What Is Globalisation?
WHAT IS GLOBALISATION?
Although globalisation is a much used term, it is difficult to define. Lasserre defines globalisation as the process by which people, products, information and money can move freely across borders. BBC.co.uk defines globalisation as “…the process by which the world is becoming increasingly interconnected as a result of massively increased trade and cultural exchange.” For businesses increased trade offers the opportunity for increased markets and ultimately higher revenues.
Increased opportunities also encourage businesses to shift production to lower cost areas as a means of reducing expenses. These shifts in operations result in companies engaging in business in different countries, thus becoming multi-national corporations.
HISTORY OF OTIS
With its roots in New York, USA, Otis Elevator Company was founded in 1853 by Elisha Otis. Previously Union Elevator Works, Otis Elevator Company rise to international status began with its first international sale in 1862. Otis cross border trade expanded from there on.Otis did business in European countries as early as 1873 and by the end of the 19th century, Otis was doing business around the world.
Otis established a subsidiary in Canada in 1902, began European production in 1910 in Bezons, near Paris, and opened a plant in Berlin, Germany, in 1912. The company also had subsidiaries in England and Belgium; agents in Austria-Hungary, Holland, Russia and Spain; and a branch office in Scotland. (Otis Worldwide 2014).
The establishment of the European Economic Community, in 1957 meant that Otis had to make changes. These changes allowed for the concentration of production of components in one specialised factory and to have a network of specialised factories each making one product category or component. The decision to centralise operations, although a profitable one, met with lots of resistance from various heads of its European subsidiaries.
WHY OBJECT TO GLOBALISATION?
The company already had operations in many countries, so why the objection to globalisation? Critics of globalisation contend that, even if increased trade promotes material prosperity, it comes with high spiritual and cultural cost, running roughshod over the world’s distinctive cultures and threatening to turn the globe into one big, tawdry strip mall. (Cato Policy Report 2003)
The Otis multinational competitive configuration meant that products were locality-defined; products from Otis UK for the UK market, Otis France for the French market, Otis Germany for the German market and Otis Italy for the Italian market. Under the global competitive configuration, and the homogenization of practices, there no longer would be four markets but one Otis Europe. “We will lose our identity!” would be one objection by national managers. Prior to this, each subsidiary