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Globalization and Industry Structure

Globalization refers to the increasing integration and interaction of people and businesses around the world. With globalization, national markets are becoming a single huge global marketplace as trade barriers fall and transportation and communication technologies improve. Industry structure describes the underlying characteristics of a group of substitute products and how they shape competitive strategy. As production disperses globally to cut costs, and markets converge, companies face intense international competition that forces greater efficiency, quality, and innovation.

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Varshini Prabakaran
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274 views2 pages

Globalization and Industry Structure

Globalization refers to the increasing integration and interaction of people and businesses around the world. With globalization, national markets are becoming a single huge global marketplace as trade barriers fall and transportation and communication technologies improve. Industry structure describes the underlying characteristics of a group of substitute products and how they shape competitive strategy. As production disperses globally to cut costs, and markets converge, companies face intense international competition that forces greater efficiency, quality, and innovation.

Uploaded by

Varshini Prabakaran
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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UNIT-2

GLOBALIZATION AND INDUSTRY STRUCTURE:

Globalization and industry structure:

GLOBALIZATION AND INDUSTRY STRUCTURE In conventional economic system, national


markets are separate entities separated by trade barriers and barriers of distance, time and culture.
With globalization, markets are moving towards a huge global market place.

Globalization:

Globalization refers to the process of integration and interaction of


people and businesses around the world. ... Through it, people and
organizations can communicate and move more easily hence conducting
business internationally.

Industry structure:

Industry structure is defined as the basic, underlying characteristics


that shape the competitive strategy for a group of firms producing products
that are close substitutes for each other (Porter, 1980).
GLOBALIZATION AND INDUSTRY STRUCTURE:

In conventional economic system, national markets are separate


entities separated by trade barriers and barriers of distance, time and culture.
With globalization, markets are moving towards a huge global market place.
The tastes and preferences of customers of different countries are
converging common global norm. Products like Coco Cola, Pepsi, Sony
Walkman and MeDonald hamburgers are globally accepted.

Individual companies have dispersed parts of their production process to


various parts of the world to take advantage with respect to cost and factors
of production such as land, labour, capital and energy. The end result is low
cost enhancing profits.

General Motors has chosen different locations like South Korea, Germany,
Japan, Singapore and Britain for making it’s product, Le Mans, General Motor
has aimed to reduce its total cost by dispersing it’s production activities. The
world economy has undergone a fundamental change. Globalization of
production and globalization of markets are taking place.

The intense rivalry forces all firms to maximize their efficiency, quality,
innovative power and customer satisfaction. With hyper competition, the rate
of innovation has increased significantly. Companies try to outperform their
competitions by pioneering new products, processes and new ways of doing
business. Previously protected national markets face the threat of new
entrants and intense rivalry.

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