Consequences of Globalisation of Business - Literature review Example

Globalisation of Business Student’s Name: Instructor’s Name: Course: Date: Introduction The marketplace, society, economy and technology are transforming at an unprecedented pace and account for the transformation in business world. As a matter of fact, the argument that the beginning of the new century has ushered in globalization of business serves to contextualize the argument. From the one hand, globalization means that the environment which needs to be evaluated for strategic business decisions processes is continuously transforming and expanding. On the other hand, the changes since the beginning of the new century when assessed in terms of business means that there have been changes with regard to international technologies and collaboration that need to be assessed closely since they affect domestic markets and ways in which business activities are currently undertaken. It is from this premise that the argument that the globalisation of business has had a beneficial effect upon the world remains multifaceted. Different scholars have argued that due to the global business environment, managers and organizations are finding themselves in a dilemma as they need to balance the needs, themes and structures of more challenges and opportunities posed by the globalized business environment; both domestic and international enterprises (VanSandt and Sud 2012; Scholte 2015). This study therefore evaluates the argument that the globalisation of business has had a beneficial effect upon the world. It borrows from different frameworks and different examples to pose a ground that best inform the position of the argument. One of the best approaches of understanding how globalization has benefited business operations is the argument postulated by Condon (2007) when argued about Transfer and Institutionalisation of Corporate Governance Practices. Firstly, the researcher considered the processes of transfer as well as institutionalization of different organsations, particularly, a corporate governance practices that evaluated the Asia-Pacific subsidiaries as well as joint ventures of United Kingdom based multinational enterprises (MNEs). On the other hand, Condon (2007) sees globalization as a process that spurs business development through institutionalization. Risk based system of internal control (RBSIC) is one aspect that the research finds to be enhanced through globalization. However, it has to be noted that benefits of globalized business stretches beyond themes that Condon (2007) concentrated in. That is, this study further considers drivers of globalization as postulated by Yip (2001) while detailing the concept of Total Global Strategy II. Condon (2016) cites Yip (2001) drivers of globalization arguing that through globalisation businesses can understand the following: Similar customer needs Global customers Transferable marketing Interdependence between countries Competitors global strategies Based on the points above, globalization of business presents the participants, the market, the institutions and the external factors with benefits that will have to be tapped especially with enterprises seeking to penetrate newer markets. Consequently, globalization helps enterprises or organization to move from their functional model to a product design model, which enables alignments of their business models to conform to current demands in the market or globalized environment (Rausch et al. 2013). Robertson (2012) noted that with the continued increase in the global business environment, objectives of every enterprise or business regarding strategic development has been to reach even further improvement in service standards. The application of global business theory in the context of different companies further enhance product design model which will allow focusing efforts and consolidating particular expertise around the product and not the function. Scholte (2015) add that if this approach is accomplished, it will bring in a more focused set of skills and experiences. Currently, there has been shift in attention since ASEAN Economic Community Blueprint 2025 was developed. Companies and enterprises are at least ensured that with ASEAN Economic Community Blueprint, businesses will be able to eliminate tariffs, advancing service deliveries not to mention trade liberations in countries where business operations was restricted (Wijen et al. 2012). According to Scholte (2015) ASEAN Economic Community Blueprint provides ground for globalisation of business activities which in turn, will ensure that companies streamline and harmonise capital market regulatory frameworks that have been hindering business operations for long. Contextualising ASEAN Economic Community Blueprint 2025 within real-world example Australia put restraints on exports or businesses engaged in export. For instance, the Export Control Act is required to determine the extent to which the restraints on such exports affects business and exportations as well as the competiveness of Australia’s exports overseas (Jankalová 2012). Indeed, Australian regulatory approach to exporting affected Telstra’s globalization of business activities. According to Farrar and Mayes (2013) lack of the country’s approach to business globalization meant restraint on Telstra’s ability to export because companies are not set free to pursue and develop both domestic and export business. In as much as these regulatory measures protect the interest of individual citizen of Australia, they undermine volume of exports. In relation to this, the cost of compliance have been found to be high and consequently affecting Telstra’s ability to establish a viable export market. In addition to this, the process of complying with the current orders is not creating a room where companies can benefit from the domestic market which would in turn alleviate the financial burden compliance impose. The issue can also be assessed in terms of the regulation’s effectiveness in promoting market access and specifically, its value in demonstrating compliance with importing countries compliance. Currently, the regulatory approaches in Australia are not seen as a positive support for the export of Australian food thus affecting McDonald’s volume of exports. While it is true that McDonald benefit because the industry or the company’s compliance with Australian regulatory approaches may mean automatic access in foreign markets, companies seeking to establish and develop new markets are affected due to lack of proper strategies that enhance business globalization. It is for this reason that McDonalds needs ASEAN Economic Community Blueprint 2025 in Australia so as to promote and develop regional frameworks in business aspects such as consumer protection, promotion of connectivity, competition policy and intellectual property rights. Bartlett and Ghoshal (1989) understanding of multinational enterprises is another way of evaluating how the globalisation of business has had a beneficial effect upon the world. According to Ghoshal (1989) globalisation means creating a situation where business operations and or companies View the world as its home Establish a worldwide presence in one or more businesses Develop a global business strategy for its businesses that operate worldwide According to Ghoshal (1989)’s points above, globalisation increases positive economies of scale thus favouring centralised production. Studies such as Godley and Hang (2012) have agreed with Ghoshal (1989)’s view’s noting that globalization of business helps in the development of integration internationally, arising from the exchange of worldviews, ideas, products, as well as other cultural aspects. Their study conceptulised the idea of business and society as it attempted to view globalization as that process which enhances knowledge-based productivity specific to the informational economy. The invention of telegraph and the internet which has generated further interdependence of cultural and economic relationship are some of the issues presented in the study. As already noted, there are growing ambitions and market penetration strategies and it means organizations now consider moving from their functional model to a product design model, which has been enabling better cross-departmental communication and alignment. The interpretation of this point is that globalisation is that tool which business considers being behind the ability to move from functional model to product design model (Szarucki 2013). As Condon noted, there is misconception that there is homogeneity production amongst MNEs especially for the world market and through their efficient approaches they are able to dominate markets across the globe. Correcting such misconception, what is common among MNEs as Condon observed is that they take advantage of market convergence and reduced government barriers to entry. Linking Condon’s views to globalisation of business, studies have introduced consumerism in understanding how market convergence and reduced government barriers to entry are factors that help in ensuring globalisation of business are beneficial upon the world. According to Sedaghat and Derrabi (2013) consumerism is well planned efforts by groups, individuals or government to enhance consumer protection from practices and policies that are likely to infringe rights enjoyed by consumers or fair business practices. Globalisation, consumerism and reduced government barriers to entry evaluate the extent to which businesses seek to benefit from the economies of scales and strong relationships with stakeholders and partners, which will in turn allow leveraging the costs. Contextualising this benefit within an existing case study, SingTel Optus PVT Limited is the second largest telecommunications company in Australia and is a subsidiary of Singapore Telecommunications Company (Thrift et al. 2014). As a result of globalisation of business Optus Company trades specifically from the Optus Brand and is currently managing a number of brands and subsidies in Australia, including Virgin Australia in the telephone market and industry. Additionally, the global economic downturn and the internal environment in Australia outline the general trend in the increase of raw material and network supply costs for the companies in this industry. This process is further triggered by increased competition due to reduction of entry barriers, driven by the industry deregulation and business globalisation since companies such as Telstra and Vodafone entered into the market. Relating this point with consumerism as earlier defined, global business has enabled Optus to invest in research and technical development (R&D) to reduce the costs of services to compete with niche operators such as Vodafone. Consumerism and globalisation to Optus is that tool which satisfies the basic demands of the civil society (Sanders 2012). The relationships between globalisation and civil society demands for high level of involvement and feedback culture. This relationship creates an environment where civil society participates in business activities such as corporate social responsibility and looks at opportunities to encourage independent sustainable behaviours. According to Condon globalisation is understood based on the following features; Growing worldwide connections Rapid discontinuous change Growing complexity and Increased number of participants Interpreting these features within the context of global operations, growing worldwide connections means that business will not be limited to wealth distribution; instead, the process of business operations will entail income distribution in societies, global financial crises management, and understanding shape of institutions that can determine global governance and the recent emergence of social conflict. Accordingly, increased number of participants means application of strategic management to counter global business environment thus allowing business activities to benefit from the economies of scales and strong relationships with stakeholders and partners. With concepts such as product differentiation, oligopolies and monopolies, perfect competition and strategic behavior characterizing the understanding of the global market environment, globalisation of business give enterprises the perfect competition and product differentiation required to survive in such conditions (Siddiqui 2012). Rapid discontinuous change helps in such environments by serving as a competitive edge in an increasingly competitive market. Concerning rapid discontinuous change, it means global business is creating competitive advantages that leverage threats. Explaining this point, Sanders (2012) noted that global business entails investment in research and technical development which if well executed will reduce the costs of services to compete with niche operators. Auto Company Sword has been recognised as a company that has succeeded immensely through global business (Sedaghat and Derrabi 2013). The Company is further known for technologically sophisticated automobiles. For the last 50 years, Szarucki (2013) noted that the Company has been growing from selling automobiles throughout South and North America. As a matter of fact, the growing markets have explored Japan and Canada. According to Scholte (2015), Sword has reaped different benefits as a result of globalisation of their business activities. For instance, a review of their production and sales between 2005 and 2015 indicated that Sword lowered their prices to their consumers by taking advantage of specialisation of labour within different markets/countries of operations (Scholte 2015). The report further shows that Sword can assemble a sedan model in the United States of America but doing this with engines which have been outsourced cheaply from countries such as Japan making their customers to pay less for their vehicles. The third benefit of globalisation of business that has benefited Sword is that it helps developing countries to access international investment funds. Contextualising this point, Sword has been receiving financial assistance from International Monetary Fund (IMF) thus allowing the Company to build the state-of-art facilities in countries such as Mexico and Canada. Based on the case study from Sword, benefits of globalisation of business is multifaceted. However, Sword has streamlined its business activities through sharing technology across national borders. Particularly, global business partnership between Japan, China and Mexico helped the company to develop new robotic arms which has helped the company to implement strategic plans towards customer satisfaction. Conclusion The story on Washington Post argued “looking back 20 years globalisation of business was seen as an approach that would raise all boats in rich and poor countries alike. In the United States and Europe consumers will start enjoying inexpensive items made thousands of miles away from them and in time, we will be seeing trade barriers dropping to support even more economic gains and multinational expansions while at the same time, geo political cooperation flourishing.” Based on the research findings above and by extension, Washington Post, globalisation of business has been a good approach for different business activities and consumers. In particular, organizations should start considering theories related to the global business environment. The recent instances where the government restricts trade or the role played by global international trade rules are examples of factors that need consideration in understanding what it means to have an enterprise in global business environment. Contextualizing these arguments businesses should demonstrate a strong focus on sustainability and growth. Therefore strategic options to grow through market penetration and market growth can be valuable to the organization but can place further pressure on already asset-heavy operations. References Bartlett, C. and Ghoshal, S., 1989. The transnational corporation. New York. Condon, D., 2007. Transfer and institutionalisation of corporate governance practices: Asia-Pacific subsidiaries and joint ventures of United Kingdom listed multinational companies (Doctoral dissertation, University of Warwick). Farrar, J.H. and Mayes, D.G. eds., 2013. Globalisation, the global financial crisis and the state. Edward Elgar Publishing. Godley, A. and Hang, H., 2012. Globalisation and the evolution of international retailing: A comment on Alexander's ‘British overseas retailing, 1900–1960’. Business History, 54(4), pp.529-541. Jankalová, M., 2012. Business Excellence evaluation as the reaction on changes in global business environment. Procedia-Social and Behavioral Sciences, 62, pp.1056-1060. Rausch, P., Sheta, A.F. and Ayesh, A. eds., 2013. Business intelligence and performance management: theory, systems and industrial applications. Springer Science & Business Media. Robertson, R., 2012. Globalisation or glocalisation?. Journal of International Communication, 18(2), pp.191-208. Sanders, P., 2012. Is CSR cognizant of the conflictuality of globalisation? A realist critique. critical perspectives on international business, 8(2), pp.157-177. Scholte, J.A., 2015. Globalisation, governance and corporate citizenship. Business, Capitalism and Corporate Citizenship: A Collection of Seminal Essays, p.43. Scholte, J.A., 2015. Globalisation, governance and corporate citizenship. Business, Capitalism and Corporate Citizenship: A Collection of Seminal Essays, p.43. Sedaghat, M. and Derrabi, M., 2013. Firms’ exports promoted by the entrepreneurs’ networking: MENA and Denmark. International Journal of Business and Globalisation, 11(4), pp.427-442. Siddiqui, K., 2012. 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