Theories of Globalization - Coursework Example

Globalization Contents Introduction 3 Globalization 3 Theories 4 World-System Theory 4 Development Theory 5 World Polity Theory 6 Neo liberal Theory 7 World Culture Theory 8 Theory of place and space 8 Conclusion 9 References 10 Introduction The process of globalisation involves in the combinations of economic, political and socio cultural and technological forces. This process is further enhanced by the expansion of different multinational companies in various countries of the world. It is the short term which describes the spread of communication, technology and production throughout the world. It also involves in the mixture of economic and cultural activities of different nations. For the globalization process many organization have created an international free market for various services and goods. This process involves in the interaction of companies, people and government of different countries by international investments and trade with the help of information technology. It opens nationalistic and local perspective for enhancing the connectivity to improve the process of transferring goods, capital and services across the national broader. In past hundred years many companies have successfully globalized their business in various countries of the world which improved the condition and situation of many countries. The process of globalization changes continuously for developing the world. It expands the relationship of different countries, companies and people which encourage them to promote positives issues for benefiting the world and its environment. Globalization has a strong impact on the almost all the companies and the countries of the world. Globalization Globalization has its origin from 325BC at the time of Alexander. With the advancement of time the process has enriched itself and has made huge contribution in the overall development of the world. Globalization witnessed its major growth in the 19th century. This modern form globalization enhanced the industrialization process. It helped in the production of different products and goods at low rate by implementing economies scale. In this century the process of globalization is characterised with Industrial Revolutions, improvement in human technology, productivity and demand (The Economic Times, 2015). The industrial revolution for globalisation widens the opportunities and sources of the companies to expand the business globally. The primary intention of the firms to globalize its business is to capture the large global market for generating and increasing its revenue. Large market will have huge demand which will reduce the cost of production. Moreover the company can get cheap labour from different countries which will help them to develop its business effectively. Establishing its business globally the firms get a large number of growth opportunities. It can access resources of many countries where the firms have expanded their business (Johansson, 2002). Often the firms globalise for seeking strategic advantages. By establishing strategic alliance with abroad companies the firm can distribute its networks and technologies. Theories World-System Theory This theory deals with inter regional division of labour. It divides the world into semi-periphery countries, core countries and periphery countries. The core countries focuses on high capital involved production with skilled labour. The rest of the countries prioritize on labour intensive and low skilled production based on extraction of raw materials. By this theory the companies can decide the appropriate country which is suitable for them to expand its business. Many of the companies’ wants to use cheap labour (Mcfarlin and Sweeney, 2008). So with the application of this theory they will be aware of the divisions and structure of labours in of different countries. This will help the companies to lower its labour related cost or to improve its type of production. Using high skilled labour at a low price is the greatest advantage for the company. Therefore companies globalizes for acquiring efficient employees for its business process. This theory helps to analyze the social changes which the world is experiencing in the modern time for the massive integration of different communicational activities (Floyd, 2000). World system theory combines various interdependent parts of the social system which are guided by the existing rules of the society. Based on this issue a company globalise because a good social system of a country will help in its growth and development. The firm will be aware of the existing rules of the countries by using this theory which will help them to determine the opportunities of its business. By using those business opportunities effectively the company can acquire more customers for its business (Hassan and Kaynak, 2004). Development Theory In this theory of globalization different countries and regions of the world have greater interdependency in terms of trade communication, finances etc. This is a theory of economic development that takes place in various parts of the world. The developed country will have many advantages contributing in the growth and expansion of the company. The developed countries will build greater integration of various factors of the business emphasising more on the economic transactions (Hennessey, 2004). This theory explains the development of the global communication system of the organization. In the modern world this is an important aspect of the business. The companies globalize for improving its communication system with its customers. This helps the companies to become more accessible in different places of the world. By following this development theory the companies create a new environment for carrying out the business process with the help of utilizing the productive resources of various places. According to this theory the companies take the advantage of virtual monetary mechanisms of various countries (Keegan and Green, 2014). Cultural factors of a country and of the people create a huge impact in the business and its growth. As per the development theory the cultural phenomenon often determines many circumstances which affect the business environment. In the modern era people having same culture are residing in different places of the world. To acquire those customers the companies often globalises its business. This cultural impact on firms helps them to satisfy the customers residing in different places of the world. The Development Theory also states that with the improvement of international trade and international financial system influences the company to expand its business globally for experiencing discrete competitive advantages. Another requirement of the companies to globalize its business is to build a strong relationship with maximum countries of the world for developing its business in the international environment (De Mooij, 2010). World Polity Theory This theory interpreted the structure, global relation and practices of the companies in the global environment of the business. The social system and the cultural framework of the country influence the companies to globalize its business. The social global changes and the transnational interactions are affected by the process of globalization is explained in this theory. The word polity defines the activities of the society influencing the framework of the country. The theory explains the set of cultural norms which creates a strong impact on the business environment and the business procedures of a country (Usunier and Lee, 2009). The companies which are comfortable with this type of cultural norms establish their business in those countries of the world which benefits them in enhancing its business with various cultural issues (McNeely, 2012). This theory helps to determine the sovereignty of the country and its territorial integrity. The company globalises to utilize the advantages of sovereignty and territorial integrity of the country. These factors will help the business to work under a good political and social environment of a country where they can perform its business activities without facing any major risk. This theory also explains that globalisation initiate the development of educating the people of the country. This will lead to the improvement of the standard of living of the people and their earning capacity. When the companies find educated customer base for its product who can understand the value of it then the companies expand their business in those places of the world to get in touch with its targeted customer base (Ferrell and Hartline, 2010). All the social factors and the business environment of a country make the business process of the companies simpler which influences the foreign companies in investing in various countries for establishing its present globally. Neo liberal Theory The neo liberal theory of globalization explains the market, society, economics and the open trade environment of a country. Liberalism is the main focus of this theory. With the advent of globalization most of the countries of the world are experiencing economic liberalization which helps to establish many free trade policies and reduces the spending of the government. It helps to improve the role of private sector companies in different countries (Faundez and Tan, 2010). The free trade policies of the countries influence the small big companies of different industries to expand their market globally. These trade agreements establish a suitable business environment and business framework for the foreign companies and provide them many benefits which help the firms to grow their business internationally. This theory also deals with the economic policies of the country. The economic liberalization policies like open market deregulation and privatization helps to develop the financial condition of a country. It is beneficial for the company to establish its business in such a country which has financial stability (Onkvisit and Shaw, 2009). Therefore the companies globalize its operations for having the advantages of open market and privatization. The government of some countries often provides many considerations to the private companies for developing its industrial sector which becomes beneficial for the foreign companies in establishing their trade relations. Wealth and turnover of a company is indicates the success of a business in global market. Therefore the company always wants to generate more revenue by properly utilizing the global market. The liberalization policies of different countries help the companies in expanding it business around the world at a low cost. World Culture Theory This theory of globalization deals with the process of connection and stimulation of awareness related to the practices of the contemporary world. It revitalizes all unites associated with this process. The world culture theory explains the relationship between the four units like international system, society, humankind and individuals. With the help of globalization all of these combines together and work in the same business environment of particular countries. These different units hold different views (Potter and Biukovic, 2011). With the advancement of globalization they communicate with each other properly and help in the development of the country and its business. According to this theory the companies get advantages in globalizing there business for these factors. A perfect integration of these four factors helps to develop a profitable situation for the company. When the society of a country understand the individual needs and helps them to fulfil it then the companies get many business opportunities to develop its trade in those places. Theory of place and space According to this theory the social structure of a country is related to space. The material basis for performing social practices is known as Space. For globalization the institution, social structure and geography of the countries is experiencing a changing relationship. The development of the social relations for globalization links distance places. As per this theory companies globalize their business to for establishing its worldwide presence. In the developed countries the companies have to incur huge cost for maintaining its business. But in the less developed countries or in the emerging market they can conduct their business operation at a much lower cost. If the company faces unavoidable problem in its business for a particular location then it can move to other places where it will have favourable factors contributing to the growth of the organization. Conclusion Globalisation of a company involves in the establishment of its business operations in different countries of the world. In the modern world they are numerous companies who are globalizing their business for their growth. By expanding their business the companies generate huge revenues and build a large customer base for their products. Different political, economic, social and cultural situation of the countries influences the trade growth of the companies and help them to grow under various circumstances which enrich the business process of the companies. In this case study different theories of globalization are described which explains the reason associated with the globalization of the companies. Globalization also helps the company to innovate new products according to the need and requirement of the people of different places. References De Mooij, M., 2010. Global Marketing and advertising: Understanding cultural paradoxes. New York: SAGE Publications. Faundez, J. and Tan, C., 2010. International Economic Law, Globalization and Developing Countries. Northampton: Edward Elgar Publishing. Ferrell, O. and Hartline, M., 2010. Marketing Strategy. Mason: Cengage Learning. Floyd, D., 2000. International Business Environment. Journal of Management & Development. Vol.15 (5), pp.48-52. Hassan, S. and Kaynak, E., 2004. Globalization of Consumer Markets: Structures and Strategies. Philadelphia: Haworth Press. Hennessey, J., 2004. Global Marketing strategies, 6th Edition. Boston: Houghton Miffing. Johansson, J. K., 2002. Global Marketing: foreign Entry, Local marketing and Global Management, 3rd Ed. New York: McGraw Hill. Keegan, W. J., and Green, M. C., 2014. Global marketing. Harlow: Pearson Education. Mcfarlin, D. B., and Sweeney, P. D., 2008. International Management. New Delhi: Dreamtech Press. McNeely. C., 2012. The Wiley-Blackwell Encyclopedia of Globalization. New Jersey: John Wiley & Sons. Onkvisit, S., and Shaw, J., 2009. International Marketing: Strategy and Theory. New York: Routledge. Potter, P. and Biukovic, L., 2011. Globalization and Local Adaptation in International Trade Law. Canada: UBC Press. Robinson. W., 2007. Theories of Globalization. [online]. Available at: < http://kisi.deu.edu.tr/timucin.yalcinkaya/Theories%20of%20Globalization.pdf > [Accessed 10 January 2015]. The Economic Times, 2015. A brief history of globalisation. [online]. Available at: < http://economictimes.indiatimes.com/opinion/a-brief-history-of-globalisation/articleshow/3276531.cms > [Accessed 10 January 2015]. Usunier, J. C., and Lee, J. A., 2009. Marketing across cultures. Harlow: Prentice Hall. Read More