The Process of Globalization and Its Impacts on International Business Activities

7/24/2019 The Process of Globalization and Its Impacts on International Business Activities

1/8

Surname 1

Name:

Instructor:

Course:

Date:

The Process of Globalization and Its Impacts on International Business Actiities

Profoundl!" #lobalization is the faster and closer inte#ration of nations $orld$ide% It

arises from the enormous declines in transport and communications costs% It is due to the

elimination of artificial obstacles to the flo$ of serices% The elimination of #oods"

&no$led#e capital and to a lesser de#ree" indiiduals across borders also contributes%

Globalization is an all'encompassin# term used for a multifaceted series of social" economic

and technolo#ical concepts% It also includes political and cultural chan#es understood as

increasin# inte#ration% Interaction and interdependence bet$een indiiduals and corporations

in disparate locations also pla!s a role (Campanella )*%

The process of Globalization insti#ated in the 1+th centur! $ith the deelopment of

capitalism" and successiel! spread to different nations $orld$ide% In effect" the e,ploitation

and sub-u#ation of Third .orld nations in /atin America" Australia" Asia" Africa and North

American $hite forei#n settlements are e,amples $here the #lobalization process ori#inall!

started% 0rom the openin# sta#e" the #lobalization process had its ori#ins in colonialism (Nam

+" 2our&e and .illiamson 1+*% 3conomies opened up for #ro$th in the 0irst .orld nations

at the e,pense of the e,ploitation of the Third .orld nations (4Process of Globalization5 para

*% Presentl!" the nature of #lobalization hin#es lar#el! on the attitudes of the colonialist

rulers% It $as ital for the rulers to distin#uish people based on their social strata" $hich

allo$ed them to e,ploit the Third .orld nations b! e,tractin# labor forces" labor and ra$


2/8

Surname )

materials for meetin# their militar! and administratie necessities% This $a!" the $ealthier

nations continued to thrie $hile the! pushed poor countries to$ards poert! (6uller 178*%

The subse9uent step of #lobalization focused on inter'imperial mone!ma&in#

actiities% The reciprocal trade bet$een the 3uropean countries" the S and ;apan formed a

se9uence of clusters on re#ional leel" accompanied b! the #oernin# po$ers% This scenario

birthed corporations and competition in the commercial circles" causin# the multinationals to

stru##le for control oer the mar&ets% The! similarl! collaborated to e,ploit the Third .orld

mar&ets more efficientl! (Campanella +*%

0orei#n trade is a &e! part of #lobalization% 3,chan#es of #oods on a #lobal leel

include the man! classes of the social order alon# $ith the commercial mar&ets% This

association helps #lobalization realize class character% +*% Indeed" #lobalization deries its risin# feature from the capital

forces that defeats the labor class" small political parties and farmers% This leads to the

con9uest of nations" $here lifest!les decline and there is the promotion of e,port tactics

(4Process of Globalization5 para >*% The deelopment of the #lobalization process includes

the commencement of class conflict% It also includes the shrin&in# of profits throu#hout the

foundin# of ?$elfare state?% The #lobalization process is indeed not a ne$ concept% Its

historical se9uence of rise" decline and inte#ration is a result of the socio'political situation of

a particular countr! (6uller 18@ 4The 3ffects of Globalization5 para 1*%

The Impacts of Globalization

International business is a $ide arra! of business underta&in#s embar&ed on across national

borders% International business in compan! $ith speedil! increasin# #lobalization has become

a $idespread sub-ect and has dra$n the attention of #oernment officials" academics and


3/8

Surname

business e,ecuties% International business is dissimilar from the local business% At the

$orld$ide leel" the #lobalization of the international econom! and the dissimilarities

bet$een nations present both challen#es and opportunities to #lobal businesses% Business

e,ecuties need to consider the #lobalized business settin# $hen ma&in# #lobal tactical

decisions and in mana#in# continuin# $orld$ide operations (Campanella 8*%

Globalization in the social" political" and economic fields has been risin# since the

18s" #ettin# a particular lift after the culmination of the Cold .ar% Numerous economists

maintain that #lobalization ma! be the cause of &e! tendencies in the $orld econom!" for

instance" hi#her profits" lo$er $a#es for $or&forces in .estern economies" hi#h immi#ration

and lo$ interest rates and lo$ inflation not$ithstandin# sturd! #ro$th (Par& para *%

Globalization has fast'trac&ed in the last t$o decades% All throu#h a period of moderatel!

robust economic #ro$th" #lobal e,ports as a part of GDP increased from belo$ ) in 1>

to aboe ) in )" and een as $orld$ide trade declined in )" due to the #lobal

stoppa#e" but rebounded in )1 (6uller 1+*%

3conomists propose the use increasin# forei#n inestment as one measure of

increasin# economic #lobalization% Another measure is the forei#n direct inestment (0DI* of

forei#n proprietorship of productie assets" for instance" factories" land" and mines% The

lar#est streams of forei#n inestment arise bet$een the industrialized nations (Par& para *%

In recent !ears" ho$eer" the flo$s out of and into emer#in# nations has #ro$n meanin#full!%

0ollo$in# the uniersal recession" the $orld GDP fell b! more than 1 in )% Some of the

#lobe?s &e! emer#ent economies suffered seere recessions in )" $hereas others mar&edl!

China and India" mana#ed to maintain stead! #ro$th (/aszlo +*%

Er#anizations encounter #lobal forces of suppl!" demand" #lobal mar&et competition"

their si#nificance to #lobal issues" political deelopments" and demo#raphic chan#es rather


4/8

Surname >

than remainin# sheltered b! local settin#% The net effect of the same factors rather than bein#

mere sub-ects to local trends and situations affects sta&eholdersF interests% This situation

applies to all sta&eholders includin# inestors" labor" suppliers" business mana#ers" farmers"

administratie bureaucrats and politicians" consumers" #oernment serants" men and $omen

and the !oun#" and the old (/aszlo 7@ Par& para *% It similarl! applies to all or#anizations

t!pes includin# business firms" #oernments" ciic authorities" trade associations" NGEs"

cultural and social or#anizations" ciil societies" reli#ious establishments" research and

education institutions" scientific bodies" political parties" multi'lateral or#anizations" the

terrorist outfits and the militar! or#anizations (4Process of Globalization5 para *% Those $ho

cannot acclimatize to the $orld$ide forces ultimatel! lose their releance and find it difficult

to surie% Those $ho chan#e and ad-ust as the #lobalization continues" conert international

opportunities into strate#ies" $hich stren#then them and ma&e them constantl! releant and

handle the dan#ers from the enironment more efficientl! (/aszlo 8@ 4The 3ffects of

Globalization5 para )*%

Accordin# to scholars" #lobalization has seeral facets that affect the $orld man!

different $a!s includin# industrial" financial" economic" political" informational" cultural'

ecolo#ical" and social and transportation aspects% A leadin# phenomenon has become the

leadin# factor in #lobal business life throu#hout the past fe$ decades% It affects the

international business in different $a!s includin# increased competition $orld$ide (an&iss

18*% This competition can be associated $ith product and serice price and cost" tar#et

mar&et" 9uic& response" technolo#ical adaptation" fast production b! corporations amon#

others% .hen a corporation produces $ith fe$er bud#ets and sells at a cut'rate price" it can

#ro$ its mar&et share% .ith hei#htened competition from forei#n companies and brands"

industries of all nations are obli#ed to increase their 9ualit! standards alon# $ith consumer

satisfaction serices% These chan#es benefit the consumers and the econom! at lar#e and raise


5/8

Surname +

the liin# standards of eer! person% 6an! could ie$ this hi#h competition as a ne#atie

influence" but fe$ can disclaim its tellin# impact (6uller 18*%

Another impact of #lobalization is the rise in competence and technolo#!% The

increase in leels of &no$led#e of nations as ne$er technolo#ies and cultures fall out to a

specific area are apparent" their &no$led#e base similarl! e,pands and #ro$s simultaneousl!%

Conse9uentl!" the! can better handle their secondar! and primar! industries" and this

eentuall! affects their tertiar! sectors in a positie er! as $ell (an&iss 1>@ 4The 3ffects

of Globalization"5 para >*%

Globalization also increases opportunities for people to #ro$ e,ponentiall! due to the

lar#er number of resources and industries aailable% There are numerous additional -obs

aailable to publics% 6ore indiiduals loo& up to the mone!'spinnin# adanta#es of moin#

abroad% This situation also increases immi#ration rates" conse9uentl! allo$in# people to #ro$

sociall! and economicall! (Campanella 1*%

Globalization also increases inestment leels% The upsur#e in forei#n inestment in

nations helps industries alon# $ith natie cities #ro$ at a fast pace% 6oreoer" it is

somethin#" $hich all nations ou#ht to be open to as it is a #reatl! adanta#eous enture for

them (Cate para *% 3er! nation currentl! imports more than eer before" hence that #lobal

#ro$th has distributed resources and abilities in outstandin# $a!s (4The 3ffects of

Globalization"5 para >*% Globalization also allo$s companies to meet consumer tastes and

e,pectations% In #eneral" consumers $ith hi#h income hae hi#h demands% This situation

compels companies to meet #reater standards (Nam *%

It also influences the choice of location% Throu#h #lobalization" businesses are

currentl! much freer to pic& out $here the! $ish to operate from" and can relocate to a lo$'

priced and more effectie location% Eer the past ten !ears" man! businesses hae started


6/8

Surname 7

ie$in# the #lobe as a lucratie business location (Par& *% The amplified moement of -obs

and businesses has enforced #oernments to compete $ith one another in offerin# lo$'cost

and attractie locations% Companies no$ hae e,tra freedom of moement in order to ac9uire

cheaper inputs" such as labor in deelopin# nations% Ene constraint on this situation is that

e,ecuties $ill not continuousl! moe to some nations if liin# conditions are dan#erous or

unpleasant (/aszlo *%

Globalization e,pedites information e,chan#e% Information is a most aluable and

costl! production element in the e,istin# enironment% It can easil! e,chan#e and transfer

from one nation to another% If a corporation has an opportunit! to use information and

&no$led#e resourcefull!" then it can adapt to this international shiftin# (Cate 1*% This issue is

comparable to the technolo#! transfer matter in $orld$ide mar&ets% The fast chan#in# of the

mar&et similarl! necessitates 9uic& transfer of &no$led#e as $ell as effectie usa#e of that

information and &no$led#e (.ild and .ild 7+*%

Globalization also affects multi'cultural and multi'national mana#ement" $hich is a

&e! challen#e to companies and their bosses% A multi'national corporate settin# is more

compound $ith more ariables" and more problematic to mana#e (Cate para )*% A multi'

cultural $or& polic! leads to $or&ers of man! different lan#ua#es" reli#ions" cultures"

nationalities and ethnicities in different offices #loball!% These $or&ers react in different $a!s

to frin#e benefits and motiation% It is hard to find e,ecuties $ho are sensitie to all these

dierse factors% It is eas! for them to offend and demotiate $or&ers unintentionall!

(Campanella 1+*%

The openin# up of $orld$ide mar&ets and enhancin# intercultural communication

creates numerous opportunities to source lo$'cost" hi#h'9ualit! labor and materials%

Eutsourcin# is $hen companies use less e,pensie" forei#n labor for underta&in#s


7/8

Surname 8

traditionall! e,ecuted locall!% In nations such as India" outsourcin# brin#s une9ualled

economic $ealth to the people% Deeloped countries often do not realize that for all people

$ho lose their -obs to outsourcin#" other people' fre9uentl! in a more economicall! de-ected

situation' #ain emplo!ment (an&iss 1*%

Conclusion

Globalization is the fundamental d!namic for international trade% This ne$ a#e of

#lobalization brin#s opportunities and ne$ challen#es and considerations $ith the chan#in#

aspects of a free mar&et (Par& para *% It proides access allo$in# countries and people to

benefit from the inter'cultural e,chan#e" #lobal diision of labor" $orld$ide specialization"

technolo#ies" and the customers en-o! a $ider assortment of #oods at lo$er prices%

Globalization emboldens a hi#her thin&in# leel and improed mana#in#% Business eoles

in ne$fan#led $a!s (an&iss 1>7@ 4Process of Globalization"5 para *%


8/8

Surname

.or& Cited

Campanella" 6% /% HGlobalization: Processes and Interpretations%H World Futures(1*: 1'

17% Print%

Cate" 2oel )8%1%8)88LabstractM%

Nam" Binh% Globalization and Emerging Issues in Trade Theory and Policy% nited

in#dom: 3merald" )% '7+% Print%

Par&" Daniel% H.hat Is GlobalisationH B)B International% .eb% 18 Apr% )1+%

HProcess of Globalization%HEconomy Watch% ) 6ar% )1% .eb% 18 Apr% )1+%

2our&e" ein %" and ;effre! G% .illiamson% Globalization and istory the Evolution o! a

"ineteenth#century $tlantic Economy% Cambrid#e" 6ass%: 6IT" 1% Print%

HThe 3ffects of Globalization En 6ar&etin# Strate#! And Performance%H .eb% 18 Apr% )1+%

.ild" ;ohn ;%" and enneth /% .ild%International %usiness& The 'hallenges o! Globalization%

>th ed% pper Saddle 2ier" N%;%: Pearson Prentice all" )% Print%

The Process of Globalization and Its Impacts on International Business Activities

Documents

Transcript of The Process of Globalization and Its Impacts on International Business Activities