What is Globalization?

Globalization is a phenomena if integration and interdependence of world economies. There are majorly six factors that need to be constituted in order to get global. These factors are known as the PESTEL factors. The word PESTEL represents:

  • Political
  • Economical
  • Social
  • Technological
  • Environmental
  • Legal

Most of the well known companies are all Global in their approach. Some examples are:

  • Nokia
  • Coke
  • IBM

To elaborate how essential Globalization is in today’s world let us assume an example, an American National goes to the office in a

  • BMW – Designed in Germany – Assembled in Mexico – Components from USA and Japan – Fabricated in Korea.

He goes to the BP Filling Station:

  • BP Service Station – British MNC in USA – Oil Well in Africa – Pumped out by a French Company – Shipped in a Greek Shipping Line.

He calls up his Stockbroker:

  • Nokia Phones – Designed in Finland – Assembled in Texas –Chipset Designed by Indian Engineering working in San Diego – Chipset Manufactured in Taiwan

He asks the broker to buy shares:

  • Share – Duetsche Telecom, A German Share

Finally he reaches office and goes to the Coffee Stall to have some Coffee

  • Coffee Stall – Coffee beans from Brazil – Chocolate from Peru.

Globalization - Interdependence of the whole World

There are two kinds of Globalization

  • The Globalization of Markets: According to this phenomenon when the markets in a particular home country for a particular product saturates, the companies go out Global in search of new markets. Examples of companies using such a Global policy are Coca Cola, McDonalds, Sony etc.
  • The Globalization of Production: According to this phenomenon whenever there is a lot of competition in the local market to produce a particular good, generally, the production of the Good is Outsourced to some other country. All the outsourcing done by the US to India and Philippines is a perfect example of such kind of Globalization.


The pros and cons of Globalization are matter of debate, economists do tend to believe that globalization leads to loss of jobs in the home country. Also, companies tend to exploit the laborers of outsourced countries.

Globalization, though debatable, is an extremely important process for the welfare of World’s Economic Senario.

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