Globalization means the integration of the various economies of the world leading towards the emergence of a cohesive global economy. The process of globalization started with the various national governments following economic and trade policies that merge with the rest of the world. Globalization involves an increased level of interaction and interdependence among various countries.

There is free exchange of not only goods and services, but also of technology, culture and management practices. The driving forces enhancing the pace of globalization are rapid advances in technology and trade liberalization. Technology has been able to shrink the distance of time and space between people and countries. physical geographical gap is no longer a barrier for a firm to service a customer in a distant geographical Market.

Over the last few years, the Indian Government has followed the policy of economic liberalization. The impact of this policy has been: (i) Reduction of barriers in international trade (e.g., reduction of import duty and liberal permission to imports), (ii) Increased flow of capital form foreign countries and vice versa and (iii) Free flow of latest technology. These have encouraged the process of globalization. The aim of globalization is to look upon the world as a ‘global village’ which would allow free flow of goods, capital, technology and labour between different countries.

Response of Indian Companies to Liberalization and Globalization. The fact that Indian economy- now described as India Inc. – is beginning to shed its insularity and is going global is clearly brought out by a number of signals. Among these the more important are as follows:

(i)    Indian companies are entering into joint ventures with MNCs.

(ii)    Indian companies are stepping up exports, and even shopping for companies.

(iii)    Indian corporate are increasingly responding to competitive price pressures from abroad by adopting competitive pricing policies.

(iv)    Developments elsewhere in the world are starting to set off tremors at home (for example, the surges and declines in London metal prices are influencing Indian metal prices).

(v)    The SENSEX and other stock market indices have started moving in line with fluctuations in similar indices in other parts of the globe like Japan’s Nikel and Hong Kong’s Hang Seng.

(vi)    Airlines are scheduling more flights to and from India. Business travelers are accounting for an increasingly larger proportion of overseas visitors.

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