The Concept and the Main Features of Globalization - Assignment Example

?Globalisation Globalisation is a crucial business concept that describes the rapid and recent process of international economic, social and political integration. The global integration allows people to communicate, travel, invest and trade. This eases the acquisition of raw materials and marketing process. Internationalised business enterprises benefit from sharing of technology and enjoying the economies of large scale. The rise in globalisation is a product of the emergence and spread of multinational firms, formation of trade blocs and increase in the amount of trade. Globalisation is also a product of investment and cultural exchange between nations. Although globalisation possesses many economic, social and political benefits it has negative impacts on most global economies as well as the environment e.g. pollution and tampers with the sovereignty of various nations. Globalisation can be divided into five categories; internationalisation, universalisation, modernalisation, liberalisation and respatialisation (Ferendinos, 2009:4; Clayton, 2004: 274-294). Internationalisation portrays globalisation as an aspect of cross-border relationships while liberalisation discusses the aspect of creating open world economy by elimination of interstate movement restrictions among countries. Universalisation views globalisation as a process of distributing a wide range of knowledge and products all over the world. International business aspects such as capitalism and industrialism determine the modernisation aspect of globalisation (Egan, 2005: 559–64). Globalisation increases global economic interdependence. This involves the rise in the sensitivity of individuals and companies on the changes taking place around the global business circle and the measures necessary for curbing possible challenges emanating from such changes. Global dependence can be unilateral i.e. a country depending on the global economy, or bilateral i.e. a country benefitting from the global economy and the global economy benefitting from that country, in return. The free movement of goods created by the globalisation process provides multi-national corporations with an opportunity to establish a global competitive advantage. Globalisation is caused by various factors. The prominent cause of globalisation is the enhancement in technology which most multinational corporations have adopted in a bid to improve production. Technological progression has led to reduced cost of transport as well as communication. The availability of cheap, rapid and reliable communication channels is the key to integration of the international capital markets. This nurtures the growth of multinational corporations as they exploit intellectual property efficient in various locations from a central point. The change in lifestyle has also led to increasing demand that makes most enterprises establish branches in other locations. The dimensions of globalisation include economic, political, psychological, sociological, anthropological, geographical and communications. The economic perspective of globalisation focuses on economic drivers such as trade, money, banking, corporations and capital. Economic dimension posits that globalisation has taken the form of an increase in trade liberalisation, expansion of world markets and the increase in the international mobility of capital. This has made many countries to come together under supranational trade unions such as the European Union as well as the formation of multinational institutions such as the World Trade Organisation (Ingham, 2004). Economic globalisation has also enabled firms gain the ability to locate their production facilities everywhere in the world. Most of these multinational firms take advantage of globalisation to target less developed countries that provide cheap labour which, in turn, reduces operational costs. Economic globalisation enables multinational corporations to establish their business close to the sources of raw materials, capital, technology and other business components; thus improving business efficiency. Economic globalisation gives business enterprises the liberty and freedom to make profits all over the world. However, globalisation has led to increased competition. This has made firms to merge and achieve economies of scale that enhances their competitiveness (Charles, 2003). Globalisation has encouraged many countries to eliminate trading blocs laying a suitable environment for enhanced competition. On one hand, this is advantageous to many corporations as it leads to the establishment of more markets for their products. However, the situation has made many local enterprises to be in constant competition with both national and international competitors. This requires being involved in a rigorous and challenging business environment to maintain business continuity and development. Such an environment is characterised by the rise of monopole companies and trough among the production costs. Merging of firms has led to the formation of large multinational corporations that have created oligopolies in many international markets. This has made it difficult for smaller businesses to establish themselves (Sirkin, Hemerling and Bhattacharya, 2008:292). The economic benefits generated by multinational companies are not normally spent on the host country. This implies that most of the less developed countries do not economically benefit from multinational corporations. The political dimension focuses on factors such as war, peace, governance, non-governmental organizations and regimes (Hopkins, 2004: 4-8). Extensive globalisation has led to partial loss of sovereignty for many states. Most states, especially the less developed ones cannot govern themselves without abiding to rule set by multinational institutions or multilateral agreements. This is because they face the danger of isolation. Many states decided to unite under the bandwagon of trade blocs in order to benefit from the economic advantages of globalisation. The industrial revolution promoted the economic prosperity of some countries over others leading to an increase in dominance. The dominant political powers have a competitive commercial edge compared to the less powerful. However, dominance led to a decrease in production while raising unemployment in the less powerful countries. The sociology perspective is related to conflicts, communities, nations, classes and agreements (Arjomand, 2004: 321–53). The enhanced interaction between different cultures has improved sharing of business ideas among people. The understanding of different cultures provided by globalisation has enabled many business firms to get involved in business ideas that generate rapid returns. Although globalisation has uplifted the living standards of most communities in many ways, most of the workers are being exploited. The multi-national corporations are busy targeting cheap labour for higher input instead of devising ways of improving the society’s living standards through better remunerations. Beilharz (2005) warns that this has widened the disparity characterising the rich and the poor among global societies. Globalisation is also causing the extinction of many cultures. The cultures of those nations that own more multinational corporations are dominant over other countries. This is because these corporations have the ability to produce many products that impact on the cultures of less developed countries such as movies and clothes. Most multinational corporations possess business rules set by the country of origin implying that employees will be required to adopt the foreign cultures while working. The communication aspect of globalisation views information as knowledge and tools, especially the internet. Globalisation has no doubt contributed to the advancement in technology. This has led to the formation of a world without boundaries i.e. communication can take place everywhere within the globe through communication means such as telephone or internet. This has enhanced the exchange of business information among all stakeholders in various parts of the world. The exchange of ideas across all nations has promoted equality in economic development leading to business expansion. According to Fiss and Hirsch, (2005: 29–52) availability of cheap, rapid and reliable communication channels has enhanced globalisation. The cutting edge is that the most crucial element of the process i.e. information is easily conveyed to everyone through the media. However, advancement in communication technology has led to an increase in crimes such as access to obscene websites over the internet such as pornography and spread in the use of drugs. Technological advancement has also led to the need for less manpower as most of the machines can produce more than manual labour; leading to an increase in unemployment. The geographical perspective discusses the aspects of globalisation that involves the utilisation of space. Increase in economic activities increases environmental pollution (Dreher, 2006). The psychological perspective views individuals as objects and subjects of global proliferation. The anthropological factor focuses on the properties of cultures such as overlapping, merging, clashing and adapting. Globalisation has spread in the form of exchange of culture and knowledge between citizens from various nations. The increase in the population of the global community has enhanced the ignorance of people towards diversity among populations. People do not understand that what a certain culture considers ethical may be opposite to another culture leading to conflict. The three main perspectives of globalisation include hyperglobalist, sceptical and transformationalist (Held et al, 1999: 32-86). The hyper globalist perspective considers globalisation as an epoch in human history. The epoch is characterised by the decline in the sovereignty and relevance of states caused by the economic advancement of foreign markets. The perspective notes that nearly all countries stands to benefit from globalisation tendencies. Some groups may benefit more than the others although the resulting impact is more favourable compared to the previous conditions. The increase in economic globalisation will enhance the impact of multinational corporations. This will make most governments lose influence among the states they govern and abide by external rules. The reconfiguration of the global economy will spell the demise of the nation-state and increase irrelevance of internal governance in most states. The sceptical perspective views the current global processes as more regionalised and fragmented than globalised (Held et al, 1999: 40). The perspective views global capitalism as inexistent phenomena. The perspective disagrees with the growth in nation-state relevance with the advancement in globalisation. This is because the increased impact of globalisation is only related to certain advanced nations. The sceptics ignore the impact of globalisation on the global culture citing that such paradigms exist to only benefit developed countries. The transformational perspective asserts that there is no single cause for globalisation and the outcome for globalisation processes cannot be determined. According to the Held et al. (1999), the ranges of factors affecting globalisation processes are paramount while the outcomes are less certain. This portrays a less determinate understanding of globalisation concept. These perspectives are related to the various theories that expound on the occurrence of globalisation. Many leading theorists have analysed the concept of globalisation in diverse conflicting ways. Some assert that it is a generalised modernity while others cite that it is post-modernity. Globalisation theories include world-system theory, world polity theory and world culture theory (Wallerstein, 2004: 23-59). World polity theory asserts that there is no single individual or institution determining the aspects that are favourable for the world as a whole. The culture of world polity gives globalisation responsibilities to nation-states. The mode of action of the individual states is determined by the global culture and rules. The undertaking of the global models creates similarity among the global institutions for nations situated at different locations. Multinational corporations are the prime drivers of the economic interrelations between nations; especially where nations rely on one another for improved trading and development. According to Wallerstein, (2004: 23-59), world system is any social system whose interdependent parts operate according to distinct rules. Close analysis of the theory leads to three instances namely mini-systems, world empires and world economies. The modern world system is economic globalisation whose linkage between its parts is economic. According to Hopkins (2004: 237), the system operates on the primacy of endless accumulation of capital. All world system’s products and activities are commercialised. The capitalist world economy is characterised by a multiplicity of political systems that provide the freedom of manoeuvre to the capitalists. The economically stable states serve the interests of the powerful and dominate the dependence of peripheral organs within the economic parity. The world culture theory focuses on the manner in which individuals gives meaning to inhabit the world as the only living place for all humanity (Ojeili and Hayden, 2006). This theory posits that globalisation is a set of dynamic relationships between the four core units namely humankind, individual self, societies and international systems. The stages of globalisation cited by this theory include societalisation, internationalisation, individuation and generalisation on the concepts about the global economy. According to Nettl and Robertson (2001), globalisation is a product of relativisation, emulation, globalisation, interpenetration, and contestation. Conclusion Globalisation is the process of increased connectedness, interdependence and integration among world economies, societal, cultural and political institutions. The rise in globalisation is a product of the emergence and spread of multinational firms, formation of trade blocs, and increase in the amount of trade, investment and the cultural exchange between nations. The benefits of globalisation outweigh its disadvantages. The main disadvantages of globalisation are unemployment, difficulty in competition and social; disintegration. Globalisation and trade liberalisation has led to decline in food production leading to a threat to food production. Globalisation benefits the community since it contributes to the overall global prosperity through the increase in labour productivity and positive contribution to the factors of production. The benefits of the globalisation concepts are relayed by multinational corporations. References Arjomand, S.A. 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