Page 78 - DMGT548_GLOBAL_HRM

Unit 4: Globalisation in World Economy

economic growth. For globalisation to be able to work, a country cannot be saddled with Notes
problems endemic to many developing countries, from a corrupt political class, to poor
infrastructure, and macroeconomic instability.
The shrinking state: Technologies that facilitate communication and commerce have curbed
the power of some despots throughout the world. But in a globalised world, governments
take on new importance in one critical respect, namely, setting, and enforcing, rules with
respect to contracts and property rights. The potential of globalisation can never be realised
unless there are rules and regulations in place, and individuals to enforce them. This gives
economic actors’ confidence to engage in business transactions.

Self Assessment

Fill in the blanks:

11. Sovereign governments have the power to erect significant obstacles to globalisation,
ranging from tariffs to ……… restrictions to military hostilities.
12. Governments recognised the importance of international ………. and coordination and
this led to the emergence of numerous international organisations and financial institutions.
13. The world is made up of nation states and a global ………..
14. By helping to break down barriers ranging from the regulatory to the cultural, more
countries can be integrated into the global ……….
15. It’s a myth that technologies which facilitate communication and ………. have curbed the
power of some despots throughout the world.



Case Study Nike: Reasons for Globalisation

ike any multinational company, Nike used the process of globalisation because
the managers felt that the company could benefit by doing so. However, it is
Lworth noting that the company actually started out as a global network; the very
first shoes that they sold were made in Japan, and imported into the United States. Today,
the global reach of Nike is much more significant.
They have manufacturing operations in 45 countries, and their products are sold in almost
ever country on Earth. This sort of expansion cannot happen without a detailed plan, and
a plan needs to be “sold” to the decision makers if it is to be accepted. These are some of
the reasons that the managers at Nike could have used to justify their expansion:
1. Lower input costs: Like any business, Nike aims to buy their products for the lowest
possible price, and then sell them for a profit. The higher the margin, the more their
wealth will increase with each sale. There is no doubt that in choosing to have their
shoes manufactured in other countries, Nike has been able to access workers who
are paid lower wages than they would have to pay if they established their production
lines in America. Lowering costs is a key goal for managers in most companies.
2. Access new markets: While the population of the United States is large, there are
even more people in the rest of the world. In choosing to sell their shoes in other
countries, Nike was able to gain access to even greater number of consumers. This
Contd...

LOVELY PROFESSIONAL UNIVERSITY 73