• Globalization is defined as the liberalization • It involves the widespread diffusion of

of trade, goods, capital, and investment ideas, technology, culture, and religion
across sectors of an economy, allowing
• The International Monetary Fund (IMF)
freedom for each country to implement
identifies four basic aspects of globalization:
new protocols.
trade and transactions, capital and
• It is an increasing interaction of people, investment movement, migration and
states, and countries through the flow of movement of people, and the diffusion of
international ideas and culture, primarily knowledge and technology
focused as an economic process of
mind map illustrating the core aspects of
integration with social and cultural aspects
globalization:
• According to Martin Albrow and Elizabeth
Core Aspects of Globalization
King, globalization is a process by which
people of the world are incorporated into a History and Evolution of the Term
single world society
• The term "globalized" was used as early as
• It involves the intensification of worldwide 1944 by Charles P. Kindleberger to describe
social relations that link distant localities, large national trusts and enterprises
meaning local happenings are shaped by
• In the late 1970s and early 1980s,
events occurring far away.
"globalization" became more widely used,
• Globalization is also described as the initially as an economic term
compression of the world and the
• By the 1990s, it was increasingly used in
intensification of the consciousness of the
academic discourse and across various
world as a whole.
disciplines, moving beyond just economics
• It signifies the free movement of goods,
• Historically, periods like the Age of
services, and people across the world in a
Discovery (15th-18th centuries) and the
seamless and integrated manner, facilitated
19th-20th centuries exhibited early forms of
by technological advancements
global interaction
• The term is considered a phenomenon with
Stages of Globalization for Companies and
no single universal definition, but many
Institutions
similar interpretations exist
• Companies and institutions typically
• Key characteristics include the movement
progress through five stages in their
and communication of people and
globalization journey:
businesses, emphasizing interconnectivity
and the ability to communicate easily across Stage 1: Arm's Length/Partnership - A domestic
borders company or institution moves into new markets by
linking with local dealers and distributors
• Globalization is an active and inevitable
process, not a passive one Stage 2: Planning Stage - The company or
institution plans and coordinates its activities from
.
its domestic base
Stage 3: Implementing Stage - The domestic • Opening Economies: The opening up of
company begins to carry out its own economies to multinational corporations
manufacturing, marketing, and sales directly in and global capital encourages cross-border
foreign markets activities

Stage 4: Support System - The company moves • World Trade Organization (WTO): The
towards a full insider presence in foreign markets, creation of the WTO has stimulated and
establishing a complete business system including regulated cross-border trade, helping
research and development (R&D) and engineering, producers and businesses grow
though still maintaining a domestic mentality
• Revolutionary Improvements: Continuous
Stage 5: Global Mode of Operation - The company improvements in various aspects lead to
or institution operates in a truly global mode, increased exports, job creation, and profit
serving customers and markets around the globe, generation
requiring organizational flexibility and a global
Impacts and Effects of Globalization
management system
• Increased Interdependence: Countries
Reasons and Drivers of Globalization
become more interdependent across
• Advancements in Science and various social aspects
Technology: Progress in science and
• Movement of People and
technology facilitates global interactions
Businesses: Globalization facilitates the
• Shrinking Time and Distance: Advanced movement and communication of people
communication and information tools make and businesses globally
it easier to connect globally, effectively
• Environmental Issues: It contributes to
shrinking time and distance
environmental concerns such as global
• Domestic Market Limitations: Domestic warming, air pollution, and water pollution
markets may no longer be sufficient due to
• Widening Wealth Gap: Globalization can
various factors, prompting companies to
exacerbate the gap between rich and poor
look abroad
due to the exploitation inherent in the
• Political and Economic Stability: Companies capitalist system
and institutions seek political and economic
• Challenges for Local Businesses: Local
stability in other countries
industries and small businesses may
• Access to Resources: Globalization allows struggle to compete with global entities,
access to raw materials and products not forcing them to choose between domestic
available in the country of origin . and global markets

• Comparative Advantage: Countries • Multinational Operations: Companies

specialize in producing goods and services establish multinational units located in
where they have a comparative advantage different parts of the world, often with
(lower cost), leading to international trade . common ownership, strategy, and
production processes
• Increased Transactions: There is a rise in
cross-border transactions, including those
involving intellectual properties like
copyrights, patents, and trademarks

• Exploitation of Underdeveloped
Countries: Globalization can lead to the
exploitation of underdeveloped countries