Globalisation is defined as the growing interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and involves international capital flows, and through the more rapid and widespread diffusion of technology.
In contrast, Glocalisation is a term that was invented in order to emphasize that the globalisation of a product is more likely to succeed when the product of service is adapted specifically to each locality or culture it is marketed in. The increasing presence of McDonalds’s restaurants worldwide is an example of globalisation, while the changes in the menus of the restaurant chain that are designed to appeal to local tastes are an example of glocalisation.
Globalisation aims at a worldwide intra-firm division of labour. In this strategy, activities are established in many sites spread over the world, based on a country’s comparative advantages. A manufacturer striving for globalization aims to secure the supply of its inputs by locating production of these inputs at the most favourable locations. Thus, labour-intensive production of components will be situated in low-wage areas, while the production of high-tech and high value-added parts will require a skilled or well-educated workforce. In a European context, this would mean locating research facilities in core areas and assembly plants in peripheral areas.
Glocalisationaims to establish a geographically concentrated inter-firm division of labour in the three main trading blocs: Japan and South-East Asia, the USA, and the EU – collectively these are known as the Triad. Manufacturers striving for glocalization are building their comparative advantage on close interaction with suppliers and dealers, as well as with other relevant actors, such as banks and governments. Two essential elements stand out in a firm’s glocalization strategy:
o the decentralization of production to hierarchical networks of local subcontracting
o a high degree of control over supply and distribution.
The strategy for glocalization involves the attempt of a manufacturer to become accepted as a “local citizen” in a different trade bloc, while transferring as little control as possible over its strategic activities. Glocalization is first of all a political, and only in the second place a business location strategy. A manufacturer aiming for glocalization will localize activities in a different trade bloc area only if it otherwise risks being treated as an “outsider” and so subject to trade or investment barriers and thus stands to lose market share, or the inevitable compromise in costs and control will allow it to produce competitively, i.e. there are suitable areas of low labour costs or regional assistance.
Glocalisation is good for India and also for the world because
- Glocalisation allows the use of natural resources in accordance with their local skill availability, local adaptations
- Glocalisation doesn’t allow environmental problems to crop up because the economic activity is adapted to the environment and has evolved in tune with it. No one would have faced any environmental crisis in India if we would have managed our water resources in the manner of its use as was thousands of years back with the help of ahar, pyne, thing, tingel or johar.
- Glocalisation differentiates between wisdom and knowledge and information and wisdom. It allows the best use of local wisdom. Local wisdom is in accordance with the society, with nature and in tune of economy, which actually evolved through many trial and errors.
- There is a lot of internalization of cost involved in glocalisation. Concepts like Green revolution wouldn’t have been successful if internalization of costs would have taken place. When we are internalizing these costs now, we know the lethal price we have paid for Green revolution.
- Glocalisation is associated with minimal conflict between society, economy people and environment.
- Glocalisation allows greater amount of decentralization, so useful in attaining resource congruence.