Globalization and Business Complexities - Assignment Example

? GLOBALIZATION AND BUSINESS: ANALYZING COMPLEXITIES by 14 August Globalization remains one of the most influential factors of business development and growth. In the postmodern reality, globalization provides opportunities for creating and integrating new business forms, facilitates communication and cooperation, and removes barriers to market expansion. However, globalization is not without complexities. This paper is a report of the study conducted in Unilever Nigeria, exploring the most serious complexities behind globalization and their effects on business. A brief review of relevant literature is included. Methods, results, and their implications for business are discussed. Recommendations for future research are provided. Globalization and Business: Analyzing Complexities Introduction The process of globalization is actively discussed by different scholars and has not only many supporters but also many opponents. But before discussing its positive and negative effects it is necessary to define this term. Globalization can be described as “…a widening, deepening and speeding up of worldwide interconnectedness in all aspects of contemporary social life, from the cultural to the criminal, the financial to the spiritual” (Kose, Prasad & Terrones 2003). Globalization has already become one of the major trends affecting all aspects of national and international business activity. A phenomenon which leads to and causes global unification of the world’s business, economic, and social orders, globalization presents a serious challenge to businesses. That the concept of globalization is new cannot be denied. The gap between globalization and nationalization of businesses continues to persist. Globalization does not erase but on the contrary sharpens the cultural and social distinctions across countries and businesses. These however are not the only challenges faced by businesses in a globalized world. The current state of science does not provide adequate information on what businesses really think of globalization and how they can deal with it. Professional opinions and beliefs vary across groups and countries. However, better knowledge of individual and business perceptions of globalization and its complexities can create a foundation for developing new business strategies. This is why this study is designed to shed light on business people’s perceptions of globalization complexities and their implications for business development. Research questions and objectives The main objective of the study is to highlight the main complexities underlying globalization and their implications for business. More specifically, the study explores the main business complexities of globalization from the viewpoint of business people. As a result, this study will help to identify the main challenges of globalization in business, assess business people’s views on these complexities, their effects on business, and create the basis for developing new business theories, strategies, and frameworks. The main research question is: what are some of the complexities the concept of globalization has brought to businesses and how can they be minimized? Sub-questions: Are business people aware of the effects globalization causes on business? What do business people in Nigeria think of globalization? What are the main complexities underlying globalization and its implication for businesses? What is the most serious globalization complexity affecting business? How to minimize it? Literature review Globalization is the phenomenon pervading all aspects of international business activity. According to Kose, Prasad & Terrones (2003), globalization is essentially about rising international trade and financial integration of all economic processes, which has gathered steam in the past years. Changes in transportation, elimination of geographic borders, and recent advances in technology and communication contribute to globalization in all aspects of individual and business performance. Business people are probably the most vulnerable to the effects of globalization and must be equipped to tackle with the challenge of economic integration. Increased cross-border capital flows, international trade, and even synchronization of business cycles are all products of globalization in business (Kose, Prasad & Terrones 2003). Unfortunately, and despite the growing body of literature, most globalization challenges are poorly understood. The current state of literature provides little information regarding the barriers which globalization faces and creates to businesses. Nonetheless, it is possible to assume that corruption, political instability, regulation, and protectionism are the principal obstacles to the development of global business ties. The relationship between corruption and globalization was research in abundance. Rubin (1998) writes that global corruption in business has become too significant to ignore. Corruption is not merely a serious barrier to globalization, but globalization itself facilitates rapid spreading of corruption moods across countries. In the meantime, the growing volume of international trade and business activity increases public awareness of global corruption (Rubin 1998). Reasons why corruption is a serious globalization complexity are numerous. First, globalization is believed to create “a transnational community in which geopolitical boundaries are reduced to no more than bureaucratic nuisances” (Zekos 2004, p.642). In other words, businesses in the globalized world acquire greater expansion opportunities, which always come at a cost. Corruption is, on the one hand, a measure of reducing such costs and, on the other hand, a measure that promotes inefficiency in privatization and concession decisions and undermines state legitimacy (Zekos 2004). Most developing countries have a weak competitive position in the global market and possess little bargaining power in global business decisions. Corruption is one of the means to enhance the developing world’s bargaining capacity. However, countries and business which do not have enough resources to pay bribes but still want to participate in global business activity may find it impossible to enter the global business landscape on equal terms with other businesses. Second, globalization and corruption are inseparable, since the former undermines the capacity and willingness of national governments to coordinate economic and social development at the national level (Cragg 1999). This is why globalization often results in a serious market misbalance, where market and business decisions are taken for the sake of profit and are divorced from the goal of improved social and economic wellbeing of people (Cragg 1999). Yet, corruption is not the only problem of globalization. Political complexities of globalization cannot be overstated. The fact is that in their striving to expand presence in global markets, businesses take into account political factors of future business success (Li 2006). Political instability is an important factor of risk in foreign direct investments (Li 2006). This is particularly the case of African countries, which have long been torn between diverse political goals, most of which used to be self-contradictory. Nonetheless, political instability is not the primary barrier to globalization in business: more often than not, even political stability cannot give African countries better bargaining power in the global markets, if they are too small and possess too little resources to attract foreign investors (Asiedu 2006). At the other end of this continuum is excessive regulation, making it difficult for international businesses to access and use limited countries’ resources and use them to achieve their global business goals. Certainly, countries and businesses are doing everything possible to deal with this challenge. Increased reliance on corporate social responsibility and voluntary codes of conduct help to alleviate the burden of globalization complexities on businesses (Kerwer 2005; Vogel 2007). On the contrary, global standards that are considered as voluntary best-practice rules used to generate serious political conflicts (Kerwer 2005). Objectively, third world countries are the most vulnerable to the effects and failures of globalization. The latter has already acquired excessive emotive coloring and is often treated as the ultimate goal of successful business (Okafor 2007). In Nigeria, globalization turned out to be a serious obstruction to sound business development, undermining ethics in the workplace and leading to serious violations of workers’ rights (Okafor 2007). Furthermore, “globalization affords all the opportunities that can help Third World countries transform from Third World to First World in one generation. However, Africa has been a marginal participant in the new global order, and watches globalization as a paradox” (Wokoma & Iheriohanma 2010). This is why the need to explore deeper into complexities underlying business is relevant is justified. Methods The study took place in Unilever Limited, Nigeria. Unilever Nigeria has 944 employees, with 65 key distributors across the country (Unilever 2011). The company vision is to help people feel and look good, by getting the most from Unilever brands and services (Unilever 2011). The choice of Unilever Nigeria is justified by three main factors. First, Unilever is a truly global corporation with extensive experience in dealing with globalization complexities. Second, the diversity of Unilever workforce makes possible to create a more diverse and objective picture of globalization complexities. Finally, it is with the help of Unilever employees that researchers can investigate globalization complexities within African business contexts. As a result, Unilever provides sufficient opportunities to explore the complexities underlying globalization and possible ways to minimize them. 24 Unilever employees from three different departments were asked to participate in the study. Of these, only one employee refused to participate. As a result, 23 written surveys were administered via email, with 10 questions included in each survey. All participants provided official, written consent to participate in the research. Brief information about the goal and anticipated results of the study were sent to all participants. All participants had the right to drop off at any stage of the process; however, not a single participant refused to participate. All participants were given 48 hours to complete the survey. All 23 surveys were returned by the deadline. Semi-structured interviews were conducted, to further validate and complement to written survey responses. Anonymity and confidentiality were guaranteed. All survey questions are included in Appendix 1. Results Basically, research participants had to prioritize among the most serious globalization complexities, namely corruption, political instability, protectionism, and excessive regulation. All research participants were also asked to suggest their own ideas concerning globalization complexities and possible ways to minimize them. 17 of 23 respondents ranked excessive regulation as the most serious complexity underlying globalization, followed by corruption (4 respondents) and political instability (2 respondents). Among others, Unilever employees also mentioned cultural diversity among the basic complexities of globalization, which is at least surprising, given that Unilever has always been at the forefront of the global movement to diversity (Unilever Global 2011). 21 respondents failed to provide any ideas to minimize globalization complexities in their survey forms. This is possible because 48 hours were not enough for the respondents to develop relevant globalization ideas. In their interviews, most respondents noted that new globalization policies could help reduce excessive regulations, but only policies developed at the state level can support businesses in the global world. Respondents suggested that, given the scope of globalization, businesses cannot cope with its challenges without state support. These results give sufficient food for thought and have far-reaching implications for global business policymaking. Discussion Excessive regulation and protection are among the most controversial aspects of the current globalization research. It is because of excessive regulation that businesses develop their own standards of business performance, to tackle with the challenge of globalization (Kerwer 2005). Thus, it comes as no surprise that most Unilever employees rank protectionism and excessive regulations as the primary complexity underlying globalization. This emphasis on excessive regulation goes in line with previous studies and supports a widespread belief that previous regulatory regimes may not work in new, globalized conditions (Drezner 2002). More surprising are the assumptions that cultural diversity is a serious obstacle to globalization in business. This can in part be explained by a belief that globalization does not erase but on the contrary sharpens the cultural distinctions between businesses and people. Moreover, multiculturalism does little to help businesses assimilate with new ideologies (Banerjee & Linstead 2001). Foreign employees in Unilever Nigeria confess that they are facing numerous cultural barriers which, as a result, cause profound influences on the quality of their business performance. In this situation, only state policies are believed to have the potential to reduce the burden of globalization complexities on businesses. That most respondents cite state authorities as the primary carriers of globalization support is not surprising, since countries, and great powers in particular, remain the primary actors in setting global standards of regulation and business (Drezner 2001). However, according to Drezner (2001), harmonization of global regulatory standards can only occur if its benefits outweigh the costs of changing domestic regulations (Drezner 2001). Based on these findings, future research should be focused on developing low-cost strategies of changing domestic regulations to meet the demands of globalized business reality. Limitations and delimitations Qualitative techniques and small sample size are the two most serious limitations of this study. However, the use of both surveys and semi-structured interviews had to improve the validity and reliability of findings. The sample was representative of the company’s workforce structure. Conclusion and implications The main goal of this study was to identify the main complexities underlying globalization and possible ways to minimize them. It should be mentioned that the opponents of globalization tendencies in the world economy support their opinions with the arguments, related to various spheres of human existence and activity, including political, economical, ecological and social sphere. While discussing positive and negative effects of globalization as far as any particular country is concerned, it is necessary to take into account that benefits are more diffused, while losses are more concentrated, hence better seen. The study took place in Unilever Nigeria; therefore, its results may not be generalizable to other business contexts. The results suggest that excessive regulation and cultural diversity are the biggest challenges posed by globalization. Consequentially, only state policies and attention to globalization at the national level can help businesses to tackle with these challenges. These, of course, are subjective opinions of Unilever Nigeria employees, which may not reflect the objective picture of globalization. Also, not all employees might have been honest and sincere in their responses. The lack of numerical information reduces the validity of these study findings. Nonetheless, these results provide abundant food for thought and imply that further research is needed to create a complete picture of globalization complexities and their effects on business. References Asiedu, E 2006, Foreign direct investment in Africa: The role of natural resources, market size, government policy, institutions and political instability, United Nations University. Banerjee, SB & Linstead, S 2001, ‘Globalization, multiculturalism and other fictions: Colonialism for the new millennium?’, Organization, vol.8, pp.683-722. Cragg, AW 1999, ‘Business, globalization and the logic and ethics of corruption’, in JD Bishop, Ethics and Capitalism, Toronto: University of Toronto Press, pp.122-141. Drezner, DW 2002, ‘Who rules? The regulation of globalization’, American Political Science Association. Kerwer, D 2005, ‘Rules that many use: Standards and global regulation’, Governance: An International Journal of Policy, Administration, and Institutions, vol.18, no.4, pp.611-632. Li, Q 2006, ‘Political violence and foreign direct investment’, Research in Global Strategic Management, vol.12, pp.231-255. Okafor, EE 2007, ‘Globalization, casualization, and capitalist business ethics: A critical overview of situation in the oil and gas sector in Nigeria’, Journal of Social Sciences, vol.15, no.2, pp.169-179. Rubin, NM 1998, ‘A convergence of 1996 and 1997 Global efforts to curb corruption and bribery in international business transactions: The legal implications of the OECD recommendations and convention for the United States, Germany and Switzerland’, American University International Law Review, vol.14, no.1, pp.257-321. Unilever Global 2011, ‘Promoting diversity’, Unilever Global, [online], accessed at http://www.unilever.com/sustainability/employees/diversity/ Unilever Nigeria 2011, ‘Creating a better future everyday’, Unilever Nigeria, [online], accessed at http://www.unilevernigeria.com/aboutus/?WT.GNAV=About_us Vogel, D 2007, ‘Private global business regulation’, Annual Review of Political Science, vol.11, pp.261-82. Wokoma, CU & Iheriohanma, EB 2010, ‘Interaction between globalization and organizational performance in the third world’, Studies in Sociology of Science, vol.1, no.2, pp.72-80. Zekos, GI 2004, ‘Ethics versus corruption in globalization’, Journal of Management Development, vol.23, no.7, pp.631-647. Appendix A: Questionnaire Please, choose the answer that best reflects your opinion (you can choose only one answer for each question!): Question Answers No Possibly Cannot say Most likely Yes Do you believe that globalization is associated with numerous complexities? Do you believe that these complexities impede the development of business? Please, rate the seriousness of the following complexities underlying globalization: corruption political instability protectionism excessive regulation Do you believe that businesses must cooperate to deal and reduce the scope of these complexities? Do you think that states are primarily responsible for reducing the number and scope of complexities affecting globalization and business? Thank you for your participation! Read More