Globalization and Business - Assignment Example

Question Identify and assess ways in which globalisation affects the international business environment. To that globalization has a profound impact upon the international business environment with the extraordinary understatement. Ultimately, the entire way in which business is organized and interactions/engagement takes place between different economies is predicated upon the impact that globalization has at the macro and micro levels. For instance, as a globalized world has developed, the access to markets and competition between companies and individual nations with respect to what can be produced and at what cost has come to be the primary motivating factor with respect to the way in which business is organized. Further, levels of standardization have developed within globalization which wind the world to a more stable and recognizable level of development. Further, perhaps one of the most profound ways in which globalization aspect of the way in which the world develops has to do with the fact that increasing interconnectedness of different economies and businesses creates a situation through which consumers and can be satisfied by the labor and raw material of a far distant region (Bremmer, 2014). For instance, in the 1800s, inputs to final output were required within a very close geographic area. However, with the age of international shipping and the progression and logistical supply chains, it is possible and indeed commonplace for a far distant region of the globe, it’s resources, and its workers, to satisfy the demand that is placed elsewhere. Proponents of globalization point to the fact that it has been able to drastically increase the level of cooperation and free trade that is exhibited throughout the entire world. Furthermore, it has also been able to raise the standard of living for many of the world’s most abjectly poverty-stricken regions. However, it must also be understood that globalization has not had a completely positive impact with respect to the way in which people live and/or custodianship of the earth’s resources (Das et al., 2013). Ultimately, globalization has been blamed for the destruction of culture, habitat, and the decreased level of interdependence that certain regions of the world can hope to exhibit in an increasingly globalized and interconnected world. As the consumer is continually driven by price and concerns over speed of delivery, globalization has effected a situation in which far off regions of the globe are now able to effectively compete and derive a far higher level of trade to their own regional economies than had been possible prior to the development of a globalized world. By the same token, globalization has allowed for the development of trade blocks and the rise of such institutions as a global culture and the rise of the IMF, World Bank, and United Nations (Arnold, 2013). In brief, globalization has impacted upon nearly every aspect of the world, politics, music, culture, and business; creating a situation by which the entire world has felt the power and influences that globalization has provided. Question 2: ‘... the fact that, after twelve years of negotiations, only such a limited agreement could be reached [at Bali] underlines that multilateral trade talks are all but dead.’ Andrew Kenningham, senior economist at Capital Economics. Examine the claim that the WTO still plays a key role in shaping the international business environment. It is without question that the WTO still plays a powerful role in mediating issues relating to global trade. Over the past several decades, many individuals have pointed to the relative efficacy of the WTO at indicative of the fact that it is somehow losing power or otherwise no longer reflective of the way in which trade understanding is expected around the globe. However, rather than coming to such a faulty and flawed interpretation, it should instead be understood that the many different points of view, goals, and economic concerns that various member states have our ultimately the reason why such a level of discord and the inability to agree on many aspect has been evidenced (Babu, 2012). Taking a developing nation as an example, the reader can readily see that a primary objective which such a nation would engage in would be concentric upon maximizing its overall level of trade and benefiting from interactions with others (Wing, 2014). Naturally, this particular desire is not unique to a developing nation alone; however, such a hypothetical has been chosen as a means of illustrating the way in which the many different viewpoints, goals, and intentions of different actors create a contentious situation in which the individual might be misled to believe that the WTO is somehow less important and less effective than it was under the earlier era of the GATT. Taking a step back, examining the belief that the WTO is somehow redundant or not required as a result of the lack of cooperation and multinational is a that is expressed within its members, the reader can readily note that multinational trade cooperation is not something that has ever been witnessed to a very large degree. This is of course the result of the fact that interested parties seek to maximize their own profitability and maneuver each and every trade restriction/requirement towards their own benefit. However, understanding recent history is another means through which the supposedly “lack of success” that the WTO has been able to achieve is easily defined. For instance, prior to the creation of the WTO, the GATT ultimately separated something of a bipolar global economic system. As a result of the fact that the 1940s, 50s, 60s, 70s, 80s, and early 1990s were defined by the conflict between capitalism and communism, the GATT was able to effectively create a level of collaboration that would not have otherwise existed had the world been more multi polar during this period of time (Ahnlid, 2012). As such, the illusion of increasing levels of contention and competition has been noted by many economists over the past several years. With the Soviet Union no longer an active or relevant part of the way in which history is formulated, it only stands to reason that a greater level of competition and multi-polarity has been exhibited within the system since the early 1990s. Question 3: In relation to ONE of the BRIC economies, identify and discuss the benefits and challenges of foreign direct investment there. With respect to some of the challenges and difficulties of foreign direct investment (FDI), the case of the Russian Federation will herein be analyzed. Shortly after the collapse of the Soviet Union, the fragmented former empire separated into 15 different states. The largest and most powerful of these, both in terms of economics, manpower, and natural resources, was of course the Russian Federation. Realizing this potential, foreign direct investment immediately began to flow into the Russian Federation and sought to establish existing global enterprise within this new, open, and potentially lucrative opportunity. One of the most obvious benefits to this was the formation of a robust natural resources extraction sector. Industries within diamond mining, gold mining, coal mining, oil extraction, natural gas extraction, and a litany of others began to flourish as foreign direct investment provided a much-needed capital that could revolutionize and technologically enhanced these existing industries from their former Soviet basis (Castiglione et al., 2012). As a direct result of this foreign direct investment, these sectors soon came to dominate the landscape of the Russian Federation and provided for fully 65% of the total gross domestic product in any given year since 1997. However, with this being said, it must also be understood that foreign direct investment has faced, and continues, problems within the Russian Federation. The first and most prominent of these is with regard to the issue of corruption and difficulties in navigating the bureaucracy of the Russian Federation. Even within the aforementioned industries, those that are performed astoundingly well, these blockages and levels of corruption have discouraged many would-be investors from engaging with the Russian Federation whatsoever (Gonchar, 2013). Our stories exist of permitting issues or other simple articles of paperwork requiring tens, even hundreds of thousands of dollars as a means of affecting due to a corrupt and bureaucratic system that is not involved past the Soviet era. Furthermore, foreign direct investment is also somewhat leery of the Russian Federation as it descends further and further into a totalitarian state. Although this particular analysis is neither the time nor the place to discuss geopolitics, the progressively tightened control that Vladimir Putin has placed over the Russian Federation, it’s media, civil society, and business, has created a situation in which only the very bravest of foreign investors continues to have faith in the way in which this economy will continue to develop into the future. Beyond these issues, the Russian Federation still poses a considerable opportunity for those who wish to capitalize upon the masses natural resource wealth and potential for further development that exists within the largest nation on earth. Bibliography Ahnlid, A 2012, Improving the Effectiveness of Multilateral Trade Negotiations: A Practitioners Perspective on the 2008 WTO Ministerial Meeting, International Negotiation, 17, 1, pp. 65-89, Business Source Complete, EBSCOhost, viewed 11 April 2014. Arnold, DG 2013, Global Justice and International Business, Business Ethics Quarterly, 23, 1, pp. 125-143, Business Source Complete, EBSCOhost, viewed 11 April 2014. Babu, R 2012, REMEDIES FOR VIOLATIONS OF WTO LAW: THE MISPLACED NOTION OF EFFECTIVENESS, Asian Journal Of Wto & International Health Law And Policy, 7, 2, pp. 457-515, Social Sciences Citation Index, EBSCOhost, viewed 11 April 2014. Bremmer, I 2014, The New Rules of Globalization, Harvard Business Review, 92, 1/2, pp. 103-107, Business Source Complete, EBSCOhost, viewed 11 April 2014. Castiglione, C, Gorbunova, Y, Infante, D, & Smirnova, J 2012, FDI determinants in an idiosyncratic country. A reappraisal over the Russian regions during transition years, Communist & Post-Communist Studies, 45, 1/2, pp. 1-10, Academic Search Complete, EBSCOhost, viewed 11 April 2014. Das, A, Hui, P, & Das, S 2013, Changing Student Attitudes towards Globalization: A Study on the Influence of International Business Courses in Qatar and Hong Kong, Journal Of Knowledge Globalization, 6, 1, pp. 23-46, Business Source Complete, EBSCOhost, viewed 11 April 2014. Gonchar, K 2013, Actions and Reactions of Russian Manufacturing Companies to the Crisis Shocks from 2008–2009: Evidence from the Empirical Survey, Europe-Asia Studies, 65, 3, pp. 508-527, Political Science Complete, EBSCOhost, viewed 11 April 2014. Wing, Y 2014, Non-Compliance in WTO Dispute Settlement: Assessing the Effectiveness of WTO Retaliation from Its Purpose(s) 2012, OAIster, EBSCOhost, viewed 11 April 2014. Read More