BUSINESS ENVIROMENT — OCM STD 12 Commerce — Question
Gujarat BoardEnglish MediumSTD 12 CommerceOCMBUSINESS ENVIROMENT5 Marks
Question
Give the meaning of globalization and explain it in detail.
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Answer
When a country permits foreign companies to do business in their domestic economy and allows domestic companies to do business globally, it is known as globalization.
Earlier, every country used to protect its industries from foreign competition and did not accept globalization.
Later, the companies of developed countries established industries or started selling their goods and services in developing and undeveloped countries. Subsequently, developing and under developed countries also allowed their companies to do business in other countries.
Globalization is a two way activity. The way multinational companies get permission to start industries in other countries, in the same way domestic companies can also seek permission to do business in developed countries. This way the industries get international exposure.
In order to develop business and industry of the entire world, an arrangement and specific rules and regulation was needed at the international level. With this objective, the World Trade Organization $(WTO)$ was formed.
$WTO$ makes effort to see that trade between nations take place smoothly as per the guidelines.
It enables its member countries to eliminate the barriers that arise in the path of globalization. India is a member of $WTO$ since its inception and hence the process of globalization has become slightly easier for India.
$WTO$ was established from $GATT ($General Agreement on Tariffs and Trade$).$ As a part of the policy of globalization, India has accepted the $GATT.$ It has also accepted foreign products and services to enter the country subject to certain conditions.
Globalization has enabled a fast growth of service sector.
Services such as banking, insurance, transportation, communication grew rapidly and also crossed countries.
Owing to globalization, the world has now become a global village. India has also globalized quite rapidly.
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