory of the country during an accounting
year.
!Free Trade

Free trade is a policy in which a country does not levy

taxes, duties, subsidies or quota on the import/export of
goods or services from other countries.

There are countries which have resolved to free trade in

specific regions. This allows consumers to buy goods and
services, comparatively at a lower costs.
!Travel and Tourism

Globalization has promoted tourism to great heights.

International trade among different countries also helps in
increasing the number of tourists that visit different places
around the world.
!External Borrowing
With the help of globalization, there is opportunity
for corporate, national, and sub-national borrowers to have
better access to external finance, with facilities such as
external commercial borrowing and syndicated loans.
 DISADVANTAGES

!Health Issues
• Globalization has given rise to more health risks and
presents new threats and challenges for epidemics.
• The dawn of HIV/AIDS. Having its origin in the wilderness
of Africa, the virus has spread like wildfire throughout the
globe in no time.
• Food items are also transported to various countries, and
this is a matter of
concern, especially in case of perishable items.
!Loss of Culture
• With large number of people moving into and out of a
country, the culture takes a backseat. People may adapt
to the culture of the resident country. They tend to follow
the foreign culture more, forgetting their own roots. This
can give rise to cultural conflicts.
!Uneven Wealth Distribution
• It is said that the rich are getting richer while the poor are
getting poorer. In the real
sense, globalization has not been able to reduce poverty.
!Environmental Degradation
• The industrial revolution has changed the outlook of the
economy. Industries are using natural resources by
means of mining, drilling, etc. which puts a burden on the
environment.
!Disparity
• Though globalization has opened new avenues like wider
markets and employment, there still exists a disparity in
the development of the economies. Structural
unemployment owes to the disparity created. Developed
countries are moving their factories to foreign countries
where labor is cheaply available.
!Conflicts
• It has given rise to terrorism and other forms of violence.
Such acts not only cause loss of human life but also huge
economic losses.
!Cut-throat Competition
• Opening the doors of international trade has given birth to
intense competition. This has affected the local markets
dramatically. The local players thereby suffer huge losses
as they lack the potential to advertise or export their
products on a large scale. Therefore the domestic
markets shrink.
 " Globalization lets countries do what they can do
best. If, for example, you buy cheap steel from
another country you don’t have to make your own
steel. You can focus on computers or other
things.

" Globalization gives you a larger market. You can sell more
goods and make more money. You can create more jobs.

" Consumers also profit from globalization.

Products become cheaper and you can get
new goods more quickly.
 ! Globalization causes unemployment in
industrialized countries because firms move their
factories to places where they can get cheaper
workers.

! Globalization may lead to more environmental problems. A

company may want to build factories in other countries
because environmental laws are not as strict as they are at
home. Poor countries in the Third World may have to cut down
more trees so that they can sell wood to richer countries.
 ! Some of the poorest countries in the world, especially in
Africa, may get even poorer. Their population is not
as educated as in developed countries and they don’t
have the new technology that we do.

! Human, animal and plant diseases can spread more

quickly through globalization.
Learning Activity: How Globalized is Your Home
1. Do an inventory of everything in your home (e.g. footwear, clothes,
computer, cellphones, watches, appliances and among others.
2. Organize your inventory into two types: First, “things” that are made
in the Philippines and second, those that are of foreign brand. List
the countries of origin of your foreign-brand items.
3. In class compare your lists with those of your classmates to
determine which countries make the most household and personal
needs you and your families have.
4. Discuss why certain products are made in the Philippines while
others are produced abroad.
THE GLOBALIZATION OF
WORLD ECONOMICS
 INTERNATIONAL TRADING
SYSTEMS

International Trade

• International trade is the exchange of goods and

services between countries. This type of trade
gives rise to a world economy, in which prices,
or supply and demand, affect and are affected by
global events.
 GLOBAL ECONOMY

!Economic globalization refers to the free

movement of goods, capital, services,
technology and information.
! It is the increasing economic integration
and interdependence of national,
regional, and local economies across the
world through an intensification of cross-
border movement of goods, services,
technologies and capital.
 TOP TRADING PARTNERS OF THE
PHILIPPINES

United States
Japan
Hong Kong
China
Germany
Holland
Singapore
South Korea
BRETTON WOODS CONFERENCE (1944)
 GOALS OF THE CONFERENCE

Intended to govern currency regulations and establish legal obligations (through the
IMF)
Set a standard for exchange rates
Establish international monetary cooperation
Money pool from which member nations can borrow funds
THE WORLD BANK AND IMF ARE STILL ACTIVE, ALTHOUGH
THEY HAVE BEEN SEVERELY CRITICIZED FOR SOME OF
THEIR POLICIES.
World Bank
It is international financial institution that
provides loans to countries of the world
for capital projects. It was established
by the United Nations Monetary and
Financial Conference or the Bretton
Woods Conference.
International Monetary Fund (IMF)
!Ensure the stability of the international
monetary system. It does so in three ways:
keeping track of the global economy and the
economies of member countries; lending to
countries with balance of payments difficulties;
and giving practical help to members.
• World Trade Organization (WTO)
- Regulates international trades
- Deals with the rule of trade between nations
- Ensures the trade will flows smoothly,
predictably and freely as possible.
- Acts as forum in negotiation trade agreements
 BENEFITS VS. DRAWBACKS
# WORLD TRADE ORGANIZATION
" Solves trade disputes between countries in a peaceful ways
×But only focuses on developed nation
" Lowers the cost of goods and services for those developed nation
×To achieve low cost, labour rights and environmental concerns are
ignored.
" Promotes economic growth in developed countries
×Favour the rich nations and powerful trans-national corporation
• World Health Organization (WHO)
- Building a better, healthier future for people all over
the world
-Concern about public health
- Prime concern is to eradicate and combat
dangerous diseases like AIDS/HIVS
-Make researches in medicines and vaccines to
eliminate diseases, and development of nutritious
foods
- Responsible for World Health Report and Survey
 FORCES SURROUNDING GLOBAL SYSTEM
OF PRODUCTION

• 2. National governments

• Deregulation refers to the easing of taxation, entry and pricing of

products or services dictated by government policy
• Privatization refers to the ownership of former public sector
operations and firms by private corporations and enterprises
 FORCES SURROUNDING GLOBAL SYSTEM
OF PRODUCTION
3. Enabling Technologies
• Transport, communications, production and organizational
improvements
• Explosion of enhanced transport and communication services
such as air cargo, integrators offering definite time delivery
(FedEx and UPS), electronic mail and electronic data interchange
(EDI)
• Advanced inventory management such (just-in-time (JIT)) and
new systems of distribution such as third party logistics (3PL)
JUST-IN-TIME AND ITS LOGISTIC

Delivery units for Production Unit Delivery units for

parts finished goods

W
Old warehouse before

ar
eh
Just-in-Time

ou
se
FACTORY
Assembly Line

Moving storage Assembly and warehousing Moving storage

units place units
 FORCES SURROUNDING GLOBAL SYSTEM
OF PRODUCTION
4. Shifts in Market Conditions and Demand
• Economic cycles affect markets and production, e.g. the Asian
financial crisis
• Dramatic shifts in demand affect over time influence type of good
being produced and production schedules
• Application of new technology can mean product obsolescence
• These changes can be described in part through product life cycle
 PRODUCT LIFE CYCLE

• Essence of PLC is that growth in sales of product follows systematic path, from
initial introduction to market through development, growth, maturity, decline and
obsolescence
 Monopoly
PRODUCT LIFE CYCLE
Competition

rs
it to
pe
om
C

Inn
ova
Sales

ting
firm

Decline of
Idea Promotion First competitors Mass production production

Research and
Growth Maturity Decline
development
Stage 1 Stage 2 Stage 3 Stage 4
CELLULAR PHONES OF NOKIA

• Evolution of basic Cellular

phones are an example of
a product which is
especially applicable to
the notion of the product
life cycle
• phone to color
enhancement to camera
and email device
Contemporary Global
Governance
 ACTIVITY

Instruction: Form yourselves into Triad. Read

the following scenarios and decide whether the
most significant impact of the scenario (for you,
for the Philippines or for the Filipinos)is positive
or negative and defend/justify them.
Scenario 1: In your local town, one of the main
sources of employment has been agriculture.
The government has recently decided to
develop the farmland into real estate and
exclusive subdivisions in order to attract foreign
investors to the country.
Scenario 2: The Philippine Government is
being pressured by the current economic crisis
to import rice from Taiwan and other nearby
countries in the region.
Scenario 3: The company that your father
works for has recently been taken over by a
transnational corporation with job
opportunities in many parts of the world if
he is prepared to move/ relocate.
 Defend/
Scenario Positive Negative Justification

3
Global Governance
Introduction

ν The world is facing with threats

and challenges that no singl
country, no matter how
powerful it is, can deal with.
♦ Terrorists:
¬ September 11, 3000 deaths, including 19 hijackers
¬ 2002 Bali Bombings: 202 deaths, 209 injuries
¬ 2004 Madrid Bomb Attacks: 191 deaths, 2050
injuries
¬ 2005 London bomb attacks: 56 deaths (including 4
suicide bombers), 100 injuries
♦ Proliferation of WMDs:
¬ Nuclear Weapons
¬ Biological Weapons
¬ Chemical Weapons
¬ What will happen if WMDs
fall into the hands of terrorists?
♦ Environmental Degradation:
¬ Global warming
¬ Ozone layer Living
¬ atmosphere
♦ Natural Disasters:
¬ 2004 Tsunami: 230,000 deaths and missing
¬ 2008 Cyclone Nagis: 138,366 deaths, $10bn
damages
¬ 2010 Haiti earthquake: around 92,000-230,000
deaths
¬ 2011 Earthquake and Tsunami
in Japan: 15,756 death, 5,927 injured, and
4,460 missing
♦ Famine in the Horn of Africa:
¬ 29,000 children may have already been perished
¬ UN said it has only $1.3 billion of the 2.4 billion it
needs 2 assist 12m people
♦ Flooding in Southeast Asia:
¬ In Cambodia, 250 people died, 18 provinces affected with the
total cost of $521 millions
¬ Thailand, more than 500 people died with the damage cost of
$ 3.2 billions
♦ Humanitarian Crisis in Syria:
¬ Death toll: nearly 300,00 people
¬ 200,00 internally displaced people
¬ 1.2 million registered refugees in neighboring countries
♦ Piracy and Transnational Crimes:
¬ Arms trafficking Drug trafficking
¬

¬ Trafficking in persons Sex slavery

¬ Cyber crimes … Pandemics: HIV/AIDS
¬ Malaria, TB
♦ 2009 A(H1N1): 16,931 deaths in more than 100
¬ countries
¬ EV71: 64 deaths in Cambodia
¬

¬
 Global Governance

! It is a movement towards political cooperation

ν

among transnational actors, aimed at negotiating responses to

problemsν that affect more than one state or region.
! There is
ν
no world government to coordinate and facilitate
cooperation among all actors to deal with threats and
challenges.
! The United Nations, the. International Criminal Court,
the World Bank etc. are examples of Institutions of Global
Governance.
GLOBAL GOVERNANCE CAN BE ROUGHLY
DIVIDED INTO FOUR STAGES:

!Agenda-setting
!Policymaking
!Implementation and Enforcement, and
! Evaluation, monitoring, and Adjudication
 OBJECTIVES:

!Equal rights for all, implying the institution of a

global redistribution process
!Eradication of poverty in all countries
!Sustainable development on a global scale as an
absolute imperative in political action at all levels
 OBJECTIVES:

!Fight against the roots of terrorism and crime

!Consistent, effective, and fully democratic
international institutions
!Global democracy must guarantee that global
public goods are equitably accessible to all
citizens of the world.
Pieces of Global Governance

1. International Law
ϖ

There are 5 sources of international

law: treaties or conventions,
customary practices, the writings of
legal scholars, judicial decisions,
and general principles of law)
2. International Norms or Soft Law
ϖ

Not a binding legal documents,

but rather the standards of
behaviors, such as: some
human rights, labor rights,
framework conventions on
climate change and biodiversity.
 3. International Organizations (IGOs)
Types: Global (UN, WTO, WHO…),
Regional (ASEAN SUMMET)
Specialized (WTO, WHO,NATO..)
Functions:

Informational – gather, analyze, disseminate data

Forum – exchanges of views and decision-making
Normative – defining standards of behavior
Rule-supervisory – monitoring compliance Operational – actions to
achieve goals
4. NGOs

! There are over 6,500 NGOs that have

an international dimension either in
terms of membership or commitment
to conduct activities.
! Advocating a particular cause such as
human rights, peace or environmental
protection.
! Providing services such as disaster
relief, humanitarian aid
6. Global Conference
ϖ The Summit for Children in1990 in New York Rio Earth
ϖ Summit in 1992
ϖ Fourth World Conference on Women in 1995
ϖ Copenhagen Conference on Climate Change (COP15)
ϖ Cancun Conference on Climate Change (COP16)
ϖ
Why we need global governance?

! Global governance is needed

to cooperate and facilitate
international efforts to address
common threats and
challenges.
MARKET INTEGRATION
Kohls and uhl have defined market integration
as a process which refers to the expansion of
firms by consolidating additional marketing
functions and activities under a single
management
 Market integration

Market integration occurs when prices among

different locations or related GOODS follow
similar patterns over a long period of time.
Types of Market Integration

There are three basic kinds of market integration

1.Horizontal integration. 2.vertical integration.

3.Conglomeration.
 Define Horizontal Integration

Horizontal Integration is the addition of other business

activities at the same level of the value chain
Examples:
The Standard Oil Company buying 40 refineries
An automobile manufacturer buying a sport utility vehicle
manufacturer
A radio station that also owns a newspaper and magazine
Horizontal integration
This occurs when a firm or
Agency gains controlof other
firms or agencies performing
similar marketing functions
at the same level in the
marketing sequence.
PARENT AGRIBUSINESS FIRM

FIRM A FIRM B FIRM C FIRM D

Example: independent oil refineries coming under
U.S oil company.
Companies using horizontal integration
 Hp Compaq

Facebook WhatsApp

Google Motorola
 2. Vertical integration
●

This occurs when a firm performs more than one activity in the
sequence of the marketing process.
It is a linking together of two or more functions in the marketing
process within a single firm or under a single ownership. This type
of integration makes it possible to exercise control
 Define Vertical Integration

is the degree to which a firm owns its upstream

suppliers and its downstream buyers.
Example:
Carnegie Steel Company owned mills where the
steel was manufactured, mines where the iron ore
was extracted, coal mines that supplied the coal,
ships and railroads that transported the material, etc.
Arrangemet of vertical integration

Wholesaling of feed

Feed mill
PARENT AGRI
BUSINESS
FIRM Transport agency

Food grains trade

Example

Meat industry buys

all the functioning
plants needed for
running this meat
industry.
 Contd.,
a) Forward integration

If a firm assumes another function of

marketing which is closer to the consumption
function, it is a case of forward integration.
Example: wholesaler assuming the function of
retailing
b) Backward integration

This involves ownership or a combination of

sources of supply. Example: when a
processing firm assumes the function of
assembling/purchasing the produce from the
villages.
● Balanced vertical integration
The third type of vertical integration is a
c o mb i n a ti o n o f the b a c k w a rd a n d the
forward vertical integration.
Effects of Vertical integration

● More profits by taking up additional functions

● Risk reduction through improved market co-
ordination
● Improvement in bargaining power and the prospects
of influencing prices
● Lowering costs through achieving operational
efficiency
 3. Conglomeration

A combination of agencies or activities

not directly related to each other may,
when it operates under a unified
management, be termed a conglomeration.
 AGRI -BUSINESS CONGLOMERATE

SALES AND
CLOTH REPAIRS OF MANUFACTURE
FOOD- FRUIT RETAIL - MILL
GRAINS PROCESSING ELECTRONIC OF
TRADE UNIT CHAIN GOODS VANASPATI
 Effects of Conglomeration

● Risk reduction through diversification

● Acquisition of financial leverage
● Empire – building urge.
 Reasons for market integration

● To remove transaction costs Foster competition

● Provide better signals for optimal generation and
●
consumption decisions.
Improve security of supply
●
 Degree of integration

● Ownership integration
This occurs when all the decisions and assets of a firm are
completely assumed by another firm.
Example: a processing firm which buys a wholesale firm.
● Contract integration
This involves an agreement between two firms on certain
decisions, while each firm retains its separate identity.
Example: tie up of a dhal mill with pulse traders for supply of
pulse
●
grains.