Page 196 - DECO303_INDIAN_ECONOMY_ENGLISH

Unit 11: Globalisation and Its Impact on India

Thailand, Vietnam, Indonesia, Malaysia, Philippines, Singapore and Brunei Darussalam are Notes
small countries by themselves. But as they became members of ASEAN, the whole region
became attractive from a business point of view and more and more companies started
establishing their manufacturing units there to take the advantage of low cost and vast markets.
Today, this region is one of the most active business hubs.
Vertical Integration: You may already be aware that vertical Integration is a company’s
management of the various stages in a value chain of production—from raw material to
production to ultimate distribution of the product. As international trade barriers are
turning less relevant, organisations can join resources situated in more than one country.

Example: Like Indian petroleum companies who have world class refining capacities
import petrol. But under the new system they are allowed to invest abroad and are acquiring oil
wells overseas to ensure regular supply of oil in future. Similarly, Shell acquired oil wells the
world over and has refineries across the globe.
Companies are vertically integrating themselves. Currently, Videocon attained the picture tube
manufacturing capacities of Thomson and got approach to picture tube manufacturing in several
countries, involving Europe.

Example: Asian Paints also has its operations in more than 27 nations. Ranbaxy and Dr
Reddy’s Lab are also taking locational advantage with horizontal integration like acquiring
generic pharmaceutical organisations in the US, Europe, Israel and other nations.

Self Assessment

Fill in the blanks:
11. ……………………-are vertically integrating themselves.
12. Companies produce different components or …………………… of their product line in
different parts of the world to take advantage of low labour costs, capital, and raw materials.
13. Corporations are today changing their ……………………-and are reorganising their
functions to cope up with the changed scenario.

Task Prepare a report on the impact of globalisation on the Indian industry.

Case Study Puma on Top of the World

hen Italy lifted the football World Cup in 2006, there were celebrations in the
town of Herzogenaurach, Germany. Puma, the sportswear company sponsoring
WItaly, could celebrate a triumph for their brand. Adidas, also based in the town,
sponsored the largest number of teams, including France, the runners-up. Puma sponsored
all native African teams in the finals of the competition, using the logo, ‘United for Africa’,
looking ahead four years, when Africa will host the finals. Puma’s marketing, which cost
Contd...

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