Impact of Globalization Wal-Mart - Essay Example

? Impact of Globalization – Wal-Mart Impact of Globalization – Wal-Mart Outline: Globalization Globalization as define by s Globalization and Wal-Mart Globalization Impacts – Actual & Potential Factors that causes Globalization Strategies that can be use for managing globalization Tackling globalization with Protectionism (government intervention) Conclusion Recommended Readings Work Cited Globalization If we talk about the processes that result in world gathering at one place, we are on the other hand talking about Globalization. This means that products and services, capital, and labor trades on a wider world basis, and information and the effects of research flow over readily between countries. The rise of less expensive sea transport and the telegram resulted to this process in the 19th century. Cheap air travel, the computer and the telephone together with the increasing importance of multinational companies and usual relaxation of controls on trade along with international investment continues in the 20th century. It is feasible that the increase of the internet and the process that starts with liberalization will continue such movement in trade in the 21st century or otherwise. http://www.enotes.com/econ-encyclopedia/globalization Oxford English Dictionary (OED)  Globalization can be define as “the act of globalizing“; from the word mention “global“ means “involving the whole world pertaining to/ “, “wider world“; “universal“  International Forum on Globalization (IFG)  “Globalization is present worldwide drive towards a globalized economic system governs by supranational organizational trade and banking institutions which are not accountable to democratic process or national government“  World Trade Organization (WTO) Director-General, Pascal Lamy  “Globalization is the historical stage of expansion of market capitalism, in similitude to the experience in the 19th century with an industrial revolution. It is a central transformation in societies reason of the recent technological revolution which has led to a recombination of the social and economic forces on a fresh territorial dimension“  The World Bank  “Globalization says it as the growing integration of societies and economies around the world...“   United Nations Poverty and Development Division  “The definition of UBPD relies on the contextual analysis but generally means to an accelerating interlinking across national boundaries affecting the so many aspects of life; socialization, cultural economic along with political. In this context of study, the focus is only on economic aspects, with emphasis on the role of I-C-T [information and communications technologies]. Therefore, globalization narrowly means growing economic interdependence of worldwide countries. This covers increases in the international division of labor effected by swelling international flows of F-B-I [foreign-based investment], along with an increasing volume and variety of cross border transactions in products and services, international migration, international capital flows and the rapid or widespread diffusion of technology. It does not Imply that social, cultural and other types of globalization are unimportant, only that they are less applicable to discussions of economic development and security“ World Health Organization  “Globalization, or the boosting interconnectedness and interdependence of countries or people, is generally thought to include two interrelated elements:  the freeing of borders to increasing fast flow of finance, people, goods, services, and ideas beyond international borders; and the alterations in institutional and policy regimes at the national and international levels that promote or facilitate such flows.” Globalization As Define by Few Authors: As Douglas Kellner notes, “the term globalization is a theoretical construct that in it contested and open for different meanings and inflections.” Globalization, in eyes of some pundits or scholars and policy makers, “is a process, a force, an age, a system, or a revolution” According to Emma Rothschild, “A way of looking at globalization from the historical perspective is to do with the social and economic history of international relationships” Now that the word Globalization has become as clear as the crystal, we are ready to move on to see the wider impacts that Globalization may have. “Globalization has positive and negative impacts on development“(WHO 2006) This paper would fundamentally highlight the impacts of Globalization. This paper carries out case study in reference to world famous retailers, Wal-Mart Stores Incorporation. Globalization and the Wal-Mart In order to understand the potential and actual globalization affects Wal-Mart. We first need to understand the influence and scope the Wall-Mart has globally. With Wal-Mart, one can save money and live better.(Wall-Mart) Since 2008 the Wal-Mart Stores, Inc. are brand as Wal-Mart. Wal-Mart is the public multinational company that runs chains of \ discount department stores and warehouses. The company place in category of the world largest organization by revenue (Forbes 2010). Founded in 1962 and publically traded after 10 years. Wal-Mart, headquartered is the majority private employer. (Wal-Mart Quick Facts 2010) It is also the largest grocery stores found in United States. In 2009, it has touched 51% of its US$258 billion sale from grocery business. (Wall Street Journal 2010) It has 8,500 stores in fifteen countries, under 55 different names. (Winston Journal ,2010). Thomas Friedman, in the book The World is Flat, says that if Wal-Mart had been an individual economy, it could rank as China's eighth-biggest business partner, ahead of Australia, Russia and Canada. Charles Fishman', in the book The Wal-Mart Effect points that more than half of all Americans reside within five miles of Wal-Mart store. For most people, that is about a fifteen to eighteen-minute drive. Ninety in percent of Americans live around fifteen miles of a Wal-Mart. This just means that the nearest store for any American national would be none other than Wal-Mart. The size of the company is difficult to grasp. Since Wall-Mart is the international company, it influences the notion on which the universal human beings stand today. It works on the principle of globalization affecting a single unified community. In such community, there is no place for fundamental sources of social conflict, which is global integration. Wal-Mart sells many of the products by St. Patrick's Day (March 17) in comparison to that Target sells all year. Globalization Impacts- Actual & Potential Globalization for sure permits an acceleration in the global output. FDI The export of Wal-Mart products results in Foreign Direct investment that provides many positive effects in return, the major being increase in surplus. Moreover, the foreign direct investment brings the best technology and other types of intellectual capital of the countries that would otherwise have to do with out such technology. Wheeling everything at home would have been costly otherwise. Global Recognition Globalization may bring the products to countries that otherwise would have been inaccessible of such variety, this mainly increases the quality of life all over the supplying region, therefore adding value to the world output. This would also help transferring savings from countries where the MP of Capital (Marginal Product) is low to those countries where it is high; this again improves the quality of life and adds to the world output. Hence, globalization builds up global recognition for Wal-Mart. Increase Accountability Being such a large multinational makes the Wal-Mart face issues for responsibility as a good corporate citizen, through major exports and imports the wealth could transfer. This could be beneficial considering the potential impact of globalization on the longer period possibilities of economic growth in developing countries. However, influencing the world with its wider revenues and profits, Wal-Mart faces issues of increase accountability. Less Waging Cost And Unemployment Wall-Mart can outsource manufacturing and the blue-collar jobs. This would be beneficial, as manufacturing work to developing nations like China would reduce employment expenditure because of low cost of manufacturing goods and wages over there. This also promotes corporate responsibility because it results in more job opportunities and lesser scenes of unemployment all over the world. Online Jobs Outsourcing will be the work of cloud computing service providers such as Amazon and Google from existing service providers in America and elsewhere. This globalization would create new opportunities for employment. However, this would unlikely to bring back all the jobs lost. Increase Competition Because, of increase in competition through globalization Wal-Mart would have to concentrate on products quality with lesser product margins to guarantee consumers satisfaction. This would cause a negative affect as it builds up pressure on the management of Wal-Mart. Government Intervention Some government intervention can support the creation of employment and regulation of economically unhealthy activities. Wal-Mart and other multinational companies and corporations that were earlier restricted to commercial activities can now, with their increase in size, greater influence political decisions. This would be a positive potential impact of globalization for multinationals. Per Unit Cost Decreases With an ability to supply more would result in decreasing per unit cost. As the quantities sold as a ratio of units supplied would decrease over the period the average cost of Wal-Mart goods or services would decrease. Growth Opportunities With globalization, there stands a wider opportunity for economic growth through mergers and takeovers. Wal-Mart can benefit through taking over the local or foreign stores, resulting economies of scale. Job Insecurity Earlier people used to have stable and permanent jobs. Now people live in the constant dread of losing jobs due to competition. This might create problems for Wal-Mart when it comes to consideration of human rights. Small businesses Due to globalization, Wal-Mart has placed many smaller businesses out of their services. A recent study carried out by David Neumark of University of California at Irvine revealed, "The Effects of Wal-Mart on the Local Labor Markets," uses authoritative statistical analysis to budget the results on jobs and wages as the Wal-Mart shifts from its center, Arkansas. The authors study shows that that retail employment did fall when Wal-Mart entered in a new county. (Found off of a website on Google) Causes for globalization impacts: Globalization can be sense to influence the distribution of income long with its level. As far as the distribution of income among countries is concerned, standard theory provides the basis to expect that the countries will benefit through trade. Economists have been preaching that trade is mutually beneficial, and many of us know that the experience of widespread growth resulting from rapidly growing trade in the post war period serves to proof that. The old Heckscher-Ohlin theory also forms the basis for resulting impacts through globalization. The theory supports its statement with reason of comparative advantage as lying in varying factor results abundance in different countries. The latest new trade theories explain that trade by increasing returns to scale would help increase the world output. This would result in greater accountability for Wal-Mart, so it needs to be careful for increasing rate of returns. http://faculty.lebow.drexel.edu/McCainR//top/Prin/txt/Cost/cost19.html Economies of scale can be term as the cost advantages, those results from expansion, the expansion that interconnects to imports and exports of goods or services. Once the company is doing well in some of the countries it could expand to different areas of the world as well, this would result in reduction of cost per unit of the output supply. This would result in greater growth opportunities for multinationals such as Wall-Mart. Therefore, this process benefits the companies and as well as the enjoyers all over the world who benefit from quality supply at competitive price. New technology is a big contributor towards globalization. Meaning one can buy and sell goods or services through our computer to people over seas. The internet and phone lines inter connect all countries together globally as one making the world a global village. This is beneficial for the customer and the supplier as well. The customer remains aware of the rates for the products or services he needs to buy. This in short means “markets are efficient” (Galbraith 1999) that is they are homogeneous market with each customer would know how much he has to pay, for which good or service and when. This is even advantageous for companies such as Wall-Mart who could cover wider markets using internet or online web network. This helps in expansion and reduces cost per unit customer. So every day people are globalizing and every day they are shopping even from home. Moreover, the internet has even open doors for online jobs. This would affect the globalization as more people who cannot move outside their house due to reasons of disability or otherwise could even get hire. This is favorable for companies such as Wall-Mart that can sell products online. This would even improve the overall employment rate all over the world. However, jobs overtaken by computers would leave certain working percentage redundant and unskilled. In such a context, they would have to search for solution elsewhere. Ability to run all over the world and such popularity globalizes Wal-Mart. Transnational Corporations are those corporations that operate in more than one nation or country at a time. Two business or companies combine into one then this result in synergies. So stores like Wal-Mart get even further through out the world, with open doors for wider opportunities, with more funds flowing in, means more output production and greater room for improvement. International trade forums like GATT, free trade agreements like NAFTA and interconnection of regional economies as shown by the creation of the European Union are instances of the new focus. Again, this factor is one that contributes to an increase in the pace of globalization impact. Globalization impacts are not only the effect of economic pressures. Politicians notice that expansion of international trade and consequential interdependence upon the economies of different countries can decrease the chances of war. The resultant of this strategy was a deep attempt at integrating regional economies in to a global economy. Strategies that can be use for managing globalization A global conclusion, but don’t count on it (Howard Davies) Technology Wal-Mart has the advantages of widely available training along with sophisticated research facilities that can be use to manage the globalization. These can help exploit the potential of emerging technologies for instance the nanotechnology to produce breakthrough products. These can help offer lower cost solutions in comparison to conventional products. FDI For resultant economic equivalence, all exports and imports should be in considerate to the country’s needs and requirements. Likewise, companies trading internationally must manage the amount of output and inputs as per regional demand in order to produce a net gain. Wal-Mart could manage its supply according to both regional profit margin and regional demand variation. How effective the results are would then depend on investment in this area of study. Global Recognition Wall-mart is such a big company. Being a multinational it influences the flow of finance, goods, services, people and ideas through the international borders. Wal-Mart needs to keep track of what consumers think of its goods or services. A global satisfaction would then form the basis of global recognition. This strategy to manage globalization would help maintain or gain wider markets in future. Reinforcement Wal-Mart could run reinforcement campaigns to regenerate organizational spirits in its people. However, its effectiveness would vary depending upon how zealous the listeners are. The object is to recreate in the general population the original entrepreneurial spirit, which led to the formation of the developed nations. It could be quite possible that longer period of prosperity has led to decline in the spirits of people, resulting in a situations where too many job seekers are running after too few job-creators. Increase Accountability To tackle the pressing accountability, Wal-Mart could issue a management report concerning all factors that it is accountable for and what measures it took to carry out such accountability. For instance, in reference to environmental concern, a report that shows steps that have been use in respect of scrap or recycling store items. Less Waging Cost And Unemployment. Wall-Mart needs to manage this part of globalization. Wal-Mart workers on not getting enough pay, ranges from $7.50-$9.00 (Found on Google) could pose threat to organizational accountability. However, Wal-Mart could contradict such statement with counter-ones, like; Wal-Mart, headquartered is the majority private employer. (Wal-Mart Quick Facts 2010). Moreover, Wall-Mart even offers online jobs that would help protect human rights to a certain extent. Increase Competition Wal-Mart must ensure that it stands up to date with the market situation and the latest technology. Market awareness would help impose barrier for new entrants or reveal need for a new marketing strategy. On the other hand, the latest technology would help speeding the manual work and improving the quality of service. The use of internet for online marketing and sale would help tackle globalization impacts to greater degree. Influence Political Decisions Wal-Mart being a largest company could easily use “lobbying strategy” These are ways to influence government in its decisions. Entering in to friendly terms with government would help increase net flow of income in the country and even for Wal-Mart. Per Unit Cost Decreases Due to globalization Wal-Mart supplies globally, because of such market coverage the net unit cost decreases. Wal-Mart could utilize the profit margins resulting thereafter to help those people who cannot afford what they require to get their needs met. Some say that Wal-Mart has help hold down the nation’s inflation rate. (Wal-Mart Nation packet) Job Insecurity Wal-Mart wields its strong power for just one criterion: to bring the lowest possible rates for its customers. At times in doing so there arise, issues of Job insecurity despite the fact that Wal-Mart employs around 1.2 million people globally. (Wal-Mart Nation handout). To counter such issues a performance measurement analysis can be publish. For instance, in reference to employment rights Wal-Mart could issue a report considering the offers of long-time benefits such a retirement plans for its employees. Tackling globalization with Protectionism (Government intervention) Globalization is the economic phenomenon driven by profit motives of free organizations. (This is also the motive behind credit and speculative expansion activities all around the world.) However, protectionism in various forms that seek to contain the free flow of goods or services is not likely to counter the overwhelming powerful economic forces. As globalization is an irreversible phenomenon, therefore policy makers will have to come up with policies that will work more effectively along the lines of economic pressures and pulls. Conclusion Globalization is a phenomenon that gathers momentum with the simultaneous improvement in the efficiency and speed of worldwide communication and transportation. These generally help push up the amounts of international trade by 100 times. Integration of global economies also leads to such consequences as employees moving to locations where jobs are available improving employment rates world over. Hence, globalization affects multinationals such as Wal-Mart therefore considering the causes and the impacts of globalization such companies shall prepare strategies of its management. Recommended Readings The Crisis of Globalization by Ahmed Akbar. Akbar Ahmed is renown world’s respected Islamic scholars. Mr Wolf has written several books including, “Why Globalization Works and Fixing Global Finance.” He receive a CBE in 2002 for services to financial journalism In an era of vast globalization, Shepherdson has proved that small can be beautiful, that attention to detail will make all the difference. Why Globalization Works by Martin Wolf The Future of Globalization written by Ernesto Zedillo. Work Cited Oxford English Dictionary - 2nd edition [electronic edition]. Oxford, : Oxford University Press; c2000 [cited 2006 June 1]. Available from: http://www.oed.com/ International Forum on Globalization. [homepage on the Internet]. San Francisco: The IFG; [cited 2006 June 1]. Available from: http://www.ifg.org/analysis.htm Lamy, Pascal. Humanising globalization. Geneva, Switzerland: The WTO; [updated 2006 Jan 30; cited 2006 June 1]. Available from: http://www.wto.org/english/news_e/sppl_e/sppl16_e.htm World Bank [homepage on the Internet]. Washington, DC: The World Bank Group; c2001 [cited 2006 June 1]. Available from: http://www1.worldbank.org/economicpolicy/globalization/ United Nations Poverty and Development Division. Economic and social survey of Asia and the Pacific, 1999. New York: The United Nations; c1999 [updated 1999 Dec 20; cited 2006 June 1]. Available from: http://www.unescap.org/drpad/publication/survey1999/svy4a.htm World Health Organization [homepage on the Internet]. Geneva, Switzerland: The World Health Organization; c2006 [cited 2006 June 1]. Available from: http://www.who.int/trade/glossary/story043/en/index.html Enotes-Encyclopedia://www.enotes.com/econ-encyclopedia/globalization Forbes Global 2000. Retrieved June 6, 2010. Wal-Mart Quick Facts." United Food and Commercial Workers International Union. Retrieved June 28, 2010. Ann Zimmerman (2010-06-07). "Rival Chains Secretly Fund Opposition to Walmart". The Wall Street Journal. http://online.wsj.com/article/SB10001424052748704875604575280414218878150.html. Retrieved 2010-06-08. Daniel, Fran (2010-09-29). "Head of Walmart tells WFU audience of plans for growth over next 20 years". Winston-Salem Journal. http://www2.journalnow.com/news/2010/sep/29/head-of-wal-mart-tells-wfu-audience-of-plans-for-g-ar-425152/. Retrieved 2010-09-29. Facultyhttp://faculty.lebow.drexel.edu/McCainR//top/Prin/txt/Cost/cost19.html Wal-Mart slogan http://www.walmart.com/ James K. Galbraith, “The Crisis of Globalization,” Dissent Magazine, pg. 12-16 Emma Rothschild, “Globalization and the Return of History,” Foreign Policy, p.2 Douglas Kellner, “Globalization and the Postmodern Turn,” (http://media.ankara.edu.tr/~erdogan/globpm.html) p. 3. Managing Globalization: Is Wal-Mart a win-win model? - Business - International Herald Tribune Rosa Gomez Dierks, Introduction to Globalization: Political and Economic perspectives for the New Century, Chicago: Burnham Inc., Publishers, 2001, p.6 “The Sunday Times” , Recommended authors. http://www.thesundaytimes.co.uk/sto/public/sitesearch.do?querystring=globalization§ionId=2&p=sto&bl=on&pf=all Wal-Mart Nation Packet http://walmartnation.com/ Wal-Mart Nation Handout http://www.cbc.ca/thelens/program_131107.html Read More