Globalization Definitions

Definitions of Globalization

Globalization: a movement in which our livelihoods, through businesses and economies, become interdependent. The increasing trade between nations, the growing market for the selling of products, and the cheapest manufacturing of products are all effects of globalization.

Economies of scale: theory that states that it is better to produce at large quantities and sell it all than to sell everything of a smaller quantity of goods. Production should be cheaper and the products should be sold to more customers.

Footprint: Refers to the different countries a company works/is located in to maximize the area and gain economic stability.

Multinational corporations: These are businesses and companies that originated in the 20th century and manufacture and sell in multiple foreign countries. They often develop the products in their native country and then manufacture them in other, mostly Third World, countries where production is cheaper. These corporations exert power over other businesses or even the government, and are viewed as employment opportunities and technology improvers by proponents, while critics see them as exploiters of developing countries and a reason for the losses of many jobs.

Conglomerate: corporations which merge with another corporation, their products however are largely unrelated, bringing the corporation growth and profit. This vertical integration emerged in the 1960s and back then was very common among investors whose stock prices then rose.

Merger: Merging is the coming together, fusing of two or more companies. The property is transferred to one corporation, who absorbed the others. There are three different types of mergers; vertical, horizontal and extensional. Vertical mergers combine different businesses, such as a car and a clothing company. Horizontal mergers integrate related businesses such as two beer companies. Extensional mergers bring together two businesses that then go into a new market. From this, a hostile takeover happens, where, against its will, one weaker business is swallows by a stronger one.

Competition: the rivalry between businesses in supply and demand, where businesses compete against one another to supply and gain an economic service. A major theme in competition is monopoly, since monopoly endangers the entire concept of competition.

Monopoly: when on the market one seller exerts power and controls the market by being the only seller of a certain commodity. Oligopoly is a situation in which a few sellers control the market, mostly two or three. This is not uncommon nowadays, whereas there are many attempts to avoid monopoly, since it eradicates a free market and market competition.

Cartel: cartels are national or international groups of sellers and manufacturers who come together to fix prices, divide markets or split profits in order to become stronger and stand a chance against the greater, more powerful corporations on the market. Cartels are mainly forbidden, by the outset of WWII, Germany had many cartels, which were closely watched and controlled by the government. Opponents claim that cartels drive out competition, while supporters say that they are merely a protection for weaker firms.
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