The impact of globalisation on business
- Increased competition - this is caused by more foreign investment flowing to countries, de-regulation which allows businesses to enter markets from which they once precluded.
- Greater awareness and reactions to customer needs - the consumer is now very selective on such essentials as quality, service and price.
- Economies of scale - by selling across many continents business can acquire economies of large-scale production. This makes them very competitive.
- Location flexibility - many modern production techniques and service provisions can be allocated almost anywhere. This allows to them gain the advantages of low cost labour and other resource charges.
- Increased mergers and joint ventures - allowing access to bigger markets and associated cost advantages.
The Bangalore Tigers - Wipro, Infosys, TCS (Tata Consultancy Services)
Wipro, Infosys and TCS are India's big three technology companies, all of which have become major global players rivalling the US's largest companies - IBM, Accenture and EDS (HP Enterprise services). Please:
- watch the video The Bangalore Tiger in Bloomsbergand
- read the article Azim Premji believes education is key to India's economic future
before considering answers to the questions below.
Define the terms:
- Service sector.
Explain why Azim Premji believes education is key to India's economic future.
Examine methods by which a firm may gain competitive advantage.
Discuss the reasons for the growth of India's technology companies such as Wipro, TCS and Infosys.
Select one of India's top three technology companies and use web searches:
- Describe the nature of the organisation
- Report on recent business activity
A good example of the globalisation is IKEA. IKEA is now one of the world's largest furniture retailers and sell a 'standardised product' worldwide.
- In 1974 there were only 10 IKEA stores outside of Scandinavia and the company annual revenue was $210m.
- In 2006 there were 237 stores in 34 countries and their sales revenue was close to 17.3bn euro.
- They have a global network of suppliers - 1,300 firms in over 54 countries.
- They have very low costs that are partly derived from huge economies of scale - large stores and a highly organised supply chain.
- The IKEA group in 2006 employed 104,000 staff - called 'co-workers'.
You can read about the IKEA concept and see a chronological history of the business here.