Global flows of goods, information, and capital. Executives are generally optimistic that the relatively free flow of goods and capital—two core drivers of globalization—will survive the financial crisis and the economic downturn. However, few see much further progress occurring in the next five years, a finding that is consistent with the. As per V K Bhalla and S. Shiva Ramu the major drivers or factors of Globalization are – 1. Economic driving forces of globalization. One of the main driving forces of globalization is economic development. Establishment of a new monetary system, the Bretton woods system in 1940. Establishment of GATT in 1947. Five major kinds of drivers, all based on change, are leading international firms to the globalization of their operations: (1) political, (2) technological, (3) market, (4) cost, and (5) competitive. List The Major Drivers Of Globalization. Advertisement WHETHER TO GLOBALIZE, and how to globalize, have become two of the most burning strategy issues for managers around the world. Many forces are driving companies around the world to globalize by expanding their participation in foreign markets. Almost every product market in the major world.

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Almanac: Globalistics and Globalization StudiesAspects & Dimensions of Global Views
5 Major Drivers Of Globalization

Current economic theory gives no sufficient practical models to explain the recent economic development with respect to globalization. In fact, the economic globalization is not always the same globalization, which is recognized through the different manifestations of this phenomenon. Based on the four basic business typologies (commodities, standards, specialties, and convenience goods) a new model defines five fundamental types of economic globalization (1a, 1b, 1c, 2, and 3). Globalization Type 1 and subtypes are related to physical material interchange, Type 2 is related to financial participations and Type 3 – to the human factor. This distinction is necessary because each type has its own rational and performs differently from a globalization viewpoint. These basic globalization types help to model the triggering mechanism of their evolution and allow us to understand the competitive constellation and strategic moves of companies as well as the different latent potential for unemployment. The Basic Globalization Types distinguished by the author allows a vivid explanation of the characteristics of economic globalization when teaching.

Keywords: business types, globalization types, foreign trade theory.

Introduction

On the one hand, economic globalization is often viewed as an obscure process that apparently yields more profit for the companies, while increasing unemployment for the working classes. On the other hand, globalization is hardly controllable, since it is not only a process but rather a phenotypical manifestation within the causal systemic world of economy and politico-social behavior. But how can economic globalization be modelled? Many books have been written on globalization but none of them presents its integral theory. Basic concepts still go mainly back to foreign trade theory with Ricardian comparative cost advantages and Pareto optimality as well as Heckscher-Ohlin. The gravity model of Isard shows the geographic view on trade but finally did not encounter the merited success. A new view has been developed by Krugman in his New Economic Geography. Different business and globalization patterns are observable in different industries. On the one hand, we have the extraction of raw materials in particular geographic regions of the subtropics, or primary aluminium production in distant but low energy cost regions, and, on the other hand, semi-fabricated products manufactured near extensively industrialized regions. Cars produced in highly automated factories in urban area and exported worldwide, fast-food chains or franchised fashion stores covering the globe to conquest market share – different concepts, but the same target: the world market. Why do so many different concepts exist? What are the rules governing the economic structure and the competitive system? Is it possible to give a structure to globalization in order to be modelled?

The Determinants for Globalization Type

Going beyond the usual phenomenological description of globalization, let us analyze the intrinsic logic of worldwide competition and the structure of the economic system. Our business system is mainly composed of:

– the transaction object, that is, a product or a service;

– the supply and demand structure, with the related transaction scheme;

– the operating configuration of supply (Rüttimann 2007).

The product is characterized by its attributes, for example, heavy or bulky, complex or precious, perishable or durable, and its customization degree, all these determining the transportability of the product. The transaction scheme describes how supply and demand interact determining the localization degree of the product. The market structures given by the number of market actors and relative concentration curves of supply and demand determine the competitive nature of the business. The operating configuration refers to how products are produced, at one extreme they are produced centrally within a single plant configuration and then distributed worldwide, or production facilities are spread around different geographic regions within a multi-plant configuration and products are sold locally. This leads to the induction scheme of Fig. 1 to classify first the business type and finally the globalization type. Indeed, as we will see, globalization is not always the same.

Fig. 1. Framework of globalization types determinants

As we can see in Fig. 1, it is evident that the typology of globalization is largely determined by the product characteristics. The backward determinants which influence product characteristics, market structure and determine the business classification, and finally the operating configuration, are:

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– value of the product;

– transport cost and related range of distribution;

– production factors in terms of cost drivers;

– demand profile;

– supply structure (Rüttimann 2007).

The Four Basic Business Typologies

These main determinants characterize each business type within industrial system. Certain combinations of these determinants reveal clear patterns for each business type. Fig. 2 shows different businesses within the matrix of product-characteristics and market-structure which are the main drivers for business type classification (Rüttimann 2007). The representation of product-characteristics (differentiated or not) as one axis, and market-structure (oligopolistic or fragmented) as another axis within a matrix, leads finally to the following landscape of basic business types:

– commodities;

– specialties;

– standards;

– convenience.

Fig. 2. Selected businesses within the product-characteristic / market-structure matrix

Fig. 3. Basic classification of business types

Fig. 3 presents a clear, systematic and structured view with which to classify roughly the businesses in types. It goes without saying that mixed types may exist. The ‘commodity type of business’ (e.g., primary aluminium or wheat) comprises all kinds of goods listed on efficient market places, such as commodities exchanges with world market prices. The ‘specialty type of business’ (e.g., electronics or automobile) embraces those durables and consumables, goods with a distinctive brand thus creating imperfect competition. The ‘standards type of business’ (e.g., cement or extrusions) covers the intermediate or semi-finished products with a rather polypolistic supply