Effects of Globalisation: Pankaj Ghemawat's Theory

Running head: GLOBALISATION
GLOBALISATION
Name of the Student
Name of the University
Author Note

1GLOBALISATION
Introduction
Globalisation is considered to be a process that is based on the integration and
interaction among the companies, people and the governments all over the world. This is
considered to be a multifaceted and complex process that is helpful in the integration of the
local and the national economies within a global and unregulated market economy (Buckley
and Ghauri 2015).
The analysis will be based on the theory that has been provided by Pankaj Ghemawat
related to the effects of globalisation in different parts of the world.
Pankaj Ghemawat theory of globalisation
Pankaj Ghemawat is the Anelmo Rubrialta Professor of Global Strategy at IESE
Business School. Ghemawat has stated that the effects of globalisation have not been able to
make the world flat. The pace of globalisation is quite fast and the connectedness of the
countries on a global basis have not been able to reach the peak levels. Financial crisis that
had taken place in the year 2008 had a major effect on the globalisation based activities that
have taken place in different countries of the world. The levels of global connectedness are
slowly going back to the peak that it had reached in the year 2007 (Hbr.org 2019).
The breadth of the connectedness levels related to globalisation have however started
decreasing in the operations of business organizations in the current environment. The shift
that has taken place of different economic activities to the emerging countries has been able
to affect the breadth of the global decline of the levels of connectedness of different
organizations and countries as well. The major driving factors related to globalisation in the
last few years are the factors based on trade, investments. The interactions that have been

2GLOBALISATION
made by the developed countries with developing ones has a major impact on the
globalisation based factors (Laxton 2017).
The AAA framework has been designed by Ghemawat that has offered three major
generic strategies for the purpose of global creation of value. The three major types of
strategies that have been stated by Ghemawat mainly include, adaptation, aggregation and
arbitrage. The ways by which organizations are able to earn revenues by making changes in
some parts of the business model is termed as adaptation. Aggregation is mainly based on the
achievement of economies of scale. Arbitrage is based on the ways economic opportunities
can be exploited with the help of differences that are present between the national and
regional markets (Tihanyi et al. 2015).
Figure 1 – AAA framework
Source - (Hbr.org 2019)