The impact of globalization - Essay Example

?Introduction Globalisation has impacted every aspect of human life. Globalisation has been through different stages of evolution and at each stage changes have taken place rapidly. The term ‘globalisation’ not very common thirty years ago, is today a major point of discussion all over the word. According to Giddens (2006), globalisation could be defined as an external force, which is an outcome of the changes in the economical, political, social and cultural conditions. These have contributed to enhanced global relationship. Appaduria (2008) believes that advance technology, such as industrialism and transport, have contributed significantly to the globalisation process and the development of the hospitality sector as well. This essay will examine relationship between hospitality industry and globalisation process focusing on economic, social and cultural viewpoints. After discussion of the concept and definition of ‘globalisation’ and ‘hospitality’, the historical perspective on social, cultural and economical aspects of the hospitality sector’s development is presented. Next, the inter-relationship between globalization and hospitality is discussed. Lastly, the positive and negative impact of globalisation on hospitality industry is discussed. Concept of globalisation Globalisation means differently to different people. It is the integration of nations through international trade of goods and services (Frankel, 2006). It is the concept of moving towards one world, one single society, one economy. The aim was to open the world market to everybody with the expectation that it would contribute to the social and economic disorder prevailing in the world. Globalisation is also the ‘intensification of worldwide social relations which links distant localities’ and it has also been as the ‘compression of the world’ and ‘a social process in which the people become increasingly aware that they are receding’ (Mak, Lumbers & Eves, 2011). All these definitions imply that globalisation leads to worldwide interdependence and integration, in addition to an increased global consciousness. The major drivers of globalization according to Singer (2004) include social-demographic (regional, cultural), technological advancement. These imply changes in telecommunication, internet, transportation, profit motives, market share, foreign direct investments, ecological and environmental factors such as pollution and green laws, political-legal factors like reducing trade barriers, and political stability. Technological changes have brought about upgradation but have also increased income inequality between highly skilled workers and unskilled workers. As Singer states, the welfare of one individual cannot take place without affecting another individual. Globalisation has widened the gap between the rich and the poor; it has increased competition, liberalisation, deregulation and privatisation but it has undermined the economic prospects for millions of people around the world (Frankel, 2006). Globalisation is also seen as the dominance of western and cultural interests over the rest of the world (Brinkman & Brinkman, 2002). It is also seen as the penetration of capitalism in every corner of the world thereby enabling the entire population to participate in the fruits of international division of labour and economy. Globalisation is a restricting process that affects every aspect of human life – capital flows, political collaboration and flow of ideas (Hjalager, 2007). It also includes environmental pollution, criminal behaviour, diseases and terror. Defining ‘hospitality’ The word hospitality is used by different groups in different ways. Similarly, various definitions of the word ‘hospitality’ are provided. The Oxford Dictionary defines it as, ‘the act or practice of being hospitable: the reception and entertainment of guests or strangers with liberality and goodwill’ (Hepple, Kipps & Thomson, 1990, p306). Some also consider hospitality to be a provision of physical and psychological comfort by the host. However, the hospitality industry encompasses a range of activities such as service, beverage, accommodation, entertainment and food. Thus all these elements should provide safety and physical and psychological comfort to the traveler. Inter- relationship – globalisation and the hospitality sector The hospitality sector is among the many causes and results of the process of globalization (Hjalager, 2007). Hospitality industry has played an important part in globalisation process. Yu (2006) contends that there has been rapid development of service industry worldwide over the modern period along with industrialism, capitalism and advancement of technology. According to the economic theory globalization is a gradually evolving process (Hjalager, 2007). Globalization is enhanced by developments in technology, communications infrastructure, and transportation opportunities. Each of these drivers or forces of change has fueled the globalisation of the hospitality industry. The hospitality industry on the other hand is responsible for being a cause for the process of globalization. Thus, globalisation and the hospitality industry are interdependent as discussed below. Transportation The hospitality industry has seen rapid development due to the introduction of modern transportation system and new economic system. Scholte (2005) explains that the first development of hospitality is found during the Roman period after the road system was built. As a result of the development of transportation system, hospitality industry has developed dramatically as evidenced by Silk Road before modernization, and railway and airplane in the nineteenth century. Advance transportation system has reduced long distance travel time which has contributed to the growth of tourism especially after the Second World War. On the other hand, the development of the transportation system, as a part of the globalisation process, has significantly contributed to the hospitality industry. According to Dittmer and Griffin (1997), hotels and restaurants started to situate near train stations or airports. People have started to travel more often to other places for leisure or business as transportation developed. Capitalism It could be seen that democratic system is suitable for capitalism. Capitalism that has spread across the world, beginning in Europe, the United States, and Eastern states too, is responsible for the growth of the hospitality industry. Higher disposable income and more leisure time were responsible for mass travel of Americans and the migrant labour. Farmers too moved into cities for better standards of living and higher income. Again, the hospitality industry has developed as a result of capitalism. Kandampully (2006) contends that free trade agreement has been responsible for the rapid growth of the service industry after the rise in capitalism. Availability of funds has incited the hospitality industry to expand to other regions. Various transnational companies took shape in order to reach a new market. Plus, cheap land and labour could be significant keys to drive multinational corporations to benefit through expansion in developing countries. For example, Accor hotel is based in France, but sixty six percent of hotels in its chain are situated overseas (Accor, 2003). Thus, expansion of multinational corporations helped build good relationship with those countries and also contributed to the growth of the national economy of the host country. Economical benefits The hospitality sector has contributed to the growth of the world economy while also enhancing employment opportunities. Kandampully (2006) mentions that seventy percent of gross domestic product (GDP) of developed countries came from service activities. The hospitality industry seems to be the first industry that could generate high national income. For instance, in the UK, the hospitality industry has contributed 90 billion pounds in 2010 to the local economy. This suggests that the hospitality sector has a high income and this could lead to growth of economic world. The hospitality sector also provides entrepreneurial opportunities to the local people which enhance the local economic activities. According to Weber, individuals could share capitalism economic system directly by abstractions. To be specific to hospitality industry, the service companies could raise local economic activities through better employment opportunities. In addition, the hospitality careers too benefit both the individual and the society. As the incomes go up, people spend more thereby generating more local economic activities. This is because the local workers spend more at local shops which can positively impact the labour market. Technology Rapid changes in information technology and the media have driven every region to become similar (Appaduria, 2008). The widespread growth of information technology and the media have helped represent a positive image of the hospitality industry (Appaduria, 2008). Various hotel chains have expanded globally and operate across nations. For instance, Best Western International was operating across 77 nations even in 1977 (Yu, 2006). Mcdonald's operates 31,000 in 119 countries. Thus, 1.5 million people have been employed by McDonald's (Mcdonald's, 2007). Mobile communication has boosted marketing and sales to many young and experienced tourists (Hjalager, 2007). Ease of advertising has enabled the small players in the sector to offer their products and services through the internet platform. The traditional industry can now meet increased international competition from unconventional sources. Industrialism, on the other hand, has generated machinery into the hospitality industry, thereby enhancing the productivity levels. Ritzer (1996) believes that efficiency, calculability, predictability and control have occurred in food industry. As globalisation induced demand for food and mass production was the inevitable answer, food production has shifted from hands to machinery, an example being McDonald's using the automatic fry machine. This has resulted in mass production and ultimately leading to global expansion. The growth in population too has increased the demand of the hospitality sector. People have a predisposition for food and thus spend a large portion of their income in eating out while looking for value in their purchase (Powers and Borrows, 2006, p36). Baby boomers and the Generation X have significantly contributed to the increased demand in the restaurant and hotel industry. Holiday Inn enjoys 100% occupancy and this is testimony of the growth of the sector. Media such as the television and the newspaper dailies have stimulated tourists to travel. In short, globalisation process has contributed towards the expansion of the hospitality industry all over the world. Sociological viewpoint From the sociological viewpoint, the world-culture theory helps to understand the key dimensions and consequences of globalisation. Globalisation suggests that the people become conscious of and give meaning to living in the world as a single entity under a ‘hybrid’ world culture (Mak, Lumbers & Eves, 2011). Globalisation has impacted the most personal and intimate aspects of human lives. While the forces of globalisation homogenize the world to some extent, it also produces heterogeneity. There is thus sameness and difference by different sorts of forces which has perhaps led to the glocalisation as in the case of McDonald's. McDonald's did not succeed when they standardized the items with same taste for the Singapore and the South African markets but then they adopted the principle of ‘think global, act local’ (Vignali, 2001). They had to adapt the local tastes, customs and laws as Hindus do not eat beef, Jains do not eat meat at all and Muslims do not eat pork. Japan prefers Teryaki burgers while Netherlands wants vegetable burgers. Despite the heterogeneity McDonald's maintains homogeneity in its main menu structure – main course burger, French fries and a drink. Schlosser (2001) highlights that globalisation has changed the way people live or dress. Hospitality sector has influenced the society to be more global by producing homogeneous products and services. American culture has expanded and influenced hospitality industry to adapt other cultures. The numerous international food industries and global brand hotels have contributed to the process of globalisation. Homogenous products and services can be seen in everyday life. People in different region can experience other food without travelling. It can thus be seen how the process of globalisation has led to the growth of the hospitality sector, while the hospitality sector too has speeded up the process of globalisation. Impact of the growth of the hospitality industry The growth of the hospitality sector has been rapid and this has had both positive and negative impacts on the very drivers that fueled the growth of the sector. Positive impact The development of ownership across borders is a significant driving force of globalization (Hjalager, 2007). Investing abroad has provided the organisations in the hospitality sector to probe new markets. The hospitality sector involves the movement of people, goods, services, ideas and money over space (Mak, Lumbers & Eves, 2011). Employment generation The hospitality industry seems to be the largest employer in the world. According to Choi et al (2000), hospitality sector could generate job opportunities - both direct and indirect - such as transportation service. Numerous careers opportunities are now available where new hotels or restaurants operate. There are a high number of hospitality workers especially in Europe. In 2010 2.44 million direct jobs were generated in the United Kingdom’s hospitality sector while 1.2 million jobs were indirect effects (Oxford economic, 2010). The hospitality sector could contribute in reducing the unemployment levels at the global level. More than 10 million workers were employed in the hospitality sector in 1995, as service companies provided opportunity without discrimination on the grounds of gender, religion, skills or education levels. In short, the hospitality industry could generate high national income and also decrease the number of unemployed. Thus the hospitality sector enabled people to travel and work across nations and regions. It provided an opportunity to live and experience in regions far and wide thereby promoting globalisation. The growth of the hospitality sector as a result of globalisation has also contributed towards the growth of the backward regions (Choi et al). For instance, there has been an increase in the number of women working today while also enhancing their working conditions. In fact, this sector is a good place to start work, especially for the women. The hospitality sector has supported women workers as they feel women offer quality service, essential for success of this sector. The MNCs in the sector have provided every section of the society to work without discrimination. Economic benefits Multinational corporations have also promoted migrant labor, as a result of good working conditions. According to Choi et al (2000), low level of currency in developing countries would push cheap labour to work in transnational organisations. For example, Thai workers are paid only fifty pence per hour. At the same time, hospitality sector in developed countries could pull migrant labour by offering standard wage and working conditions. These organisations offer acceptable working conditions, higher wage and flexible working hours than local companies do. This has led to better standards of migrant life. Besides, repatriation of income to their home countries is another benefit of the relationship between globalization and the hospitality sector. Infra-structure development According to Appadurai (2008), technology has expanded without border by complex interrelationships. To put it another way, technological advancements has benefited the society as well as the industries. Because of the expansion of multinational hotel chains the local infrastructure receives impetus. These hotel chains invest in local communities in countries where they expand. Growth in media Hospitality sector could benefit from mediascapes and Technoscapes. Society could be influenced by worldwide media to purchase more in hospitality industry. Media projects the image of the hospitality industry worldwide. Appaduria (2008) claimed that the media has created reflection of the world which directly impacts the hospitality sector. Through the movie, The Beach (2000) Thai tourism and hospitality grew dramatically. Media also benefits from the hospitality industry as the number of advertisements generated is huge. Plus, media projects the development as well as other issues important to the sector. The hospitality sector maintains contact with journalists as media has the potential to project unbiased mental image of the industry which influences customer purchase. Media are now merging across borders while the larger firms are diversifying into television, films, publishing, internet marketing and so on (Hjalager, 2007). It is now possible for consumers to receive information on their mobile phones. Negative impact Economic impact Free trade, an impact of globalization, enabled the MNCs to expand overseas without restrictions. This meant growth and profits for them but has adversely impacted the local units. Knowles et al (2004) find that finances of small local food and lodging units have declined after international hotels and restaurants chains have appeared. Their earnings were impacted as they could not compete with the international brands. Many even faced closures. Five Pubs, a unit in the UK had to gradually reduce its business as many international coffee shops opened in the vicinity. Excessive expansion is not an ideal condition. Policies have to be developed to stop the unrestricted expansion of the transnational corporations. This could be combated by setting up local associations or bodies which could protect the interests of the small local business in the sector. Environmental degradation Tourism and the hospitality sector have penetrated destinations outside the industrialised world. Mass tourism soon left negative impacts on nature and the destination. Eco tourism was introduced with the expectation that it would reduce the negative impacts and make tourism a sustainable industry (Bauer, 2008). Eco-tourism directly benefits the local communities through economic development and political empowerment. However eco-tourism soon caused more harm than benefits. To promote eco-tourism people started sleeping in tents and shunned commercial services but this also meant cutting down firewood, creating eroding paths and entering local people’s home, thereby causing more environmental damage. Such tourism also impacts the health of the local people. While Borrows and Powers (2006) find environmental issue to be a sensitive problem in the society, Rizer (1996) associates environmental degradation to the quick service restaurants. In other word, service industry causes damage to the environment. These occur because of the extensive use of papers, cups, and plastics; beach hotels bring about water issues and airlines contribute to air pollution. Media While the reach of the media has widened, the smaller enterprises are unable to manipulate the global media providers (Hjalager, 2007). The advancement in media also impacts the hospitality sector adversely. It is now possible to share information or read reviews of customers which influence the purchase decision thereby impacting the sector. Interest groups now increasingly use the website to distribute news, travel information and such services are booming. Social concerns There have been several social concerns which have made the hospitality industry focus on the development of the local communities. Conway (2008) points out that social concern seem to be essential. In other words, business plans should include social enterprise and community development plans. Global brands of hospitality have harnessed the power to modify its products and service in each culture and society. Although people could share same experiment of global products and services, American eating culture has decreased the number of traditional restaurants. Knowless et al (2004) find that western culture has led to a decline in traditional culture. Homogeneous products can be found instead of local products, as foreign countries tend to prefer American brands, and it is cost-effective for the marketer to sell standardized products. Rizer (1996) cites the example of Pizza Hut promoting its food as “It’s a piece of America" (Washington Post, 1990:B10 in Rizer, 1996). The mobility of people (migrant labour) has significant impact on food consumption (Mak, Lumbers & Eves, 2011). While employment generation takes place in the tourism sector most often people in tourism sector are low-paid workers; they work under hazardous conditions with little provisions for safety and health (Bauer, 2008). The guides and porters are exposed to wide range of health hazards. People in this sector have to work long hours with practically no break. This amounts to exploitation. Technology People with higher skills gain more income than unskilled workers (Muriente, 2005; Knowles et al, 2006). Unskilled workers have thus become victims of advance technology, as demand for skilled workers has increased dramatically to suit new technology, especially computers. Education has not expanded to provide equal opportunities to all especially in the developing countries such as Asia. The hospitality sector employs high number of unskilled workers. As a result of low skills and low education requirement, the hospitality workers draw lower wages. Powers and Barrows (2006) highlighted that low wages has been seen in service industry. Growth in technology has thus adversely impacted the unskilled workers. Conclusion Globalisation leads to worldwide interdependence and integration. It has led to growth in all sectors and particularly the hospitality industry, which has been the scope of this paper. While globalisation has brought many benefits to the society and the economy of nations, as Singer states, the welfare of one individual cannot take place without affecting another individual. Thus, globalisation demonstrates both positive and negative outcomes. Globalisation led to increased infra-structure and technology enhancement, and these developments led to expansion of the hospitality sector. However, as the sector expanded it also increased income inequality between skilled and unskilled workers. It affected the local communities where the international hospitality organisations expanded, and it also led to environmental degradation. While efforts were made to homogenize the world and their habits, organizations have not been successful in this as cultures deep-seated and difficult to change. Expansion, growth and globalisation cannot be reversed and these would continue to increase. The negative impacts have been particularly experienced by the developing nations. Efforts are being made to make the hospitality sector sustainable and minimize the negative impact of the sector. Negative impacts could further be combated with the support of bodies such as the World Trade Organization (WTO) that could help in protecting the interests of the small businesses and retain their market share while competing with international organizations. However, the two – globalisation and the hospitality industry - have contributed to the growth of each other. References Bauer, I. (2008). The health impact of tourism on local and indigenous populations in resource-poor countries. Travel Medicine and Infectious Disease. 6, 276-291 Brinkman, R. L., & Brinkman, J. E. (2002). Corporate power and the globalization process, International Journal of Social Economics, 29 (9), 730-752 Frankel, J. 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