Globalization of IT Industry
What are the
locational factors of
the IT industry?
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Globalization of IT Industry
What is the information technology (IT)
industry?
It is a type of _______-____________
high
technology industry.
Information technology (IT) industry
Manufacturing
of hardware and
equipment
(Any examples?)
Development of
software and
related services
(Any examples?)
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Globalization of IT Industry
What are the characteristics of the IT
industry?
1 Research and development-intensive
Inputs
Raw materials
Processes
Outputs
Design
Manufacturing
Power
supply
Assembly
Packaging
Skilled and unskilled
labour
IT equipment
products
Technology and
R&D
Capital
Which two inputs do you think
are the most important ones for
the IT industry?
Cash
Global markets
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Globalization of IT Industry
What are the characteristics of the IT
industry?
1 Research and development-intensive
Therefore, the IT industry is widely known as a…
technology
____________-intensive
industry
capital
__________-intensive
industry
research and development
_________________________
-intensive industry
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Globalization of IT Industry
What are the characteristics of the IT
industry?
2 Short life cycle of IT products
Stage of
production
Development
Growth
Maturity
Market grows
rapidly
Market
levels off
Decline
Market
drops
rapidly
How often do you change
your IT products such as
mobile phones, PCs, etc.?
Much work
on R&D
Only in a few years
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Globalization of IT Industry
What are the characteristics of the IT
industry?
3 Multinational and multi-point production
(Using an IT firm in the USA as an example)
Stage of
production
Development
Growth
Production
requirement
Scientists and
engineers for
______
R&D
Skilled
workers
Location of
production
- Headquarters: in US big city
- R&D centres: location with
professionals and _______
skilled
_____________
labour in home country
( ______
more developed countries)
Maturity
Decline
___________
Unskilled workers
for standardized mass
production
Mass production
bases: location with
________
cheap labour
overseas (in ______
less
developed countries)
____________
Multinational and ___________
multi-point production
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Globalization of IT Industry
What are the characteristics of the IT
industry?
4 Concentration
in clusters
In development /
R&D stage
For example,
What
attract
are
more
the
technology
advantages
professionals
for
information can
IT firms
to go
toto
form
flow among
clusters?
the area.
firms; and…
Silicon Valley in California is
one of the most famous IT
industrial clusters in the USA
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Globalization of IT Industry
What are the characteristics of the IT
industry?
4 Concentration
in clusters
What are the advantages
for IT manufacturing plants
to form clusters?
In maturity /
production stage
For example,
This cluster
efficient
reduceuse
the of
pattern is called
investment
raw materials
on
____________
industrial
infrastructure;
and fuels.
_____________.
agglomeration
and…
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Globalization of IT Industry
What are the characteristics of the IT
industry?
5 Importance of global markets
A lot of money for R&D
A lot of money for R&D
In order to cover the huge amounts of
money spent on R&D…
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Globalization of IT Industry
What are the characteristics of the IT
industry?
5 Importance of global markets
________
Global markets are needed to maximize the profits.
Markets of the mobile phone
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Globalization of IT Industry
What are the characteristics of the IT
Near to ___________
City centre
universities
industry?
or research institutes
6 An IT industrial
landscape
This new
kind of
industrial
landscape is
called a
________
green
________
field
site
________.
A large pool of
scientific and
technically
skilled labour
Located in
__________
suburban
area
Venture
capital is
available
Low, modern,
dispersed office-plantlaboratory buildings
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Globalization of IT Industry
What are the locational factors of the IT
industry?
In development stage
Technology
______
High level
Site
‧In ( MDCs / LDCs )
‧( City centre /
suburb )
‧Near universities or
research institutes
Labour
Researchers,
scientists and
technicians
Large amount of
__________
venture capital
Capital
Government
policy ‧Provide financial
support for _____
R&D
‧Encourage
innovative culture
Market
__________
Global
markets
Others
Any examples?
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Globalization of IT Industry
What are the locational factors of the IT
industry?
In In
development
maturity stage
stage
Technology
No need______
to
be oflevel
high level
High
Site
‧In ( MDCs / LDCs )
‧(
City
centre
Cheap
‧_______
land/ site
suburb )
‧Good infrastructure
‧Near universities or
research institutes
Labour
Abundant
Researchers,
scientists
_______
and
cheap semitechnicians
skilled
labour
LargeLarge
amount
amount
of capital
of to
venture
set up
__________
factories overseas
capital
Capital
Government
policy ‧Provide afinancial
good
infrastructure
support
for _____
R&D
‧Encourage
‧Provide
good
innovative culture
communal
services
Market
__________
Global
markets
Others
Any examples?
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Globalization of IT Industry
What is the world distribution of the IT
industry?
Europe
USA
The IT industry here mainly
capital.
professionals
venture
There Where
are Why
more
_____________
and
isThey
ismost
the
are
IT
IT industry
industrial
( MDCson
/set
LDCs
centres
up________
there?
). found?
concentrates
_____.
R&D
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Globalization of IT Industry
What is the world distribution of the IT
industry?
China
Malaysia
Mexico
India
Brazil
The IT industry here mainly concentrates on
There
are
cheap
______
price
and
________
costs.
Are
Why
there
isany
the
ITITland
industrial
industry
set
centres
up there?
in LDCs?
labour
the
manufacturing
of the
___________.
hardware
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Globalization of IT Industry
Where is the IT industry in the USA?
Silicon
Valley
large
Can
Theyyou
Where
arename
mainly
are
a these
famous
foundIT
inIT
clusters
Why?
the
industrial
suburbs
mainly
cluster
of found
_______
in the
in?cities.
USA?
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Globalization of IT Industry
Where is the IT industry in the USA?
Why is the IT industry there?
Favourable locational conditions
The suburbs of the large cities in the USA have…
a ______
high
standard
of living
a __________
pleasant
living and
working
environment
skilled labour
and
professionals
_____well
developed
infrastructure
__________
venture
capital from
the big cities
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Globalization of IT Industry
Where is the IT industry in the USA?
Why is the IT industry there?
Helpful government policies
The policies carried out by the state governments also
help attract the IT firms to come to their states. These
policies include:
Favourable
business
climate
Innovative
culture
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Globalization of IT Industry
Case study: How did the hard disk drive (HDD)
manufacturing industry develop in the USA?
Stage 1: 1956-80
It was the beginning of the industry, it needed:
HDDs were bulky, assembly plants needed to be located
 ＿＿＿＿＿＿＿＿＿＿＿＿＿＿
professionals / scientists for R&D;
near __________
markets to save transport costs.
thewere
USA
the
USA
Europe
In＿＿＿＿＿＿＿
＿＿＿＿＿＿
In
＿＿＿＿＿＿＿.
and
＿＿＿＿＿＿.
Wherewith
was
Where
technological
the
Why?
assembly
development
plants?
carried out?
 places
technology;
and
advanced
Distribution pattern of the HDD industry of the USA (1956-80)
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Globalization of IT Industry
Case study: How did the hard disk drive (HDD)
manufacturing industry develop in the USA?
Stage 2:
1: 1980
1956-80
to present
Professionals
/ In
Scientists
the
Asia
USA areplants?
＿＿＿＿＿＿＿＿＿＿＿＿＿＿＿
In
＿＿＿＿＿＿＿.
＿＿＿＿＿＿.
needed
forout?
R&D.
Where
isWhere
technological
are
the
Why?
assembly
development
carried
Distribution
Distribution pattern
pattern of
of the
the HDD
HDD industry
industry of
of the
the USA
USA (1956-80)
(1980 onwards)
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Globalization of IT Industry
Stage 2: 1980 to present
Advancements in
technology
Smaller size
of HDDs
+
Better transport
Market situation
Pressure
from
consumers
results in lower
transport costs
___________
________
Cheap labour
+
________
Cheap land
+
Favourable
government
policies
Lower the locational
importance of
market
__________
Better
communications
production plants
can be set up away
from the HQs
Attractions of LDCs
Keen
competition
___________
Increase
the locational
pull of LDCs
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Globalization of IT Industry
What is the relationship between
globalization and the IT industry?
What is
globalization?
The
It has
development
many meanings.
of the IT industry
Butiswe
very
canmuch
look in
at line
it in with the
two
development
major aspects.
of globalization.
There is a growing number of multinational firms.
Countries all over the world have become more
inter-related.
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Globalization of IT Industry
What is the relationship between
globalization and the IT industry?
Globalization in marketing
IT products target at _________
global markets.
Sell here
1 Export
Export products directly
Foreign market
Home country Produce
here
2 License
Grant a license overseas
Produce and
Home country
sell here Foreign market
3 Foreign direct
investment (FDI)
Set up a plant overseas
Produce and Foreign market
Home country
sell here
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Globalization of IT Industry
What is the relationship between
globalization and the IT industry?
Globalization in production
HQs and R&D in…
Home country
Production bases in…
Overseas
(usually in ________
less
developed countries)
_____________
Multinational production
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Globalization of IT Industry
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Globalization of IT Industry
Examples of IT hardware and equipment
Laptop
Mobile
phone
PSP
iPod
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Globalization of IT Industry
Examples of IT software and related services
SMS
Online
games
Online
ticketing
e-shopping
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