Which Is More Convincing: Market Or Regulatory Approaches To Globalization - Research Paper Example

Which Is More Convincing: Market Or Regulatory Approaches To Globalization? Pros of Market Approaches to Globalization 1. Market approaches to globalization reveals most about social relations when it is understood as the spread of connections between people at the global market. 2. In terms of chronology, market approaches to globalization have improved intense growth of superterritorial connectivity, which has mainly occurred over the last fifty years. 3. Market approaches to globalization can be explained in terms of a world-systemic active in which the expansion of supraterritorial spaces are interrelated with certain turns in capitalist production, bureaucratic governance, identity politics, and rational knowledge. 4. Has led to important reconfigurations of geography, economy, polity, identity and knowledge. 5. In terms of normative concerns, market approaches to globalization and its recent speedy growth of global relations have improved human security, social equality and democracy. 6. On policy responses, market approaches to globalization has led to the rise of politics that combines reformist and transformist measures can substantially reduce possible harms and greatly increase possible gains of improved connectivity in the twenty first century. Cons of market approaches to globalization 1. They do not exercise control over the practices and activities of the company. 2. They do not offer a base for the determination of market needs around the world. 3. They do not have control over the financial institutions like banks. 4. They fail to integrate private interest and the public good. 5. They do not permit the consumers to decide where and how to pay for the internalization costs. These advantages to market approaches to globalization have implications for social analysis. Market globalization has rendered methodological territorialism useless. In the modern world, it is no longer possible to comprehend geography in terms of territorial spaces alone. Important aspects of social relations in the market now transcend territorial areas (Rossi 99-102). Organizations are now able to reach consumers in different social stratification across the world. Further, market approach to globalization has brought about effective competitions among various organizations. Competitive success is not realized simply by gaining an advantage in or more value activities in the global market, it involves maintaining such an advantage. Sustainable advantage is the main reason behind the core of success fully implementing competitive strategy. Market sustainability must be strived for. Organizations should rely on investments is assets related to key parts of the value chain that create entry barriers for new entrants in the market (Belk 521-525). Market approaches to globalization has brought about improved connectivity across different territories of the world. Various organizations can now reach a wider market in the world. Bigger market coverage ensures that organizations generate more revenues necessary for their survival. In addition, it ensures that organizations compete favorably to win consumers (Rossi 99-102). The expansion of supraterritorial spaces has interrelated with certain turns in capitalist production, bureaucratic governance, identity politics, and rational knowledge. In so doing, organizations create mobility barriers that prevent rivals in their strategic groups from replicating the sustainable competitive advantage that characterizes their group. Consumers will always avoid using products and services whose management structures are still bureaucratic, practices divisive politics and takes decisions irrationally (Belk 521-525). Global relations have improved human security, social equality and democracy. There are established international codes and ethical standard established by international organizations. Ethical standards ensure that organizations do not produce goods and services that can cause harm to a human being. In addition, it ensures that there is social equality whereby every individual, whether male or female is treated equally. In most cases, this is achieved through the formation of various worker interest groups (Rossi 99-102). The strongest reason for not using the market approach is that they do not exercise control over the activities and practices of the company. The industry-wide regulation, particularly the production contracts have significant economic and social impacts. For instance, in an agri-processing company, production contracts (as regulatory forms) are ways to exercise control over the on-farm practices and activities without being involved directly in the management and ownership and of land. In comparison with the option of direct farm ownership, farming contract permits the processing companies to maintain significant influence over the farming activities without the capital and risks linked with farming (Pritchard and Burch 99). Thus, market approaches do not exercise control over the activities and practices of the company. Market approaches do not offer a base in which the global market needs can be determined. Regulatory classification of a product offers the basis for which the market needs of the world can be determined. It not only guides the creation of a product and its anticipated benefits, but also establishes the go-to-market course that increases speed-to-market and drives innovation. It is a common thing for those involved in the product development, to focus on innovation of the existing company products. Thus, developing of products, that may be universally new, as well as new to the corporation, is a daily routine. The phenomenon of globalization is moving fast, necessitates international companies to develop systems, and processes that increase speed-to-market and constant innovation through regulatory approaches (Betton 56-57). Financial institutions like the banks need to be controlled so that they will be a high level of uniformity among these institutions. The regulator establishes the general principles and objectives that will govern the financial institutions. Then it becomes the mandate of each regulated company to show the regulator how the principles and objectives are satisfied through the selected procedures. If the objectives can be attained by a different regime that is not costly (with lower compliance costs) for the operation of the banks, then they will be advantageous in minimizing the deadweight costs. Full compliance with objectives and principles means that the bank has entered a contract with regulator. Contract regulation indicates increased differentiation among the banks in regard to the regulatory arrangements (Johnson 150-151). Market approaches do not integrate private interest and public good. Regulatory theorists suggest that regulatory methods when designed in the correct way can be the driving force through which private interest and public good can be integrated. The market also regulates but it is encouraged by third parties who seek to control the social outcome of business behavior. With the help of skilled policy makers, market deficiencies can be eliminated through regulatory techniques such as meta-risk management (Haines 20). Lastly, market approaches do not permit the consumers to decide where and how to pay for the internalization costs. An alternative approach to regulation was developed in the 1990s based on utilizing market-based mechanisms like independent certification and tradable pollution permits. The approach was used as a way of internalizing impacts. The approach allows consumers to make decisions through market-based regulatory tools (controlled by the market actors and not political authority), which take into consideration the benefits, and distribution costs of internalization (Lipschutz and Rowe 39). In conclusion, globalization renders the competitive environment stable. Global competition in the market puts a premium on the dynamic aspects of strategy. For instance, organizations in different countries have brought to the competitive arena different bundles of competitive advantage that have affected the distinctions among strategic groups. In addition, several organizations have followed a sequenced entry approach to penetrate barriers erected by incumbent firms in the market. While the incumbents are busy erecting barriers, the prospective market entrants are busy trying to overcome the barriers (Belk 521-525). With global competition, new entrants can come from anywhere in the world. Entry into the global market often occurs through systematic exploitation of resources that are well within the entrants reach. New organizations venturing into the global market exploit advantages they already possess through the presence in a geographical area with preferential access to the requisite resources, for instance, low cost labor and cheap raw materials (Belk 521-525). Consequently, new organizations in the market drive strength from their home market characteristics. With global integration and the corresponding convergence of taste, organizations in different countries are in a position to exploit their home market advantages. An important element to the success of any company is the control of the activities and practices of the company. This is because regulation allows significant control over the activities without incurring any risk and capital linked with the processes of the company. Market approach does not provide regulatory classification of a product and thus market needs cannot be determined. Regulatory classification of a product provides the basis for which the market needs of the world can be determined. Financial institution need to be regulated because the regulation offers increased differentiation among the banks in regard to the regulatory arrangements. Regulatory theorists argue that proper regulatory techniques are important in the integration of the private interest of a company and the public good. In regard to internalization, regulatory approaches assist the consumers to make decisions on where and how to pay for the internalization costs. Works Cited Rossi, Ino. Frontiers of Globalization Research: Theoretical and Methodological Approaches. New York, Springer, 2007. Print. Belk, Russel. Handbook of Qualitative Research Methods in Marketing. London, Edward Elgar Publishing, 2006. Print. Pritchard, Bill, and David Burch. Agri-Food Globalization in Perspective: International Restructuring in the Processing Tomato Industry. Burlington, VT: Ashgate Publishing Limited, 2003. Print. Betton, C. I. Global Regulatory Issues for the Cosmetics Industry, Volume 1. Norwich, NY: William Andrew Inc., 2007. Print. Johnson, O. E. G. Financial Risks, Stability, And Globalization: Papers Presented At The Eighth Seminar On Central Banking, Washington, D.C. June 5-8, 2000. Washington, DC: International Monetary Fund, 2002. Print. Haines, Fiona. Globalization and Regulatory Character: Regulatory Reform after the Kader Toy Factory Fire. Burlington, VT: Ashgate Publishing, 2005. Print. Lipschutz, R. D., & James K. Rowe. Globalization, Governmentality and Global Politics: Regulation for the Rest of Us? New York, NY: Routledge, 2005. Print. Read More