Risk Impact of Global Communications in Business - Research Paper Example

RISK IMPACT OF GLOBAL COMMUNICATIONS It has pertinently been d that globalization has brought tremendous modifications in life style of the people in all parts of the world in general. These transformations in life style are not confined to one specific zone or area; rather, imperative magnitude of change could be observed and estimated in almost all individual and collective as well as domestic and professional activities. Though it is globalization that has revolutionized human life by changing the world into small village, yet another force has been working behind globalization for the last two decades, which has actually paved the way for introducing globalization in the world. The dynamic force regulating and accelerating globalization is undoubtedly revolutionary development being made in the fields of information technology, navigation and communications. Hence, it is marvelous technological advancement and innovative tools, techniques and equipments that have paved the way towards fastest possible progress and growth in political, social, cultural, economic and commercial areas of contemporary world. The zone which has witnessed fastest changes in the wake of IT revolution is undoubtedly corporate sector that includes trade, commerce and business-related activities, which has observed glorious expansion world-wide. “Advances in information and communication technologies (ICT)” Brynjolfsson and Kahin observe, “are affecting many aspects of business activity. Notable among these are the obscuring of the material aspects of the behaviour of firms and the subsequent changes in the meaning of distance and geography.” (2000: 111) The fields including marketing, traveling, e-commerce, communications, health and medicines, home appliances and domestic necessities, education and trade have experienced outstanding flourishing in the wake of technological advancements. “Trade liberalization and information technology” UNESCAP reports, “continually advancing, national borders are increasingly disappearing and barriers to global trade are falling. As a result, global manufacturing and marketing are becoming increasingly organized. To cope with this operational environment, global firms have been searching for new production and logistics architectures as a way of gaining the advantages that come with standardized global production.” (Quoted in unescap.org) Hence, the swift means of communications including airplanes, mobile phones, internet, navigation equipments and others have brought the individuals, communities, organizations and nations closer to one another, and have united them in the ties of global business actions. Gone are the days when making connections with foreign companies and business communities were a hard nut to crack. Now, contracts are entered into and signed between large firms and corporations over mobile phones and internets even both the parties to the contract are living in pole-apart regions of the globe. However, the above discussion reveals only one aspect of the influence of IT on modern life, which cannot be declared as the description of complete picture of the entire situation. Fast growth in communications and IT has also left unfavorable impacts too in commercial activities of the organizations. It is particularly the case with the US based corporations and firms, which have experienced financial losses and setbacks as soon as globalization has established its foot on the earth. The US companies and organizations had been leading the world in corporate sector throughout 20th century. The food and beverages, clothing and dresses, equipments and tools, industrial finished goods and products and innovative ideas as well were always imported from the USA by the world at large. “The United States,” Canavan et al. observe, has been the world’s leading producer and consumer of information technology (IT) products which, during 1991-2000, came to play an increasingly prominent role in U.S. trade and manufacturing. During the period, IT trade rose at a much faster rate than overall U.S. trade and, by 2000, accounted for 17 percent of total imports and 19 percent of total exports.” (2002: 3) It was due to the command and control of the American companies over creating quality products on the one hand, and application of latest technology by the entrepreneurship on the other. But globalization has outsourced the US companies to a great extent. Implementation of the full-fledged outsourcing strategy as their business priority serves as the most imperative potential risk for the US global organizations, which has given a go to the economic downturn of the USA. It is therefore the theorists declare the hiring of staff members from the developing Asian and African countries in bulk as one of the most significant reasons behind the fall and failure of the US organizations. “This has”, Pillai suggests, “happened because manufacturing work is outsourced to developing nations like China where the cost of manufacturing goods and wages are lower. Programmers, editors, scientists and accountants have lost their jobs due to outsourcing to cheaper locations like India.” (Quoted in buzzle.com) Since the Asian and African employees and workers are available against low wages in comparison with the US work force, the US companies always prefer to hire the cheap work force in order to save the money and cut short their expenditures. The employees belonging to foreign countries get promoted from lower rank to the managerial positions with the passage of time and subsequently have access to the strategic management policies and planning schemes of these giant organizations of the USA. The work force belonging to foreign lands seldom displays loyalty to the US companies and steals away the ideas and formulae applied by the great companies of the USA, and sell them to the entrepreneurs belonging to their native land. Consequently, the Asian and African manufacturers produce the equipments and utensils of professional and domestic use without maintaining their quality. On the contrary, these low standard goods are sold in the local and global markets at cheaper rates, and the demand for the US based products falls to an enormous extent. Thus, copying of ideas and designs of the successful companies for their own benefit is open violation of the patent rights of these organizations. Hence, not only this that they produce their goods for the native land, but also they confidently export low quality products to the foreign countries. Since an overwhelming majority of the global consumers is eager to purchase goods and services at low price, the goods prepared from the stolen formulae and carrying low quality captures the attention of the buyers and outclasses the genuine US products in sales and marketing. The Chinese industry is another potential threat for the US global organizations. The industry has made outstanding developments in all business sectors particularly during the last two decades. The industry is creating each and everything for the wide range of its customers and clients living in various parts of the earth. But if quality of these products is discussed and analyzed, it becomes evident that the industry is violating the statutes of trademark and copyright laws by preparing low quality products through adopting the designs and styles of the high quality American products. It is therefore the Chinese products have captured the attention of the consumers living in Asian and African countries, who are using millions of the Chinese mobile sets, computers and navigation equipments, communication equipments including fax machines, printers, laptops and several other products. It has seriously affected the US global organizations and their business volume has observed an imperative downturn subsequently. “Typically”, Canavan et al. argue, “U.S. firms were among the first to bring newer, more advanced products to market and were leaders in product design and innovation. However, as products matured, manufacturing often moved to lower cost countries. As such, U.S. exports tended to be concentrated in higher end, design- and technology-intensive items, while imports were often more mature, lower end products.” (2002: 6) Another potential risk for the American globalization includes the newly devised trend of entering into joint ventures with other companies for the promotion of corporate activities of both the companies, launching joint venture, and rapid business expansion for both of them subsequently. The concept of traditional solo flights adopted and projected by the greatest entrepreneurs in past is in constant wane for the last one decade. Now the food and beverage companies including McDonalds and Coca-Cola have entered into joint venture to combat with the competition menace. Though Coca-cola is one of the giant beverages companies of the globe, yet it has revised its strategic scheme in win the battle of the survival of the fittest in order to remain ‘in’ in the global market. An overwhelming majority of the US organizations has failed to espouse the same strategy of entering into joint venture, and has consequently lost its market share gradually. If the trend remains one and the same, it will be very hard for the companies to survive under the situation of perfect competition. In addition, the corporate firms sponsor mega events like Soccer World Cup, cricket matches, Olympic Games and others, in order to boost up their business ventures. But unfortunately the US teams are either not participating in the popular sports and games, or they are not showing good performance in the playgrounds. It is therefore the interest of the US organizations in sponsoring the sports events is in decline, which also affects their business expansions too. Another noteworthy potential risk before the US global organization is the inappropriate and inapposite political policies launched by the US statesmen. The indecisive wars in Afghanistan and Iraq have cost the losses of millions of dollars to the US economy. The feelings of hatred in the minds of the Muslim community for the invader USA have forced them discover new horizons of trade and commerce in the world. The US invasion on Iraq and disclosure of shameful atrocities committed by the US military officials in Abu Ghuraib prison of Baghdad led towards the boycott of several US products by the fundamentalist Muslims as a protest against the invasion. Furthermore, the Arab investors have drawn their money from the US banks, which has led to the bankruptcy of over one hundred American banks within one year. It is therefore, there is an urgent need of political reconciliation with the Arab world, so that this populous zone of the world can be turned into the important market of the US products again. Hence, the state of political isolation and conflict with China, North Korea, Venezuela and the Islamic World is putting the business of US firms at great stake. Not only external, but also internal factors play dynamic role in the success and failure of people and organizations. Another potential threat to the US global organizations is the growing competition between the US organizations. Since Microsoft, Apple Inc and Red Hat are three leading IT product creating companies of the USA, and non-cooperation and conflict between these companies serve as leg-pulling, which is putting their business ventures in grave jeopardy. The US organizations launch campaigns against the companies belonging to their native land, which put the reputation of all the US companies at stake. Racial and ethnic discrimination has added fuel to fire in this regards. The economic unity and subsequent growth of the businesses of European Union are also a potential risk for the US brands. The fall of US dollar in the recent years is a sound proof of the fall of the US economy at large. The global environment is significantly in favor of European and Chinese markets, which are fulfilling the growing needs and requirements of the customers and consumers. The arrangement of G-20 Summit is also the sign of European unity, where the European countries look united under one banner to strive for the uplift and prosperity of their people and businesses. On the contrary, the US appears to be standing alone in international arena. Her involvement in international disputes has left adverse affects on the US global organizations, and the magnitude of their investment observes imperative setbacks and downturn. The “charter of sustainable economic activity,” Bromund & Foster state, “trumpeted especially by France and Germany, mixes statements of the obvious with rhetoric that baldly calls for the U.S. to relinquish its sovereign authority over economic policy to a global government. Of immediate concern is the charter’s appeal for global, supranational financial regulation--a clear European power grab to contain and diminish the role and freedom of the U.S. financial sector.” (2009: 2) Hence, the European powers look reluctant to surrender to the US financial domination anymore. To conclude, it becomes crystal clear that globalization has challenged the US exploitation and domination over the world. Liberalization of trade and commerce has provided the nations with the opportunity of choosing their friends, partners and allies at corporate sector. “Economic globalization”, Boutaleb views, “appeared as an extension of the world capitalist liberalization which seeks to enable strong capital to achieve utmost benefits through liberalizing trade and establishing free competition in trade exchanges. This is the system of free economy which is based on opening markets to capital able to conquer them. In other words this is the market economy.” (2003: 9) The freedom of thought has helped out the nations in releasing themselves from the atrocious clutches of the domination of one country, which has resulted into the downturn of the US companies. The prejudice prevailing in the USA on the basis of racial, religious, ethnic and economic discrimination has divided the nation at large, and the appointment of the member of African American community as well as women at managerial positions in the overseas markets have also challenged the activities of the US global organizations. There is an urgent need of national unity, harmony and integrity as well as developing friendly relations with other nations in order to safeguard the interests of the US organizations within global perspective. REFERENCES: 1. Boutaleb, Adelhadi. (2003) Criticism of Globalization: Positive and Negative Aspects http://www.isesco.org.ma/english/publications/Islamtoday/20/P1.php 2. Bromund, Theodore & Foster, J. D. (2009) The G-20 Summit: Potential Threats to U.S. Interests http://www.heritage.org/Research/Reports/2009/03/The-G-20-Summit-Potential-Threats-to-US-Interests 3. Brynjolfsson, Erik and Kahin, Brian (2002) Understanding the Digital Economy: Data, Tools and Research MIT Press 4. Canavan, Theresa H., Carr, Robert. & Johnson, Christopher (2002) Factors Affecting U.S. Trade and Shipments of Information Technology Products: Computer Equipment, Telecommunications Equipment, and Semiconductors http://www.usitc.gov/publications/332/working_papers/wp_id_02.pdf 5. Pillai, Parbharkar. (2008) Negative Effects of Globalization http://www.buzzle.com/articles/negative-effects-of-globalization.html 6. http://www.unescap.org/ttdw/Publications/TFS_pubs/pub_2194/pub_2194_ch2.pdf Read More