Globalization

The term “globalization” became a popular buzzword for describing business practices

in the last few decades, and it appears as if it will continue to be a key word for describing

business management throughout the new century. In this section, we review

a few key trends of the world economy: (i) the emergence of globalized financial markets,

(ii) advent of the euro (iii) continued trade liberalization and economic integration,

and (iv) large-scale privatization of state-owned enterprises.

The 1980s and 90s saw a rapid integration of international capital and financial markets.

The impetus for globalized financial markets initially came from the governments

of major countries that had begun to deregulate their foreign exchange and capital markets.

For example, in 1980 Japan deregulated its foreign exchange market, and in 1985

the Tokyo Stock Exchange admitted as members a limited number of foreign brokerage

firms. Additionally, the London Stock Exchange (LSE) began admitting foreign

firms as full members in February 1986.

Perhaps the most celebrated deregulation, however, occurred in London on October

27, 1986, and is known as the “Big Bang.” On that date, as on “May Day” in 1975 in the

United States, the London Stock Exchange eliminated fixed brokerage commissions.

Additionally,