Impact of Globalization

on Service Sector

Group No. 4

Vikram Gade 10
Sonica Ghatkar 12
 Globalization
• Does it mean the fast movement of people which results in
greater interaction?
•
• Does it mean that because of IT revolution people can be in
touch with each other in any part of the world?
•
• Does it mean trade and economy of each country is open in
Non-Intrusive way so that all varieties are available to
consumer of his choice?
•

• Does it mean that mankind has achieved

• emancipation to a level of where we can
• say it means a social, economic and
• political globalization?
 An Example of Globalization

ØA British Princess and her Saudi Arabian boyfriend

died in Paris after being treated by Swiss doctors
with American medicines while their German
BMW car driven by a drunken Turkish driver
consuming excessive French wine and chased by
Italian Paparazzi crashed against a river tunnel.
•

ØThis news is being sent as SMS by an Indian

journalist using a Chinese made Nokia handset
with a Singaporean Airtel simcard smuggled from
Korea and using Orange network of Thailand.
 Globalization in Simple terms
Globalization is an attitude of mind- it is a
mindset which views the entire world as a
single market
Process of transformation of local or regional
phenomena into global ones
Process by which the people of the world are
unified into a single society and function
together.
This process is a combination of economic,
technological, sociocultural and political
forces.
Is often used to refer to economic
globalization, i.e,
• integration of national economies into the
• international economy through trade,
• foreign direct investment, capital flows,
 Positive Aspects
 Increased free trade between nations
 Increased liquidity of capital allowing investors in developed
nations to invest in developing nations
 The business market in the world has no boundaries, they can
market their products in any part of the world.
 Corporations have greater flexibility to operate across borders
 Global mass media ties the world together
 Increased flow of communications allows vital information to be
shared between individuals and corporations around the
world
 Greater ease and speed of transportation for goods and people
 Reduction of cultural barriers increases the global village effect
 Spread of democratic ideals to developed nations
 Greater interdependence of nation-states
•
 Negative Aspects
 Increased flow of skilled and non-skilled jobs from developed to
developing nations as corporations seek out the cheapest labor
 Foreign salaries attracted a lot of human capital which affected our
productivity.
 Lead to a great dissatisfaction among the under
developed/developing countries.
 Increased the chances of inferiority complex among these nations.
 Increased likelihood of economic disruptions in one nation effecting
all nations
 Corporate influence of nation-states far exceeds that of civil society
organizations and average individuals
 Greater risk of diseases being transported unintentionally between
nations
 Spread of a materialistic lifestyle and attitude that sees consumption
as the path to prosperity
 Globalization and India
Reductions In Import Duty
Removal of restrictions on imports imports
Devaluation of Currency
Removal of permissions on setting up enterprises
and expansion of capacity
Privatization of Public Sector Units
Membership of WTO
Easier entry of multinationals

 Service Sector
 Service Sector of Indian Economy contributes to around 55
percent of India's GDP during 2006-07. This sector plays a
leading role in the economy of India, and contributes to around
68.6 percent of the overall average growth in GDP between
• 2002-03 and 2006-07.
 The various sectors that combine together to constitute service
industry in India are:
o Retail
o Real Estate
o Communication
o Banking
o IT & ITES
o Health Care
 In the current economic scenario it looks that the boom in the
services sector is here to stay as India is fast emerging as global
services hub.


 RETAIL INDUSTRY
 Generating more than% 10 ’ of India s ’ GDP
 Largest source of employment after agriculture
 Increase in the number of international brands
 Increase in urbanization credit, availability infrastructure
and technology
 India's economy is booming, due to so many economic
reforms.
 the rise in the working population which is
• young & reduction of the unemployment rate.
 pay- packets which are hefty, and having
• a huge package of salary package.
 more nuclear families in urban areas
 rise in the number of working women
 more disposable income and customer aspiration
 western influenced life style is adopted.
 growth in expenditure for luxury items increases.

Reason for the growth of retail industry
 Existing Indian middle classes with an increased purchasing
power
 Rise of upcoming business sectors like the IT & engineering
firms
 Change in the taste and attitude of the Indians
 Effect of globalization
 Heavy influx of FDI in the retail sectors in India

 Big Bazaar Crossword, Ebony Retail Holdings Ltd., Food
Bazaar, Globus Stores Pvt. Ltd., Food World Ltd.,
Pantaloon Retail IndiaLtd., Shoppers Stop, Titan Industries
and
• Reliance Retail Ltd,
 New enterants like Wal-Mart Stores, Carrefour, Tesco, Boots
Group

 Real Estate Industry
 Real Estate – Second Largest employment driver in India
next only to agriculture
 Indian real estate industry is growing with a compounded
growth rate (CAGR) of more than 30%on the back of
robust economic performance of the country.
 Market is getting more organized with
• presence of overseas Developers Housing
• sector contributes to 5%of the country’s GDP
 Emergence of small cities – tier II & tier III cities
 New avenues of investment – hospitality, health care,
integrated townships, infrastructure corridors
 Investments flowing from multiple sources –
FDI/PE/Institutional Investors/Debt
•
 Banking Industry
Great innovations in financial reforms , restructuring
convergence
The arrival of foreign and private banks
Fall in hardware prices and the advent of cheap and
inexpensive but high powered PCs & servers
The market focus is shifting from mass
• banking products to class banking
The financial market has turned into a
• buyer's market
Customized banking products have been
• introduced

 Personal Care Industry
 The Indian personal care industry is estimated at Rs 170 billion.
 Most segments of this industry are going through a decline in 2002
with several leading players reporting lower sales in 2002 due to
lower volumes as well as lower realization.
 The next phase of growth has to come from the rural market as the
urban markets are near saturation levels.
 The industry has a low entry barrier and competition is severe.
 Though most of the market share is with the larger players,
companies vie for the marginal market share.
 Cheaper imports and duplicate products are also affecting the major
players.
 The way ahead for the personal care companies is
• to introduce new & better product, improve
• penetration, make the consumer trade up in
• price &quality.

 Software Industry
 IT and ITES empowered companies by software
 Creates employment
 Export Export software services
 Growth of BPO
 Fastest growing sector of Indian economy
 Increase in GDP contribution by service sector

 Communication Industry
 Communication Technology is basically an
• electronic based system of information
• transmission, reception, processing and retrieval
 Exceptional growth of mobile users
 Increasing access to high-technology for developing countries.
 The Indian telecommunication industry, with about 525 million
mobile phone connections (Dec 2009), is the third largest
telecommunication network in the world and the second largest
in terms of number of wireless connections.
 companies such as Vodafone, Bharti Airtel,
• Tata Indicom, Idea Cellular, Aircel and
• Loop Mobile have entered the space.


 Health care Industry
 India spends about 6.5% to 7% of GDP on Health care.
 Out of this 1.5% is in the
• Govt. Sector and 4.7% in private sector.
 Provision of Health care in the Country
• is the shared responsibility of the
• Centre, State and Local Governments.
 Includes beneficiaries covered under ESIS, CGHS, Army,
Railways, self funded, PSUs and Insurance products.
 Most of the health care providers in the country are in private
sector and are on fee for service basis
 The share of public financing in total health care is just about
1% of GDP compared to 2.8% in other developing
countries.

 Health care spend in India is considerably lower than
that in other countries

2008 US UK Mexico Brazil China India

Life expectancy 77.4 78.3 72.6 71.4 72.5 64.0
(avg. # of years)
# of Physicians 2.7 1.9 1.7 1.2 1.7 0.4
per 1,000
Healthcare
people 5,365 3,036 336 236 62 32
spend
Healthcare
(USD per 13.2 8.4 5.5 7.5 5.0 5.3
spend
capita)
(% of
GDP)
 Health care Industry in India
 The Ajay Piramal Group-owned private equity (PE) firm,
India Venture Advisors, will launch its second US$ 150
million healthcare fund next year.
 Healthcare major, Fortis Hospitals plans to invest US$ 55
million, to expand its facilities pan-India.
 According to a latest report by McKinsey, driven by strong
local demand, Indian healthcare market is expected to
continue growing close to previously projected rates of 10
to 12 per cent.
 Ranbaxy Laboratories’ acquisition by Japan’s second largest
pharmaceutical company, Daiichi Sankyo Ltd, in June last
year
 Various health care products like insurance, mediclaim on
rise…
 Conclusion
 A country must carefully choose a
• combination of policies that best enables it
• to take the opportunity - while avoiding
• the pitfalls.
 For over a century the United States has been the largest
economy in the world but major developments have taken
place in the world economy since then, leading to the shift of
focus from the US and the rich countries of Europe to the
two Asian giants- India and China.
 Economics experts and various studies conducted across the
globe envisage India and China to rule the world in the 21st
century. India, which is now the fourth largest economy in
terms of purchasing power parity, may overtake Japan and
become third major economic power within 10 years.
•
THANK YOU