Before understand the meaning of globalization of markets, it is very important for us to understand the meaning of globalization. Globalization means allowing interaction, integration among the people, companies and government of different nations by international trade, investment, and aided by information technology.
Meaning of globalization of markets
Globalization of the market means doing business in different countries of the world. Globalization of market includes all the global companies that are currently doing and expanding their business in different countries. Companies that are doing business in multiple countries are known by different names. For example- multinational companies, and international companies.
Types of globalization
1) Political- In political business globalization, different governments of different nations come together and work for the welfare of the people globally. For example- EU, UN, WHO.
2) Social- In Social globalization, different societies from different countries promote themselves globally by which people’s lifestyles is spread over global networks. For example- International entertainment channels.
3) Economical- In economical globalization, Normal companies expand their business in different countries of the world to generate more profit and increase the goodwill of their company. For example- Coca Cola, Dominos, etc.
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Stages of globalization
Globalization has four stages. Let’s discuss all stages one by one:
1) Domestic Stage- In Domestic Stage, Production, marketing, and other activities of business is limited to its home country. For example- If an Indian company is doing business in India only then we can say that the company is doing business at domestic stage.
2) International Stage- When a company starts expanding its production and business activities to other countries as well then the company is doing business at international stage. For example- Reliance, Tata, etc.
3) Multinational Stage- Multinational Stage means when the company starts production and other business activities in more than one international country.
4) Global Stage- Global stage means when the company’s product is available in every part of the country.
Impact on company when they go for international business
1) Increase in business– When a company is expanding its business it means that the company will do business in different countries and increase the goodwill of the business and try to reach more and more people.
2) Large Competition– Companies face heavy competition at the international level when they are about to expand their business internationally. Usually they get double competition. The first is to compete with the domestic companies that are already doing business in the country and secondly with those companies who come to the country to do business from different countries.
3) Increment in investment– Companies need more workers and investments to increase the productivity of the product to ensure that no one will face the problem of product shortage in the country.
4) Tax relaxation– Every government of any country gives tax relation to those companies which come to their country for the purpose of doing business so that people get more choice at lower prices in the country and the country’s GDP and current situation can be improved.
5) Remove Monopoly– Monopoly means that there is no competition in the market for a particular product. For example- Oil company, if there is only one oil company in the country then the company will be called monopoly oil company as there is no other company producing or supplying oil in the country.
How Indian companies are performing in the global market?
Indian companies are giving great performance in global markets and defeating many foreign companies. Let’s have some example of Indian companies that are doing great in global market:-
1) Peter England- Because of name may be you think its a foreign brand but no this is not foreign brand. This is an Indian brand which is run by Aditya Birla group in India and in global market also. Performance of this brand in global market is amazing. As of today, Peter England operates his business in over 300 countries and has a customer base of over 4 million.
2) Cafe Coffee day (CCD)- Cafe Coffee day is one of the most popular company in the world and It is known for its coffee. Headoffice of this company is situated in Bengaluru. If we talk about the outlets of this company, then the company has more than 1600 outlets across the world.
3) TATA- Tata Industries Group is a well-known industry in today’s time which does not need any kind of introduction. TATA group was founded by Jamshedji Tata but Its real growth has been seen under the ownership of Ratan Tata.
4) Jaguar- Jaguar is an Indian brand that manufactures and sells cars in India and outside India. The brand comes under Tata Motors as the Tata group acquired this brand from Ford Motors many years back.
5) Lakme- Lakme company manufactures cosmetic products and it is very well known company regarding its cosmetics. In India and outside India most people prefer to buy cosmetic product of Lakme company because of its good quality and this is the reason today Lakme has huge customer base and it becomes a billion dollar company.
forms of business organizations
We can divide business organizations into five categories according to their functions and people. Those five categories are:
- Sole proprietorship
- Joint Hindu Family Business
- Cooperative societies
- Joint Stock Company
Let us discuss all types of business organization in detail:-
1) Sole proprietorship
If we split the word, sole means only and proprietor means owner. That is, a business in which there is only one owner who owned, controlled, and managed the whole business, then that business will be called business under sole proprietorship. For example- A shop owner. In this, all the profits and loss are enjoyed by only one person.
Things that the person enjoys in sole proprietorship
a) No one else controls the business
b) Fast and quick decisions will be made
c) enjoy own monopoly and control in the business
d) get high profits in less investment
Problems faced by an individual in Sole Proprietorship
a) Cannot expand the business on a large scale as the person is the only one who is handling the business
b) Revenue and Income will be limited
c) If something happen with the owner business will be shut down.
d) Unlimited liability- During a loss in business, the owner will also have to sell his personal belongings at the time of loan repayment.
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2) Joint Hindu Family Business
Joint Hindu Family business is a type of business in which members of family run the business together but business is controlled by the head of the family who is the eldest member. If the person carrying on the business leaves the business or dies for any reason, his successor will manage and control the business. This type of business is found only in India. This is one of the oldest form of business organization in India.
The family person who is actual owner of the business will be known as Karta and his liability would be unlimited and liability of rest of the family member in the business would be limited. In this type of business, there is a large number of family members of the Hindu Undivided Family (HUF) and all members run the business together. For example- Haldiram.
A partnership is a type of business in which two or more members control and manage the business. In partnership members should not be less than 2 and more than 100. If the members exceed 100 then it will no longer be called a partnership, it will be called a company.
Things that the person enjoys in Partnership
a) Enjoy the high profits as business runs on large scale
b) two or more mind work together and generate more Ideas
c) Enhance the creativity in the business
d) Workers will do their work perfectly as there will be two or more boss in the business.
Problems faced by the person in Partnership
a) Not full control in the business
b) Delay in taking decisions as other partner can Interfere in your decisions if he did not like your decision
c) All partners will have unlimited liability
d) Profits will be divided in two or more parts
4) Cooperative Society
Cooperative Society is a business in which people work together for a common purpose. For example- Amul. In amul, the common problem among the people was that they wanted to eliminate the middleman as the middleman used to charge the high commission from the people. So a group of people facing the same problem formed their own cooperative society and started providing milk directly to the customer. To start the business of co-operative society, there should be at least 10 members.
The main motive of this type of business is to provide good services to the people instead of earning profits. This business is a voluntary association of persons, who join together with the motive of welfare of the members. In cooperative society business, it is compulsory required that the business should be registered under the Cooperative Societies Act 1912.
5) Joint Stock Company
Joint Stock company is a artificial person which has its own separate identity from its owner. For example- Reliance, TATA. The company has a common seal which is used by the company to give approval. Today every company is following the rules and regulations of the Companies Act, 2013.
Being a separate legal entity (a separate identity in the eyes of the law) whenever there is a conflict against the company, the aggrieved will sue the company in court instead of the owner of the company. Along with this in the company owner enjoys the benefit of limited liability. If company face losses in the future and disable to pay back all its debt then creditors has right to sell the things of company and recover their amount as much as possible but they cannot even touch the things of company’s owner to recover their amount.
In Joint Stock Company, owner called as Company’s director and in each company there should be minimum 2 directors compulsory to form a company. Every director has his share percent in the company as per of that they get their salary. For example- There are 5 directors in a company, one director holds 10% share of the company, one hold 8% share, now as per of these share percentage they get their salary. Director who has more percent of share will get more salary. The percent of share among the shareholders is decided on the basis of their investment in the company. Director who invest high in the company will get high percent of share.
Types of company
There are two types of joint stock company:-
1) Private Company- Private companies are the type of companies that does not registered in stock exchanges. Normal people cannot buy share of these companies and cannot invest in these companies. In private company minimum number of people should 2 and maximum number of people should 200. The name of each private company should be accompanied by the title of Pvt.Ltd (Private Limited). For example- Dominos Pvt.Ltd.
2) Public Company- Public companies are the type of companies that are registered in stock exchanges and normal people can buy and sell their shares and invest in these companies. For example- TATA, TATA is registered in national stock exchange (NSE) and Bombay stock exchange (BSE). Every day many people buy and sell TATA share in share market. In public company, there should be minimum 7 member and maximum no limit. The name of each public company should be accompanied by the title of Ltd (Limited). There is no Pvt. in the name of public companies. For example- TATA Ltd., Reliance Ltd.