Globalization
CHAPTER ONE
Globalization
LEARNING OUTCOMES
This chapter will enable you to: l Explain the nature of globalization Assess the pace and extent of globalization
l
Explain the importance of globalization for organizations and countries Analyse the factors inhibiting globalization
l
l l
Analyse the factors driving and facilitating globalization
4
GLOBAL CONTEXT
Case Study Globalization and Dell
The globalization process involves the establishment of economic, political, social, and technological links among countries. This case illustrates how one company, Dell, got involved in, and profited from, the process of globalization. It shows: how Dell took advantage of the freeing up of cross-border trade and investment to set up a global supply chain across five continents and to penetrate foreign markets; how it had to adjust its products to different country contexts and how its production methods have been influenced by foreign firms. its machines in its own plants but outsources the supply of many components such as motherboards and CD/DVD drives to other companies and, as a result, is heavily reliant on foreign suppliers like Samsung of South Korea, Infineon of Germany, Foxconn in China, the Dutch firm Phillips, Nokia in Finland, and Sony of Japan. The whole production operation from the design to assembly stage can involve a dozen countries. The Dell Notebook illustrates the complex global nature of Dell’s supply chain. The machine was designed by Dell engineers in Texas and Taiwan and assembled in Malaysia from parts made in China, the Philippines, Germany, Singapore, Costa Rica, Israel, India, Thailand, and Mexico. Dell’s production system aims to minimize the number of components held in stock. It does this by applying principles of lean manufacturing and just-in-time production first employed by Japanese manufacturers such as Toyota.
The Company
Dell, based in Texas, is the world’s second largest manufacturer of personal
Globalization
LEARNING OUTCOMES
This chapter will enable you to: l Explain the nature of globalization Assess the pace and extent of globalization
l
Explain the importance of globalization for organizations and countries Analyse the factors inhibiting globalization
l
l l
Analyse the factors driving and facilitating globalization
4
GLOBAL CONTEXT
Case Study Globalization and Dell
The globalization process involves the establishment of economic, political, social, and technological links among countries. This case illustrates how one company, Dell, got involved in, and profited from, the process of globalization. It shows: how Dell took advantage of the freeing up of cross-border trade and investment to set up a global supply chain across five continents and to penetrate foreign markets; how it had to adjust its products to different country contexts and how its production methods have been influenced by foreign firms. its machines in its own plants but outsources the supply of many components such as motherboards and CD/DVD drives to other companies and, as a result, is heavily reliant on foreign suppliers like Samsung of South Korea, Infineon of Germany, Foxconn in China, the Dutch firm Phillips, Nokia in Finland, and Sony of Japan. The whole production operation from the design to assembly stage can involve a dozen countries. The Dell Notebook illustrates the complex global nature of Dell’s supply chain. The machine was designed by Dell engineers in Texas and Taiwan and assembled in Malaysia from parts made in China, the Philippines, Germany, Singapore, Costa Rica, Israel, India, Thailand, and Mexico. Dell’s production system aims to minimize the number of components held in stock. It does this by applying principles of lean manufacturing and just-in-time production first employed by Japanese manufacturers such as Toyota.
The Company
Dell, based in Texas, is the world’s second largest manufacturer of personal
References: Bank of International Settlements (2007) Triennial Central Bank Survey of Foreign Exchange and Derivatives Market Activity, April Boyenge, J.-P. S. (2007) ILO database on export processing zones, International Labour Office, April EU Commission (2008) State Aid Scoreboard, Spring Ghemawat, P. (2001) ‘Distance Still Matters: The Hard Reality of Global Expansion’. Harvard Business Review, September, 137–47 Gray, V. (2008) ICT Market Trends, Symposium organized by the International Telecommunications Union, February Gupta Anil K. G. (2004) Global Strategy and Organisation. New York: John Wiley & Sons Held, D., et al. (1999) Global Transformations. Stanford: Stanford University Press International Monetary Fund (2006) World Economic Outlook, September Isbel, P. (2006) Energy Dependency and Spanish Interests, ARI 32/2006, available at www.realinstitutoelcano.org Levitt, T. (1983) ‘The Globalization of Markets’. Harvard Business Review, May–June, 91–102 OECD (2007) International Migration Outlook Office of National Statistics (2004) Annual Abstract of Statistics Ohmae, K. (1985) Triad Power: The Coming Shape of Global Competition. New York: Free Press Prasad, E., Rogoff, K., Wei, S.-J. and Kose, M. A. (2003) ‘Effects on Financial Globalization on developing Countries: Some Empirical Evidence’. IMF Occasional paper No 220, September 3 Ratha, D., Mohapatra, S., Vijayalakshmi, K. M. and Xu, Z. (2008) Revisions to Remittance Trends 2007, Migration and Development Brief 5, World Bank, 10 July Ritzer, G. (2004) The McDonaldization of Society. London: Pine Forge Press Rosen, D. H. (2003) ‘How China Is Eating Mexico’s Lunch’. The International Economy, Spring, 78 Rugman, A. and Hodgetts, R. M. (2002) International Business. London: Prentice Hall Tunstall, J. (2008) The media were American: US media in decline. Oxford: Oxford University Press UNCTAD (2007) World Investment Report UNWTO (2007) World Tourism Barometer, Vol 5, No 2, June World Bank (2008a) MIGA Perspectives, January World Bank (2008b) The Migration and Remittances Factbook World Trade Organization (2007) World Trade Report