Globalization of Economic Processes - Assignment Example

Lecturer: presented: Question Globalization is the process through which markets world wide are continuously becominglinked, with a rising interdependence amongst states participating in international business. It is a process that has led to the movement of human populations beyong political boundaries leading to civilization and integration of different world cultures. It is not a new phenomenon since the earliest indicators of globalization date back in the 16th century, when road transport facilitated the movement of people and goods from the the Roman Empire through the Silk road to china. The portuguese were also involved in these early forms of globalization by the 16th century as they conducted their global explorations. These explolarions are known to have created connections between continents, world populations and economic systems. Colonization also largely contributed to globalization of trade, mixture of world cultures and religion. In the recen years, there has been a wave of globalization that can be attributed to four major drivers for change. These include technological advancement, social cultural aspects, economic and political drivers. Main Drivers for Globalization Technological advancement has played a significant role in reducing the time and cost of travelling and transportation of goods. It has increased the efficiency of service delivery globally. For example, air transport has enabled traders in perishable commodities such as horticultural products to effectively transport them to differnt continents without suffering losses or incurring extra costs of rifrigeration facilities. Before the modern transport systems, it took a number of days to move from one country to another. Recent developments in communication technology have also had a significant impact on globalization. Global social interractions have been facilitated by the use of internet technology. More over, this technology has enhanced global trade since people can buy and sell products through the internet. Electronic banking has been on the rise and more and more people are engaging in online trade. It has also led to globalization of education whereby on line learning is currently a major feature of modern education. As world economies strive to achieve economic growth, they are tending to engage in international trade where they engage in foreign direct investment. This has led to establishment of multinational companies with the aim of utilizing the available opportunities through expanding their markets in foreign countries. Financial globalization has been effective in increasing the interdependence of states in regard to trade. Less developed countries have been getting foreign aid in order to accomplish their economic objectives. They have been encouraging foreign direct investment in order to promote economic growth. This has led to globalization of financial institutions. Foreign markets for domestic products has also made it possible for goods and services to be traded over wide ranging markets. The political and legal drivers for globalization are closely related with the economic drivers. They were mainly spearheaded by the developed countries after the second World War in order to develop close ties and interdependence between countries, which was a move meant to prevent possibilities of war in future. It led to the signing of treaties such as the GATT and later the WTO that were aimed at reducing the barrires to international trade. These have played a significant role in facilitating the recent wave of globalization since investment in foreign countries has been made easier amongst member countries. Social cultural factos have also played a significant role in globalization. Increasing levels of international tourism is one factor that has enhanced globalization. Provision of social amenities to assist the less developed countries has led to globalization of health services and other social institutions. People from these countries migrate to developed countries in search for employment and other important services that are not available locally such as advanced institutions of learning. Population increase is a major factor driving people to seek alternative areas for settlement where competition is low. These migratory habits have significantly contributed to the recent wave of globalization. Various types of companies can utilize the concept of globalization to accomplish their business goals. This mainly can be achieved through establishment of foreign markets for locally manugfactured goods in order to escape local competition. It works through the estalishment of foreign subsidiaries which operate under the main company. Globalization has enabled companies such as Starbucks and Coca-Cola to expand their markets globally. They are some of the leading companies world wide that have taken advantage of globalization. Smaller companies can also take advantage of globalization through outsourcing skilled human resources from foreign countries. Technological transfer is also a major benefit that can be derived by the local small companies from globalization. This helps in improvement of the quality of products and services which are more competitive in the market. Question Two Viewpoints in relation to CSR There are various viewpoints in regard to corporate social responsibility. Some are supportive while others argue against it. Milton Fieldman is one of those who argue against this aspect of business. He does not agree with the believe that business owners enhance the presence of a free enterprise while they assert that their main aim of business is not to maximize profits, but rather assming that they have high interests in the promotion of the social welfare of people. Friedman believes that the assumption that the business no business men can pay so much attention to promotion of social activities at the expense of profits. He feels that this is a form of socialism that is not applicable in any business setting largely because the purpose of engaging in business is to make profits while minimizing costs and other expenditures that a business may incur. He believes that there is lack of proper analysis and credibility in businessess men who claim to engage in corporate social responsibility. Friedman does not find it prudent for managers to forget that they are responsible to the stakeholders and to go on and utilize business funds for the common social welfare in activities such as environmental protection. He feels that the economic drivers towards business are undermined when such activities take a center stage in the business, and that the business goals can not be achieved, and that such principles are basically seditious. On the other hand, Archie Carrol, supports corporate social responsibility in the view that the managers are obligated to accomplish certain responsibilities such as economic accountability through ensuring that their products satisfy the needs of consumers, thereby increasing the capability of the business to offset its liabilities. Carrol believes that the business has an obligation to maintain the requirements of the government in social matters such as the laws governing employment and others that protect employees from discrimination. According to these views, a business is also required to maintain ethics in regard to the customs of the society. These are mainly meant to motivate the people to work e. g. Promotion of personal development and stress reduction in the work place. Generally, Carrol views economic responsibilities to be the most important, followed by legal, ethical and finally the discretionary prospects which are mainly aimed at assisting in programs for social development such as environmental conservation, community projects and such activities where there are no financial gains that the business expects. The CIPD views CSR as a way through which businesses can uphold their business strategies. This view focuses on the significance of the stakeholders with whom the business establishes a relationship through CSR which enhances the development of a supportive environment for operation. It is also viewed as an important aspect of generating organizational change that is beneficial for the organization in terms of human resource management. Other views include those of the the Institute of Directors, whereby CSR is seen as the extension of organizational activities outside the normal organizational activities and legal requirements in a bid to take control of the effects of the business operations on the surroundings as well as the entire society. This mainly depends on the interrelationship between the organization and the stakeholders. Different stake holders include community based organizations whose attention is focused on the area of business concern, the surrounding community who may be affected by the activities of the business, international organizations with a focus on social affairs such as human rights protection and environmental conservation, human resources, suppliers as well as customers. The organization establishes partnership with the stakeholders who have similar interests. This helps the organization to accomplish its objectives in an effective way where roles are shared thereby minimizing costs. These stakeholders may impact on the organizational strategic decision making since not all objectives match, and therefore the business is required to adjust its strategic plans to harmonize it with the overall plan of the stakeholders. For a successful partnership, the stakeholders must remain committed to the agreements. Conflicts may arise when some stakeholders pull out of the partnership. This usually creates a vacuum that may hamper the realization of the objectives of an organization in CSR. More over, it happens that every organization works towards maximization of profits and therefore the partnership may not satisfy the wider community since there is a tendency of concentrating on particular areas in which the business is likely to make profits. For example, if Starbucks is to forma partnership with an environmental organization for the purpose of conservation, it is most likely that Starbucks will target the coffee growing zones while the other organization may be interested in general conservation. Companies have an obligation to the community in the sense that it forms an integral part in its operations and profitability. The community provides raw materials in many cases, labor, and market for the finished products. It is therefore necessary to uphold people’s endeavors in community development in order for organizations to generate a positive attitude amongst them, thereby promoting the organization’s productivity. More over, they have a right to live in an environment that is free from pollution, and intrusion. An organization establishing within community can only survive through its acceptance. It therefore has an obligation of ensuring that its impact on the welfare of the community is not adverse through engaging in CSR such as in environmental conservation and pollution control. Engagement in CSR is important for the business in terms of maintaining employee productivity through enhancing satisfaction by engaging them in activities meant for career development and promotion of employment rights. On the other hand, the business acquires a large market share through engaging in activities that build confidence amongst consumers of its products, while at the same time taking the opportunity to promote them. Consumers usually go for the products of the company that they feel they are close to in terms of participation in community development activities. More over, social responsibility helps an organization to avoid breaking the government regulations in regard to investment. Conclusion The views of Milton Fieldman are not supportive of Corporate Social Responsibility. They indicate lack of credibility in regard to the aims of engagement in business. The argument is that businesses are usually focussed on maximizing profits and not in other activities that are not profit oriented, which makes CSR a failure in terms of business strategy. However, other views are in support of the concept of CSR, such as Archie Carrol with the view that the managers are obligated to accomplish certain responsibilities in the context of CSR. Businesses accomplish CSR through establishment of partnerships with major stakeholders such as community organizations, customers and suppliers. However, they exert pressure on the strategic decision making of the business. Conflicts arise in trying to meet shareholder expectations and satisfying the wider community. Despite these conflicts, companies have an obligation to their community, while on the other hand they derive multiple benefits through engagement in Corporate Social Responsibility. Read More