Globalization as the Integration of the Interaction between Nations - Essay Example

THE PROS AND CONS OF GLOBALIZATION IN BUSINESS Globalization According to Pang (2006, p.3), globalization is the integration of the interaction between nations. In modern days, a person can work in Mexico, and go for lunch in another state. In addition, an individual in a country in Africa can wear a watch made in China, a pair of trouser made in Hong Kong and a shirt made in Dubai. More so, an individual in the U.S. can comfortably drive a vehicle from Japan. A student in Africa can go pursue their academics to a western country without any form of discrimination. An individual might invest in a firm in Mexico and later sell that firm to someone else in India. A company such as the car industry in Japan, might set a firm in the U.S. and sell the already made cars to individuals in another country let’s say, Asia. What are the factors that lead to globalization? As a manager of any firm, the main objectives are to maximize profits and minimize the costs. The costs can be minimized by looking for cheap labor force and nearness to raw materials. A company in Asia might decide to set up a new firm or move the initial firm in Asia to another country with cheap labor. Secondly, the firm can also shift due to nearness to raw material. More so, the market can also influence globalization. A country might shift its production firm to another country targeting certain individuals in that country. Poor countries encourage foreign investors so that they can benefit from the taxes levied on them. For this reason, it is clear that also the economic status of a country is a key factor to increasing globalization (Bożyk 2006, p.172). There are, however, demerits and merits of globalization in business. For this reason, this paper tends to explain the advantages and disadvantages of globalization in business. Advantages of Globalization Firstly, globalization is beneficial to many people. As discussed earlier on, an individual can move from his working office in Mexico to another country just for lunch. For this reason, the utility of this individual is satisfied. This person will feel satisfied since they got what they wanted therefore derived satisfaction. In addition, the individual might have used either a public or a private jet. In whatever way, employment is created for the pilot flying this individual for lunch. More so, the restaurant also receives some payments in compensation for what this individual will consume. Suppose an individual sets a firm in another country, what would happen? Firstly, the state will receive money in the form of tax by the foreign investors. Secondly the area around the set firm will be developed by these foreign investors. The condition of the road will also improve, and water and electricity would be made available and affordable to the settlers around the firm. In addition, individuals will get employed. When there is employment, crime is reduced since people will have jobs. More so, idleness that would have led to drug abuse is reduced. For this reason, individuals become independent, and the state’s dependency ratio reduces. In addition, when the dependency ratio reduces poverty will also reduce. The state will also allocate some of its budget that was initially located to help the poor to other sectors such as health. On the other side, the investor will benefit from the minimum cost of production and, for this reason, he will expand on his profit margins. Thirdly, globalization improves the quality of products. An individual wears clothes from a different country because of the power of globalization. When such an individual import these pieces of clothes, domestic dealers in same outfits will improve the quality of their products so as to meet the consumers’ tastes and preferences. In addition, an individual might also import an electronic machine because they think it is of high quality. When the domestic producers of same electronic machine realize that their people are importing other machines, they will have to get back to the drawing board and check on how to improve the quality of their product. The product will, therefore, increase in quality thus meeting the consumers’ tastes and preferences. Globalization also strengthens the relationship between countries. When the relationship between countries becomes strong, people will benefit from exports and imports. More so, tourists freely visit these countries thus earning the countries foreign exchange. The foreign exchange earned by the government uses it to improve sectors such as security. Tourists also benefit from the scenes in those countries since their utility is satisfied. Globalization in another hand brings competition in the market. An example is the car industry in Japan and China. The car industry in Japan produces all varieties of cars such as Toyotas, Hyundai, Mercedes, and Nissan. However, China produces similar automotive. Customers will always go with the best, and the two industries have to improve the quality of their automotive, also lower the prices in order to attain the largest market share. Secondly, is the cloth production industries. There are numerous cloth production industries all over the globe. However, for these industries to maximize their profit, they have to attain the largest market share. In order to attain the largest market share, they have to improve the quality of their products and also lower the prices. For this reason, the customers will always benefit from quality and cheap products offered to them. Globalization has also led to the mobility of labor force. With globalization, persons can go work in different countries for greater wages. The countries that import these services benefits from quality production due to skilled labor. Quality products favor the customer, and the firm grabs the largest market share. On similar lines, individuals move to different countries to acquire knowledge of certain disciplines. When these individuals are skilled, they become experts and when they go back to their home countries, they improve production and thus the country benefits at large. Through globalization, there is the availability of foreign goods and services in any country. For example, not all countries manufacture cars. For this reason, it implies that the cars in those countries that do not manufacture cars were imported. Also, there are countries with low-skilled labor forces. In such countries, in crucial sectors such as road engineering and health sectors, the state have to import expertise to deal with these areas. Domestic individuals get excluded since; the country would not want to face a future crisis of a disease outbreak or bad condition of roads. Through globalization, countries earn wealth. According to world’s statistic, all countries register an average of 3% increase in the GNP. The major contributor to this increase in GNP was globalization. Some countries export their products to other nations. For this reason, such countries earn foreign currency that will in turn increase the national income. Some countries also benefit from foreign investors. Investors from other nations set up firms in these countries for production. These investors pay tax to the government of the host country. The tax received increases the national income of the host country. On the other hand, when these investors set up firms in such countries, employment in created. When individuals in the host country get employed, they benefit from the wages earned. However, the state will preserve its money that was initially used to fund these individuals. For this reason, the dependency ratio is lowered, and the national income increases (Mishkin 2005, p.19). Globalization improves the life standards of individuals. For an individual working in Mexico and goes for lunch in another country, shows the high standard of living of such an individual. Globalization enables the individual benefit from all form of entertainment from various parts of the world. An individual might opt to go and watch a live performance by world’s greatest artist in other countries. More so, individuals might want to explore various geographical sites in different countries. On similar lines, individuals might want to school in other countries. When an individual schools in another country, it implies a high living standard lived by an individual. When individuals visit another country either for entertainment, schooling or to acquire any service, they have to pay tax. Therefore, the host country earns foreign currency from such individuals thus boosting the national income of the host country. Globalization has also led to a peaceful relation among countries. When there is peace among countries, there is security in trade and also trust. For this reason, the peaceful relation has led to foreign borrowing. In case a country is faced with a certain epidemic such as drought disaster or a disease break out, this country can borrow funds and also services from other countries. Globalization has also facilitated free trade. There are evident incidences of countries importing or exporting products abroad without charged tax on imports or exports. It has enabled equality in trade. More so, all people benefit from globalization since the products in the markets target every potential buyer and, for this reason, no discrimination. For example, car manufacturing industries, they sell cars to every individual irrespective of their countries. In addition, barriers to entry are minimal, and there is the free exit from the market. For this reason, it is clear that globalization focuses on equality (Hilton 2009, p.64). Globalization has facilitated the ease of transportation processes. Initially, without globalization, goods will take up to 8 months from the date of purchase to the day of delivery to a person in another country. With globalization, good takes less than a week for delivery due to the ease and the initiation of the containerization and also the implementation of a standard railway gauge. The standard railway gauge has facilitated the movement of goods across the globe by railway transport. Globalization has brought about the unity of diversity. The dream that every nation had the global market has now been brought to reality by the current activities globally. The unity of diverse has facilitated understanding among nations. Different countries issue tenders to certain countries such as tender to build roads and infrastructures. Lastly, globalization is beneficial to developing or poor countries. Such countries, lack enough resources and skills to set up firms that would generate income for the nation. However, through globalization, foreign investors set up income generating projects in these countries. For this reason, the poor countries benefit from tax paid by these investors. More so, employment is created for the citizen of the poor countries and poverty is therefore reduced (Mishkin 2005, p.19). From the above discussion; it is clear that globalization is important to every individual. However, there are some critics of globalization as discussed below. Disadvantages of Globalization Firstly, globalization has led to drainage of the labor force. For example, a qualified doctor in India might leave his country to go and work in another country because of the low wages in his country. For this reason, the country will suffer a loss since it will have to import the same service that had existed at a higher cost. Secondly through globalization, individuals invest in another country with the aim of making profits. However, the host country will only benefit from a tax levied by the investor. The host country becomes limited from developing its ideas and start up its firm instead. Therefore, the income that is from tax is almost constant all through unlike if the country owned its firm since there would be room for expansion. Expanding the firm will in turn expand the profit margins. Thirdly, globalization has contributed to the widespread of drug trafficking. For example, an individual might want to export or import cocaine from another country. It is, however, clear that drug trafficking is a crime. For this reason, this individual will use other products such as cars to pack cocaine inside. More so, individual might falsify the brand of their exports or imports to hide the trafficking of cocaine. For example, an individual might use wheat flour bags to pack cocaine inside (Kennett 2013, p.384). Globalization has led to discrimination of a kind. For example, many people opt to take education in high levels in Holland. For this reason, it is believed that Holland produces qualified candidates for job markets which in real sense are not the case. Globalization sets the value of the common currency such as Dollars and Euros to be very low. For this reason, in order for a country to fit and benefit from globalization, it has to set its currency lower also which demoralizes the economy status of such a country. Globalization contributes greatly to pollution of the atmosphere. Some individual might move their firms to countries with minimum regulations. Developing countries have weak regulations, and therefore they encourage investors to set up industries in their countries and pay a lower tax. These firms produce smoke to the atmosphere, and the surrounding individual suffer from acidic rainfall thus affecting their health. More so, these firms discharge chemical products in the form of waste to rivers. Chemical discharged would in turn affect the living creatures in the water and also an individual who will consume the infected water (Thai, Rahm and Coggburn 2007, p.74). Lastly globalization is like a rope that ties many countries together. However, when one country collapses, other countries collapse too. A good example is the Japan car manufacturing industry. Japan, is famously known for the production of locomotives around the globe. Nearly 80% of the world’s population depends on locomotives from Japan. When Japan collapses, the countries that depended on Japan for locomotives will face a great shock and for this reason they will be forced to look for other alternatives. From the above discussion, it is clear that, however, important globalization is, some critics face it. Therefore, it is for the countries to come up with laws and regulations to control pollution. Also, investors in a certain country granted a specific time for investment to pave the way for the development of such countries. References Babones, S 2009, “Trade globalization, economic development and the importance of education-as-knowledge,” Journal of Sociology, vol. 46, no.1 pp.45-61. Bożyk, P 2006, Globalization and the transformation of foreign economic policy, Ashgate Pub, Aldershot, England. Hilton, M 2009, Prosperity for all, Cornell University Press, Ithaca. Kennett, P 2013, A handbook of comparative social policy, Edward Elgar Pub. Ltd. Mandle, J, 2002, “Globalization and Its Critics”, Historically Speaking, vol.4, no.1, pp.19-22. Mishkin, F, 2005, Is financial globalization beneficial?, Mass.: National Bureau of Economic Research, Cambridge. Pang, N 2006, Globalization, Chinese University Press, Hong Kong. Thai, K., Rahm, D. & Coggburn, J 2007, Handbook of globalization and the environment, CRC Press, Boca Raton. Read More