Trends in Globalization - Essay Example

? Globalisation Globalisation As the suggests, globalisation refers to strengthening relationship between organisations, governments and individuals across geographical horizons. The term is generally used to regard economic globalisation. Economic globalisation can be explained as: increasing economic activities across the globe, through distribution of products or services by reducing international trade barriers. International trade barriers are placed by countries for various reasons. Some strong reasons could be to stipulate the use of local products, not compromising taxes, fear of rise in un-employments, pressure in maintaining budgets and dilution of long held customs and culture. Trade barriers can be tariff, import quotas, exchange rates, conflicting cultures and export fees etc. A dramatic increase in the process has been witnessed in the last decade. Technology has reduced the communication gaps between geographies. Travelling across national borders has been made easier and as a result doing business internationally has lesser complications in the modern age. The introduction and implementation of International Accounting Standards (IAS’s) and International Financial Reporting Standards (IFRS’s) has made comparisons between organisations appropriate. Comparable and understandable flow of financial information has developed greater trust amongst investors. Formation of European Union, African Union and the Arab League has further cracked open the case for globalisation. Similar laws and regulation prevailing through the Middle East, the common currency usage across Europe and the fusion of cultures has further escalated the pace of Globalisation. Globalisation accelerates the exchange of ideas and commodities over massive distances. The major forces working behind the phenomenon is development in the communication infrastructure and the use of internet in our daily routines. Generally it can be held that as economies emerge and adapt to work together, they experience growth and opportunities to expand across national borders. It can also be advocated strongly that increased globalisation has created fierce competition amongst economies, nations, corporations and individuals. The concept of globalisation is not as simple as it jingles along. Repercussions of the process are severe. This article discusses major implications created by globalisation for Governments, organisations and individuals. The article strongly advocates a neutral perspective, the pros and cons of globalisation. The pro and anti-globalist agenda, challenges faced by governments and its effects on individual organisations have been considered to explain the phenomenon referred to as globalisation. (ACCA, 2011) As globalisation become more universal, responses against and for have materialised. The powerful pro-globalisation lobby advocates their perspective as being adequate. Their argument indeed has much weight. They strongly support the idea that globalisation brings forth opportunities for nearly every one. Increased competition amongst organisations can provide numerous opportunities for individual growth and would create better employment opportunities. It reduces the impact of few capitalists dictating the economy as they see fit. Thereby increasing standards of living amongst the citizens and pushing the GDP positive. The main pro-globalisation organisations promoting it are the World Trade Organisation and the World Economic forum. The world trade organisation is a member driven institute. Its purpose of existence is to oversee the global rules of trade between nations. Its core responsibility is to make certain that trade flows smoothly and freely. Similarly the world economic forum is an independent organisation involved in improving the worlds business, academic and political environments. Both the organisations through series of debate and negotiations with member countries have achieved milestones which seemed impossible at one stage (Macdonald, 1997). The anti-globalisation groups have potential in their arguments as well. The fear put forward is that economies deprived of resources are not actually able to operate properly with other developed economies. The pressure that will be faced of excessive competition when economies connect will wash away local small challengers. This means that there is a possibility that local goods manufacturers or services providers will drift away thus creating a vacuum and increase un-employment. Major anti-globalisation groups include Friends of the Earth and Greenpeace. Friends of the earth is a social organisation raising alarm over issues impacting society, environment and other issues of social well-being of humanity. Their core belief is that we need to change the rules of the economic activity so that economy works for people and the environment, not challenge one against the other. Greenpeace on the other hand is a Non-governmental organisation with core values of transparency and accountability. They have a defined charter which sets out principles of good corporate governance. They believe that if organisations work harms nature then should be held accountable for it. Both the organisations have a strong point of debate at their corners. People have a strong believe in their ideas and therefore have created many hurdles in the globalisation process. These organisations have a success story of their own. The major achievements include: reduced federal giveaway for nuclear power, compelled bush administration to produce reports on global warming and banning gene doping. Many other remarkable achievements have been associated with these organisations (Bertucci et al, n.d.). Economic and financial globalisation, the merging of economies and the expansion of world trade has fetched numerous benefits to countries around the world. It still remains a concern that the current financial crisis has clogged globalisation, with shrinking trading activities and slipping economies internationally. Today even pro-globalists groups except that globalisation has not come without a price. Globalisation has benefits beyond imagining, positive implications across national boundaries and certainly better opportunities. But all this is not possible without risks being involved. There are numerous and far impacting risks involved with the process of globalisation which should be considered. For economies to flourish great deal of investment is made by countries. This investment of time, money and other resources such as man power and minerals are of great importance to any country. Globalisation tends to merge economies together which provides for this sort of investments. It can be argued that, this whole process would be at the cost of the other economy loosing something. Generally one economy will benefit at the expense of the other. The cost and expenses of globalisation are discussed below in detail. (Fischer, 2003) Globalisation has enabled woman to play an active part in today’s economy of developing countries. Cultures that excluded involvement of woman completely such as (Saudi Arabia) have fallen behind in the economic progression race. It is put forward by the pro-globalists that globalisation increases opportunities and helps build economies, thereby decreasing child labour. Due to globalisation, advances have been made in the field of medicine through better public health policies and enhanced food supplies. Increased wealth is a definite indicator of progress in the society. If the masses are wealthy, than the quality of living will improve. The improvement in the quality of living has directly impacted on the environmental policy of a country. Many countries have worked to improve the standard of living of their citizens and implemented environmental friendly legislations. Globalisation has helped reduce cultural barriers and increased trust amongst people of different societies. This has made the dream of a global village more realistic. Trading between countries has been excessively improved. Due to reduction in trade barriers, trade has been made easy, which has helped local community and small businesses to grow and expand beyond geographies. (Noonan, 2004) Globalisation has become a progressive reality in the world today. It has not come without a price as hinted earlier. So what is actually wrong if the world is coming close together? The answer revolves around the fact that different nations have different priorities, and therefore coming to a consensus on matters becomes difficult. In general terms this can be explained as; if two economies connect and one is developed the other is sinking, priorities would be very different. The developed one will try to move towards more luxuries while the sinking one would try to acquire basic necessities for its people. Therefore when it comes to globalisation, the difference between the rich and poor nations becomes great hindrance. Further if we discuss the concept of a global village, economic turbulences in one country would have disastrous effect on the other (Bertucci et al, n.d.). Culture is amongst a dilemma facing globalisation. People do not easily compromise on the age old cultures being religiously followed across the world. There are many countries in the world which would never compromise when it comes to culture and religion. Pro-globalist advocate that globalisation creates more job opportunities. The fact is actually reverse especially in developed countries. People have lost jobs because of outsourcing. Another argument forwarded by the anti-globalist is, that certain diseases spread throughout the world because of globalisation. Many cases have been witnessed in the world, most recently the swine flu epidemic, which spread across the world just because of people travelling across borders for business or vacationing purposes. (Shangquan, 2000) Globalisation is creating a worldwide repercussion which could weaken political support for an open world economy. Policymakers and diplomats should be vigilant in designing policies. Globalisation tends to create pressure on governments budgetary control. As a consequence most governments shift their focus on subsidies. This undermines the focus on capital expenditures. Increase in the rate of un-employment poses greater threat to governments. Globalisation has created opportunities in less developed countries at the expense of downsizing in developed ones. In most developed countries corporations are outsourcing there operations to cut down costs. Before making policies to assist or resist globalisation, governments should consider the impact that will be created on social life. Most people in the developing world would not compromise on their religion, cultural norms and ethical values. Governments will face a huge challenge in changing the lifestyle of people and create room for negotiation on the matter of religion and culture. (Shangquan, 2000) Strong opposition will be faced from local businessmen as they would not appreciate any relaxation in trade barriers for foreign companies. There will always be a fear amongst local businessmen that when foreign competition flows in, they will lose their competitive edge and drift away. Further relaxing trade barriers by governments could also result in loss of export fees, import duties and other tax revenues. Implications of global village are of reasonable importance here. Countries that have economies connected to one another enjoy benefits of similar currency, same laws and regulations and very less trade barriers. A perfect example would be of the European Union. Recently it has been witnessed during the Greek Debt Crisis that not just one but whole of the Euro-zone has suffered its impacts. This is an example of how globalisation impacts different economies simultaneously. The parliamentarians in the areas affected by the debt crisis should now rethink their policies as to what extent they are willing to support globalisation. Immigration policies have also been impacted by globalisation. A drastic increase in immigration has been witnessed in the last decade. Stringent Policies are now being drafted to reduce immigrants to an acceptably low level. Migrations from developing countries to developed ones in search of better opportunities have increased competition in the local community. It can be presented here that due to excessive migrations and increased rivalry in the domestic markets, populace have not come closer. Instead more hatred has surfaced and tension between different communities have emerged who believe that there opportunities to expansion are being hijacked by foreigners. Further, many infectious diseases have said to spread across countries due to immigrations. People who are not affected by a disease themselves are possible carriers of it. It has become a great challenge for developed economies to restrict access into their own country, because the act could undermine trade and would also affect students travelling for educational purposes to the education rich economies of the world (Haugen et al, 2010). As discussed earlier, organisations such as Greenpeace and Friends of the Earth are now a bigger challenge for governments than ever before. Since the economic recession and the European debt crisis the fear put forward by the anti-globalists have materialised. People have started to put more faith in the call of these organisations. Strategists now have to be more vigilant in drafting strategies for global economy as they would face a much greater opposition from these pressure groups. Globalisation has shaped economies of different countries, dissolved cultures together and has mended vinegary relationship between nations. At the same time it has produced unalterable impacts in the way of thinking of corporations and individuals as well. Let’s take the example of Grant Thornton LLP a firm of Professional accountants. It is considered as the fifth largest accounting network with corresponding and member firms across the world. Today globalisation has become a very familiar phenomenon in our daily routines. Its effects can be felt on a day to day basis. The major impact has been seen in terms of providing training opportunities to individuals from across the channels working for other Grant Thornton member firms. It is a great experience to meet people from the Grant Thornton family across the globe. If we consider the firms perspectives, it has found an experienced individual belonging to the same firm just from another country. The individual also has benefitted from the arrangement, as he would get an opportunity to train in a different environment. The only loser in this scenario would be an individual of the country where there was an opportunity, but was taken by another individual from a different country. (Official Website, 2011) Through such arrangements positive sharing of information is brought about. Learning is increased and different ideas are consolidated creating synergies. Sharing knowledge of laws and regulations between countries has decreased the trust gaps on the drafting and use of financial information. The international accounting standard has had an encouraging part in mending ties between borders. By using similar accounting practices, it has become easier to compare financial data, build expectations and provide audit and assurance services. The mistrust between investors has significantly decreased which in turn has resulted in foreign investment pouring inn. International Standards on Auditing has also made life easy being an auditor. Adoption of these accounting, reporting and auditing standards has produced greater synergies and proper functioning of the audit function wherever may be in the world (Haugen et al, 2010). As the progressiveness of globalisation matures, the firm has witnessed greater cost reductions. It has become increasingly common amongst firms to utilize individuals working for other member firms to work in different countries rather than dispatching a whole team of our own men. This has reduced cost to firms significantly. Further when the firm has presence in almost all the countries in the world through the network of member firms, it is fairly easy and simple to consolidate knowledge and provide services to clients without specifically training your own employee. Through the use of communication technology member firms are increasingly being connected with one another to assists each other’s operational requirements. This type of globalisation has produced both economies of scale and economies of scope for the firm (Haugen et al, 2010). Another good example of globalisation from the perspective of the firm would be the use of common Audit software throughout its member firms. The software usage standardises the audit process across the world. Employees are trained to use this software in every member firm. This again produces synergic effects as when the requirement may be any employee throughout the Grant Thornton network can be pulled to assist with the operation. Globalisation has further helped improve firm’s efficiency in cases of group audits. During transnational audits, firms face many barriers. These can be cultural barriers, difference in laws and regulation, different accounting standards being used and probably the client may have a subsidiary in country where there are serious security concerns. Under such circumstances globalisation comes into play effectively. One member firm can ask the help of another firm already present in the target country to perform an audit on its behalf without finding the need to send our own employees to another country (Official Website, 2011). Different ethical values prevail in different jurisdictions of the world. Globalisation has somehow consolidated these practices in the form of corporate governance structures. Global accounting bodies such as the International Federation of Accountants (IFAC) have produced ethical charters which should be abided by all professional accountants across the world. This has helped firms, not just one but all to have a common ground of consensus. Organisations such as Audit firms are a good example of globalisation. Most of the aspects that globalisation stands for are covered in its perspective. We can find people of different countries coming together with the help of technology, accounting bodies such IFAC and the presence of corresponding members have brilliantly merged societies and individuals together. Bibliography ASSOCIATION OF CHARTERED CERTIFIED ACCOUNTANTS (ACCA) (GREAT BRITAIN). (2011). Governance, risk and ethics. London, BPP.BPP Study Text Paper P1: Ethics, Corporate governance and Internal Control BERTUCCI, G., & ALBERTI, A. (n.d.). Globalisation and the Role of the State: Challenges and Perspectives. [online]. United Nations. Available at: FISCHER, S. (2003). Globalisation and Its Challenges.American Economic Review. 93, 1-30. HAUGEN, D. M., & MACH, R. (2010). Globalisation. Detroit, Greenhaven Press MACDONALD, D. (1997). Industrial Relations and Globalisation: Challenges for Employers and their Organisations. [online]. International Labour Organisation. Available at: NOONAN, S, D. (2004). The Benefits of Globalisation. [online]. Foundation for Research on Free Economics & the Environment. Available at: [Accessed 15 March 2012] OFFICIAL WEBSITE. (2011). Grant Thornton. [online]. Available at: [Accessed 15 March 2012] RODRIK, D. (1997). Globalisation Requires Positive Government Policy Responses. [online]. Peterson Institute for International Economics. Available at: [Accessed 15 March 2012] SHANGQUAN, G. (2000). Economic Globalisation: Trends, Risks and Risk Prevention. [online]. Economic & Social Affairs, CDP Background Paper No. 1. Available at: [Accessed 15 March 2012] Read More