Globalization Definitions Summary

Globalization: The process of the individual’s livelihood becoming more independent through economic, specifically business, advancements. Increased international trade and the outsourcing of factories are examples of effects of globalization. 

 Economies of Scale: An economic theory which focuses on the efficiency of production and sales. It allows for a larger market for companies and for large companies to buy cheaper.

 Footprint: The area in the countries that a company works in, which allows for more economic stability for a company.

 Multinational Corporations: Also known as transnational or international corporations, these business enterprises have a branch or several branches in one or more foreign countries. These branches are commonly located in Third World countries, where production is cheap.

 Conglomerates: Conglomerates are corporations that acquire or merge with other companies, whose products are mainly unrelated to the company’s original product. This allows for rapid growth.

 Merger: The fusion of two or more corporations, where all assets of are reassigned to a single company. There are several types of mergers: vertical mergers (different types of company’s merge that have supplier-customer relationship), horizontal mergers (related businesses merge), extensional mergers (2 related businesses join to enter a new market) and a takeover (stronger business takes over another against its will).

 Competition: Rivalry between companies that provide similar or even unrelated services; sellers compete against sellers and buyers against buyers. A well known example is McDonald’s vs. Burger King. Competition is, in theory, controlled by copyright laws, fair-trade laws, minimum wage laws and wage and price controls. However, contractors in third world countries have, in order to attract the large multinationals, crossed these boundaries

 Monopoly: Due to excessive control over the supply of a certain product, since the product is either only being produced by one corporation or one corporation producing the product is so large it overshadows the other producers, the prices are virtually under the control of this one seller. However, antitrust laws have made most forms of monopoly illegal, since it goes against American capitalist ideals; prices should be determined by market forces rather than being settled by corporations.

 Cartel: National or international manufacturers/ traders that are joined by the agreement to control certain areas of the economy. Price fixing and limiting supplies are examples of cartels goals. They have been banned in many countries.