The Concept and Precept of Globalization and International Business - Essay Example

1. Introduction The current rapid globalization has given new insight into business paradigms and reconceptualised business dynamics in terms of global business imperatives that fundamentally rely on integration of local and global interests. Bateman and Snell (1990) assert that changing external environment becomes potent force that necessitates organizations to change and evolve to meet new challenges of the time. Globalization is vital change factor that has greatly facilitated mobility of people and resources across international border which has significantly impacted socio-economic imperatives of the businesses as well as the national economies (Inkpen, 2003). The multi-faceted approach and understanding of the concept and precept of globalization has therefore emerged as critical issue which needs to be evaluated from wider perspectives and scope of new opportunities of growth and development. 2. What is globalization? Sirgy et al. have described globalization as ‘the diffusion of goods, services, capital, technology, and people (workers) across national borders’ (2004: 253). It is distinct in its transportability of people and material across the globe. Myriad factors like new business opportunities, personal and professional development of people and organizations has expedited the process of emigration and immigration of people across nation (Wild & Wild, 2014). It therefore not only defines the changing pattern of social pattern across the globe but also the changing dynamics of business that has become more competitive. Multicultural societies have increasingly become a norm with people from different countries, races and religion (Murden, 2005). Consequently inter-dependency of resources has emerged as major global imperative which significantly impacts socio-economic and political ideologies of nations. The socio-economic policies and strategies of the countries need to be more flexible so as to suit the internal and external compulsions of the host nations. 3. Evolution of global socio-economic and political system within globalization The process of evolution is complex in its change process and involves collective decision and public participation. Inglehart and Welzel (2009) believe that a constructive political and ideological transformation is often a precursor to adoption of democratic values which is intrinsically linked to empowerment of the people. This helps people and organizations to adopt the changes for higher performance and promotes democratic values and political participation within and across the various socio-political institutions. Thus, democratic tenets become the key ingredients for economic independence and development of nation by evolving into more liberal and resource-based economy that encourages mutual cooperation amongst nations (Rugman & Collinson, 2014). These factors become vital linkages for globalization. The globalization has brought in a new approach to international political economy. Powell (1990) says that globalization has facilitated trade and opened opportunities for capital accumulation through more secular distribution of power structure. It has served as catalyst for emerging economies like India and China to redefine socio-political and economic ideologies that are backed by the new technologies and interdependent market forces. The emerging economies have increasingly become important stakeholders in the global trade and commerce. Barnett strongly asserts that globalization has made nations interdependent on each other for their socio-economic development mainly due to the fact that the ‘growing diversity of capitalism is becoming one of its global strengths’ (2009: 409-410). 4. Factors that impact globalization 4.1 Interdependency of resources People and resources have become major facilitators for globalization that considerably contribute to the fast changing dynamics of international business. The vast potential of emerging new economies of the developing world has made the global market more challenging and highly competitive as they have significantly closed the gap between the developing and developed nations. The environmental factors influence the establishment of a new political equation which highlights the new age communication and interdependent market forces. Flexible approach and wider perspectives of issues and global concern become intrinsic part of contemporary global business dynamics. Hamel and Prahalad (1989: 581) claim that analysing competitors as well as the foreseeable pattern of industry evolution constitute major corporate challenges. Hence, businesses tend to adopt flexible approach and incorporate the changing equations of the global business environment to gain leverage. The inter-dependency of the nations in the sphere of economic cooperation and trade practices has been one of the essential factors for globalization. The supremacy of developed nations is fast losing its status due to rapid globalization which is witnessing the emergence of new global competitors from the third world economies like India and China which are fast developing as a global economic force. This has resulted in new business ideologies that are characterized by indigenization of businesses’ products and services to suit the conditions of the nations where they had expanded their business operations. Thus integration of market forces and inter-dependency of resources become critical elements of global businesses that exploit the same by adopting flexible approach and maintain their competitive edge in the global environment. Charles Hill (2004) highlights the differences across nations that are exploited by business entities for expanding business interests. He stresses that countries have different political, economic, and legal systems and these differences have major implications for the practice of international business. Thus globalization ushers in flexibility of approach that helps to adapt to the changing technologies and work environments due to varying time zones that also redefines time and space as the business is spread across the different countries. Most importantly, these factors have contributed to the development of common goals and universal values with viable options for the global business by accepting their products and services in the same common format. 4.21 Non-market factors The non-market issues directly and indirectly impact on the operation and performance and operation of the global business. The issues like socio-political environment, role of government regulations, local laws and the legalities involved etc., play crucial part in establishing a firm across international borders (Ingsbury et al., 2004). The socio-religious culture of local populace has strong impact on the attitude and consumer behaviour of the public, which directly impacts the economic transactions of the company. It is also important to take into considerations the social values and customs while evolving one’s business strategy to succeed in foreign soil. Within the broader imperatives of globalization, businesses tend to adapt and accept local environment so that they can satisfy the changing requirement of the population in order to achieve their business goals and objectives. 5. Critical paradigms in global business Globalization has been key propellant for integrating economic resources and greatly contributing to the international trade activities across nations. But global business is also accompanied by increase of commercial disputes between the business enterprises which have resulted in the formation of various international agencies like WTO, GATT, arbitration tribunals etc. the provide neutral platform for international trade dispute resolution (Perloff, 1992). International Commercial Arbitration is one of the most effective mechanisms for resolution of trade related disputes of international businesses. It makes efforts to understand the wide ranging issues and takes into account the broader considerations of international relations between the states and the global communities so that each party is given the same deliberation as per the business compulsions in order to resolve the dispute amicably for a mutually acceptable settlement. Globalization has redefined traditional business practices that encourage incorporation of business and cultural compulsions of the business partners in the host countries. The socio-cultural and political ideologies of the host nation influence major determinants of success of international business and business practices (Wall et al., 2010). National cultures evolve into powerful factors within business negotiation that help to form business strategy and behavioural pattern (Rubin & Sander, 1991). The international business practices must therefore, acknowledge the changed equation of business practice with reference to the changing socio cultural background of the country, where one needs to expand the business interests. As such, globalization ensures enhanced understanding of cross-cultural values and other barriers which would positively impact business negotiations for a win-win situation in global business. It emphasizes interdependency of resources, including cultural competences of people that can provide firms with unique element of competitive advantage. Thus, in globalization, global companies tend to act as local that cater to local demands (Mackay, 2004). Effective communication is essential criteria within international business strategy that facilitates dissemination information in a manner that would get the message to the targeted audience or customers. The marketing of goods and services becomes complicated issue in international businesses and involves multifaceted tools which need to be interpreted in the correct context for effective advertising. The understanding of socio-cultural beliefs and value system provides wider perspective of local perception and interpretation of the various symbols and contextual contents used within marketing tools for better penetration into the emerging new markets. This is one of the most critical parameters of global business as its cultural approach exploits the tenets of globalization that is largely focusing on interdependency of resources for economic gains. The wider ramifications of globalizations are also visible in the complicated supply chain management of goods and services that are spread across the globe. The sustainability of resources that have long term ramifications on the environment become crucial issues that need to be monitored with well-planned guidelines and delivered ethically. Apart from sustainable business practices, the child labour has also emerged as key concern for business partners in third world countries (Winstanley et al., 2002). Cost effective labour and low cost of raw material foster unethical practices that need to be constantly monitored by global agencies so that people and resources across globe are not exploited by global business partners. Thus, the accountability of people and organization at each stage of supply chain becomes vital concern within global business practices. The increasing dependency of nations vis-à-vis trade and economic development has resulted in new business compulsions that promotes cross cultural understanding as vital input for survival and development agenda. Ghauri, Pervez and Cateora (2010) strongly contend that changing cultural dynamics are strong facilitator of change and significantly impact international businesses. It has evolved into a highly critical paradigm within the development processes across different social segment like education, business and society at large. They significantly impact the development of people and their attitude towards different race, culture, religion and nationality. Beside this, rapid globalization has created a pluralistic society and the businesses need to focus on the issues that impact the purchase behaviour of the pluralistic society of the contemporary times (Montgomery, 2008). Globalization has also brought influx of people coming from different race, color and nationality and focus has now shifted from the manufacturer and suppliers to the changing preferences and practices of the customers (Robertson & White, 2003). The Products and services have become global in essence because they are accessible across the international borders. Retailing has become one of the effective modes of expanding businesses across the globe that emphasizes the interdependency of resources showing how international trade has become a necessity. Hence, in the era of globalization, global firms evolve strategies that take into considerations the interests of the local population where they operate using local resources so that wider goals and objectives of the international firm can be shrewdly aligned to meet the challenges of local conditions. 6. Global economic system and globalization Today, globalization has transformed the world into a global community. Robertson & White, (2003) further assert that within the precinct of globalization, socio-economic and political culture is not only redefined but also reconstituted to exploit the interdependency of resources for the wider benefit of nation and its development. It underpins the principles of economic development that relies on mutual cooperation and promotes more liberal political culture for business alliances as part of development strategy. Process of globalization therefore hugely influences the socio-cultural and political dynamics of the societies and brings together the diversity of national and cultural identities for the benefits of nations at large (Bisley, 2007). It supports more equitable distribution of resources that transcend race, colour, culture and nationality. Globalization has evolved as effective process that encourages collective decisions and common goals that opens opportunities for people and organizations with diverse interests across the globe. The various perspectives of globalization are intrinsically linked to economic integration of resources which exploit and are exploited by people and organizations for expanded goals that incorporate national interests and contribute towards the development processes. Indeed, while the hegemony of the powerful nations like America is real and may adversely impact the wider interests of the poor, it has nevertheless provided emerging economies of the third world countries to come to the forefront of the economic map and pose serious challenge to American hegemony. Globalization endorses economic integration across the globe through free trade and liberalization. It has resulted in diminishing national boundaries and in inflow of foreign trade, both in term of goods and human capital. It serves as an enabling element in the development process across developing and under developed countries as it exposes them to the benefits of globalization that provides them with huge opportunities for improving their standard of living. Inter-dependency of economic units becomes vital inputs of the developing relationship when trade and business alliances are encouraged across nations. Subsequently, trade negotiation and compromise between nations across the globe result in liberalization of economic policies which promote equity amongst nations. The process of globalization also introduces democratic process within the nations that allows them to formulate policies for the wider welfare of their. Thus, globalization not only empowers the nations but also its people. While free trade and liberalization makes countries attractive for foreign investments, it also gives stimulus for domestic business to become more competitive through highly creative inputs and mechanisms leading to greater productive outcome. It exploits inter-cultural competencies and integration of ideas across race, culture and nations for social and economic equity. Moreover, the rapid globalization and advancing technology has markedly influenced international trade. In the current environment of market driven commercial activities, mutual dependency has necessitated reforms in international trade policies. The various elements of foreign trade along with liberalization constitute vital ingredients of a nation’s wealth which are invested to improve socio-economic parameters for the welfare of people at large. The equitable distribution of wealth through sharing of resources across the globe ensures that benefits of economic integration filter down to society and become part of development processes of the nations. Thus, national economies are merging into inter-dependent global economic system to work collectively towards common goals. 7. Conclusion The various drivers of globalization seriously influence myriad aspects of national and regional interests across the globe. The integration of resources across the international borders has helped create new climate of competitive business environment. It therefore redefined globalization in terms of inter-dependency of resources which calls for development of mutually satisfying framework of policy that endorses global culture and values. It also highlights the liberalization of economic policies and opening of domestic market for global agencies so that it could create win-win situation for business partners. The neo-liberal policies encourage deregulation of industries, privatization, incentive for foreign investment etc. that are distinct in their content. Thus, to judiciously exploit the fundamental criteria of interdependency of resources, dynamic strategies of international businesses creatively evolve innovative mechanisms to influence and exploit resources within and across the merging of national economies for greater equity. (words: 2523) Reference Barnett, Thomas P M. (2009). Great Powers: America and the World After Bush, New York: Putnam. Bateman and Snell. (2009) Management: Leading and Collaborating in a Competitive World. 8th edition, London: McGraw hill. Bisley, N. (2007) ‘Identity, Nationalism and Globalization’, in Nick Bisley, Rethinking Globalization, London: Macmillan. Ghauri, Pervez N. and Cateora, Philip R. (2010) International Marketing, 3rd edition, London: McGraw-Hill. Hamel, Gary and Prahalad, C. K. (1989) ‘Strategic Actions’, Harvard Business Review, May, pp. 63-76. Hill, Charles W.L. (2009) International Business: Competing in the Global Marketplace, 7th edition, London: Graw-Hill Irwin. Ingsbury, D et al. (2004) Key Issues in Development, London; Macmilan-Palgrave. Inkpen, A.C. (2003) ‘Strategic Alliances’ in A. Rugman and T.Brewer, The Oxford Handbook of International Business, Oxford University Press,2003,Chapter 1. Inglehart Ronald and Christian Welzel. (2009) How Development Leads to Democracy? What We Know About Modernization, Foreign Affairs, vol.88, no.2, pp. 33-48. Mackay, Hugh. (2004) ‘The Globalization of Culture?’ in David Held, A Globalizing World?: Culture, Economics, Politics, 2nd edition, London: Routledge. Montgomery, Cynthia A. (2008) ‘Putting Leadership Back into Strategy’, Special Issue on HBS Centennial, Harvard Business Review vol.86, no.1 January, 54–60. Murden, Simon. (2005) ‘Culture in World Affairs’, in Baylis J.& S. Smith, The Globalization of World Politics, Oxford: Oxford Printing Press. Perloff. (1992) ‘The Ties that Bind: The Limits of Autonomy and Uniformity in International Commercial Arbitration’, University of Pennsylvania Journal of International Business law, vol.13, no.2, pp. 323-350. Powell, Walter W. (1990) ‘Neither Market Nor Hierarchy’, in Barry Staw and L.L.Cummings, Research in Organizational Behavior. Greenwish, Conn: JAI Press, Vol.12. Robertson, Roland & White, Kathleen. (2003) Critical Concepts in Sociology: Globalisation. London: Routledge. Rubin, J. Z., & Sander, F. E. A. (1991) ‘Culture, negotiation, and the eye of the beholder’, Negotiation Journal, July, pp. 249-254. Rugman, .A. M. and Collinson, S. (2014) International Business, London: Pearson. Sirgy, M. J., D.J. Lee, C. Miller and J. E. Littlefield. (2004) ‘The impact of globalization on a country’s quality of life: toward an integrated model’, Social Indicators Research, vol. 68, pp.251-298. Wall, S., Minocha, S. and . Rees, (2010) International Business, London: Prentice-Hall, Wild, J.J., and Wild, K L.(2014) International Business, London: Pearson. Winstanley, D., Clarkand, J., and Leeson, H. (2002) Approaches to Child Labour in the Supply Chain, Business Ethics: A European Review, vol. 11, no. 3, July, pp. 210-223. Read More