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Transcript of IBM1 Not Mine
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BVV SANGHA
BASAVESHWAR ENGINEERING COLLEGE
BAGALKOT
A Presentation on impact of Globalization onChemical Industry
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Objectives of the Study
Objectives of the StudyThe overall objective of this study is to examine the impact of globalization on the
manufacturing sector.
will enable the country benefit maximally from the current globalization trend in
the world economy.
In order to achieve this main objective, we intend to do the following.
analyze the challenges, opportunities and risks of globalization and their
implications
for sustainable development in Nigeria;
examine the impact of globalization on the manufacturing sector of the economy .
discuss socio-economic policy issues and reforms needed for the country to
maximize the benefits and minimize the risk associated with globalization.
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INTRODUCTION TO chemicals industry
Over the last eighteen years the Indian chemicals industryhas moved from manufacturing principle chemicals in a highly
regulated market to being a mature industry in a liberalized
economy. Until 1991, with the domestic chemical industry
enjoying protection in the form of differential import duties on
raw materials and finished chemical products. Chemical
manufacturing was largely controlled by licensing regulations.
The Indian chemical industry, 12th largest in production, is
growing at an average rate of 12.5%. However, sector
modernization of existing technology through foreign
collaborations could further enhance growth.
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DEFINED GLOBALIZATION A S
international integration of markets for goods, services and capital. It is theprocess of change towards global economic integration and a worldeconomy characterized by liberation of trade , and rapid diffusion ofadvanced technologies and consumption patterns. Again, Aina (1996)proceeded to review theliteratur e and suggested that globalizationconnotes a presence, the process of making global, being present world
wide, at the world stage or global arena. These imply visibility,120M.A.O. ALUKO, G.O. AKINOLA AND SOLA FATOKUN
immediacy, or availability. Abubakar (2001) argued
that an issue, object, value(s), institutions, or
practices is globalized if either through commerce,
production, consumpt ion, politics and the
information technology it is visible or considered
relevant in global centres. In this sense, therefore,
globalization entails universalization whereby the
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Globalization is the process by
which businesses create valueby leveraging their resources
and capabilities across borders,
and includes the co-ordinationof cross-border manufacturing
and marketing strategies.
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Positive impacts of Globalization
varied opportunities for the developing
countries
. It gave a fillip for better access to the
developed markets.
The technology transfer promised better
productivity
thus improved standard of living.
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Negative impacts of Globalization
Globalization has also thrown open varied challenges such asinequality across and within different nations, volatility in financialmarket spurt open and there were worsening in the environmentalsituation. Another negative aspect of globalization was that amajority of third world countries stayed away from the entire
limelight. Till the nineties, the process of globalization in the Indianeconomy had been guarded by trade, investment and financialbarriers. Due to this, the liberalization process took time to hastenup. The pace of globalization did not start that smoothly.
Economic integration by 'globalization' enabled the cross country
free flow of information, ideas, technologies, goods, services,capital, finance and people. This cross border integration haddifferent dimensions - cultural, social, political and economic. Moreor less the economic integration happened through four channels -
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Strategies Effects of Globalisation on Chemical Industry
The chemical industry has been traditionally been developed in protectedenvironment. The globalisation posed several challenges to the IndianChemical Industry. The Indian Chemical manufacturers were not globallycompetitive and hence they struggled to deliver quality as the import
quality chemicals (KPMG, 2004). Another challenge Indian Industry facedis the environmental regulations forced by the policy makers due to theInternational pressure (Gopalkrishnan R., 2008).
Entry of Foreign Players like Dow Chemicals, Akzo Noble and BASF hasmade the Industry more competitive. As explained by Mr. P.N. Shah, GM,
Larsen & Toubro Ltd., (Personal Communication, January 15, 2009) theforeign players use the world-class technology which gives both, Costeffective as well as better quality products.
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Contd
The import duty has been reduced after opening theeconomy. This has made Indian producers suffer. Especially,the smaller players were affected adversely. The earlier yearsof 21st Century saw closing of many small scale players inIndia. This hinted Government of India to take up initiatives
such as Cluster Development approach for the Developmentin India (Sachitanand, 2009).
Prof. R.N. Shukla (Personal Communication, January 16, 2009)stressed upon the point that Indian Chemical Industry faces
the challenge of dumping which is also a result ofGlobalisation. This has made the import cheaper and localproducers less competitive. This also resulted into shift offocus towards export markets for the Industry.
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The chemical industry is facing some challenges as wellas new business opportunities. The globalisation hasincreased Indias foreign trade and also forayed new
avenues in Pharmaceutical industry. The growingnumbers of expiring patents have increased theimportance of Research and Development.
While basic chemicals segment is facing a decliningdemand, it needs to focus on cost reduction tactics.The growing competition from China andimplementation of REACH agreement are thechallenges faced by the industry. The entrance offoreign players has witnessed technological
advancement in the industry for the larger players. The smaller players have suffered due to lack of funds
and hence collaborative strategies such as ClusterDevelopment is required.
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The advantages of manufacturing highclass chemical products in India are as
follows -Friendly Government of India policiesLow cost labor
Low and world class infrastructureStrong technical educationLarge number of science and engineering graduatesQuality output
Highly skilled workforceUsage of innovative processGood client relationshipslabor cost
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Huge scope for innovationExpansion of existing relationshipsHuge demand in overseas markets
Availability of more technical work forceIncreased number and quality of trainingfacilitiesLarge and very fast growing Indian
petrochemical marketHuge trained talent poolCompetitive
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Weaknesses of Indian chemical industry
Insufficient basic infrastructure for the
chemical industry
High feedstock cost in comparison to Middle
East countries
Prevalence and use of old and outdated
technology
Synthetic fiber industry is unorganized and
operates in small clusters
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Opportunities of Indian chemicalindustry -
Huge demand for polymer and synthetic fiber
Great opportunity for product development
Low consumption of polymer in comparison
to global consumption rate
Ever increasing size of domestic markets
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Threats to Indian chemical industry -
Stiff competition from other regional players
like, china and the Middle East countries
Stiff rational pricing pressures
Environmental hazards concerns
Low market recognition
Relocation of manufacturing sites to regionwith abundance of feedstock
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Notable points of Indian chemical industry -
It share stands at 2% of world market
Annual rate of growth of the Indian chemical industry is 10%
Its business is worth US$ 30 billion
Profit incurred is around 14%
Wide variety of products
Basic components are petrochemicals, inorganic chemicals and
fertilizers
The Indian states of Gujarat, Maharashtra, West Bengal and Andhra
Pradesh have the largest concentration of chemical and
petrochemical units
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CONCLUSION
Lastly it can be concluded that Globalization
has both positive and negative impact on the
chemical industry. Globalization often results in a
melding of foreign & domestic product forms &functions
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