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This has served many companies in producing cheaper goods by taking use of the low cost of labor and machineries involved, from different countries. The other side of globalization that is also prominent is the decline in product quality, by outsourcing cheaper equipments and low cost of the unskilled labor (Pragmatic Outsourcing, 2012).
Employing the trend of globalization has increased significantly in the industrial sector of the European countries. The increase in population and global competition has narrowed the profit margin of many industries and has ignited the need of producing more volume of products, to beat other competitors (Isidro, 2011). Hence, many European industries utilize the cheap labor, fuel and low government taxes of under developed nations to produce bulk quantity of their products within the limited budget for it. A flashback of the European industries would lead to the fact that globalization started from the textile industry in the early 20th century and then it was adopted in electronics, furniture and books publishing sectors (Blass, 2005). With the change in policy by Markets in Financial Instruments Directive (MiFID) of trade tariffs and eradicating the concentration rule in Europe, monopolization in industrial sectors was broken to a great extent. It allowed several new companies to enter into the corporate market and intensify the business competition (Blass, 2005).
In this respect, the Italian footwear industry is considered to have gone through considerable changes in its managerial and production strategies, by implying globalization in its system. Historical trade data of Italy suggest that its footwear sector that has a prominent contribution in its overall GDP and has a high impact on the international footwear market (Milan, 2010). However, present market position and sales figures present a different scenario of prominence of the Italy’s footwear industry. Pressure of the international market and emerging entrants has forced Italy’s footwear industry to delocalize their resources, which has resulted in losing their distinct image. The vertical integration methodology of these industries was replaced with a global supply chain network, which resulted in less flexibility and control over the finished product. This paper aims to provide hypotheses of the effect of globalization on Italian footwear, based on the understanding and evaluation of sales figures and current standing in national and international market. The will use the academic and theoretical data to compare other footwear industries with the Italian, to justify the hypothesis presented (Larch, 2005). Theoretical Overview The pattern followed in the Italian footwear industry involves foreign direct investment in the production cycle. Since, Italy footwear sector is largely delocalized several of its resources are involved in production and designing is being outsourced (Amighini & Rabellotti, 2003). This brings the ownership of foreign investors in different production units carried out in other countries. One essential thing to consider is the formation of several business groups, which is the result of market fragmentation. Such business groups act as the middle man between the actual producer and the company been outsourced. Therefore, there are
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Multinational Business: Foreign Direct Investment (FDI) Introduction Globalization refers to the integration of world economies through the reduction of barriers to the movement of trade, capital, technology, and people. International business or cross cultural business has been increased a lot in recent times as a result of globalization, liberalization and privatization policies implemented in many countries.
The company’s workforce is now 75,000 strong employed in 9 locations across the country. Since the EU market is saturated and because of the down turn in the economy for the past 2 years, the company’s management has been seriously considering strategies for stimulating growth for the company.
FDI can also be defined as an investment of a company in a foreign country by building a factory within the host country. It is through a company’s direct investment in machinery, building and equipment in another country that foreign direct investment is made possible.
Inward FDI increased from 9.6% of GDP in 1990 to 26.7% in 2006. (Woodward, 2011). There has also been a recent flow of FDI towards developing economies and this has had a plethora of effects, both for home and host countries. (Raj and Sager, 2005). Foreign Direct Investment has over the last three decades aroused conflicting responses from the first and third world.
The paper then goes further to discuss the aspects of regional economic integration. In so doing, the paper offers explicit coverage of the advantages and disadvantages likely faced by a country that engages in the regional economic integration. In addition, the paper also identifies and discusses technological advancement and increasing trade as the major forces behind the increasing globalization.
The closer linkage between and among global powers has precipitated more interdependence and better business opportunities among countries, but when economic crises strike more seriously than expected countries suffer economic losses, which sometimes cannot be solved by the International Financial Institutions (IFIs).
Africa especially is an area of interest since it has shown enormous growth in the recent years due to FDI than any other effort that has been carried out in the past. The paper critically explores the role of FDIs in the improvement of economic conditions of Africa and India as examples of its success.
This study gives an analysis of these factors in detail. This information will be of great significance to investors as it will act as a guide to them. The study gives a critical analysis of the issue at hand in an attempt to understand the general issue. This understanding will help in the process of coming up with the solutions.
realist point of view, instability is prevalent in some countries as they attempt to join the global market being the main cause; however, a liberal’s argument on the matter is more rational because it depends on local strategies that extend to the international environment.
This has led to most developing countries and to a large extends developing economies and those still in transition to divert they attention to FDI as the main source of economic development. Chaudhuri and Mukhopadhyay
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