Why the World is not Homogeneous - Essay Example

Why the World is not Homogeneous Course Name and Code Institution Name Faculty Name Insert Your Name Insert Your Number Instructor’s Name 15 June 2009 Countries all over the world are different. This may be attributed to principles and ideologies that they hold or their position within the world society. A country in EU may have different position in understanding the basic requirements of an African state. Different countries have no commonalties and thus pursue their requirements differently. Thus, the aim of this paper is to discuss why the world is not homogenous and they way that this difference may influence strategies that are made by international corporations. Economy is a major factor that makes the world not to be homogenous. Different type of economies mostly indicated by command and free market system prevents success or freedom of exchange of goods and services (Boiun, 1998). For example, United States economy is that of free market while former Soviet Union economy was command economy. Hence, it is difficult for these two economies to do business. Moreover, availability of raw materials reduces the chances that the world will be homogeneous. Additionally, factors such as interest rates that are charged differently and exchange rates become an obstacle. For example, there is no specific media of exchange e.g. currency that can be accepted all over the world. The size of GDP and income per capita limits the success or openness that economies can operate freely (Gallie et al, 1996) resulting in discrepancies in the societies. Social factors controls the way that the world can come together to accomplish economic and other goals. However, social life prevents the way that economic transaction or orientation can be achieved. Education enlightens consumers to understand what they want and how they utilize certain products and services (Boiun, 1998). Many societies such as those in Africa and Asia may not be comfortable in using certain products or embracing certain ideas. Discrimination usually is a major factor in preventing many countries coming together. For example, Uganda under Idi Amin drove out Asian communities and apartheid in South Africa illustrate extend of racial discrimination (Gallie et al, 1996). Discrimination may result in negligence of a given sector of population or country or people of a given orientation. Moreover, family life and religion shapes the way that society embraces other societies and what these societies bring. Discrimination is also associated with religion. Even though many countries advocate for freedom in choosing religion, some countries may view religion as something that may inhibit the success of their activities (Granovetter and Swedberg, 2001). Culture is a component that makes people different and usually results from learning. Thus, culture is seen differently in different parts of the world. There are traditions that are core in certain communities such as the role of women in the society. Culture usually has hidden effects especially in the development, trade and business. Moreover, country’s culture may prevent the way that it views other cultures or tradition. For example, China is a world power but before this, their internal pride and self-sufficiency pride resulted in closing of China’s borders (Gallie et al, 1996). Moreover, other cultures due to suspicion, nationalism and radical philosophy remains closed to outside world; this can be seen through extremist Islam in Afghanistan and communism in North Korea preventing countries interacting. Even though some countries employ the idea of culture subtly (believe in unity, greater good and the rule of law) others are fragmented, paranoid, resistant to change, angry and uncertain of their position in modern world. Nevertheless, the rich countries can be brash and overconfident while the poor countries can view themselves as the victims and result into despondency. Nevertheless, language, set of beliefs and customs of different countries may not embrace different cultures. Language is the foundation of poor communication since most business details or technologies are communicates through English or French. Thus, those cultures that communicate using Spanish, Chinese or Arabic may not be comfortable with English. Politics negate the aim of ensuring that the world is homogeneous. A factor that is linked with political factors is bad government (Boiun, 1998). The role of various governments is to ensure that development is encouraged and create a good environment for business. The governments should ensure that they maintain infrastructure and spend finance wisely. Moreover, governments are supposed to set statutory directives and business practices that encourage initiative and investment, protect individual and business legally, and honor contracts, property rights and copyrights. The principles and ideologies are not in place in many countries thus preventing them to become homogeneous. Corruption is a major drawback in ensuring that counties, business and individuals can operate comfortably. Corruption is disheartening and frustrating since it reduces the effectiveness and efficiency of starting business, law court activities, selling or buying property and any activity that requires government assistance. Hence, corruption reduces the chances of businesses and economical relationship been started and many business and individuals will be suspicious in any activity that may occur. Trade laws controls the way that business are transacted. World Trade Organization commands most world trade and WTO itself is controlled by Europe and US (Gallie et al, 1996). However, WTO applies different rules when it comes to different countries especially LEDCs. Tariffs and subsidies negate the way developing countries do their business (Pearce, 2006). For example, it is hard for a developing country to export steel to United States or EU compared to the way that the partners within these trade areas transact their business. On the other hand, subsidies inhibit the success of exporting products especially in the developing countries. Thus, this suspicion or transparency in the way business is done reduces the chances that developing and developed countries can do business comfortably. Nevertheless, political instability prevents the world coming together. Countries such as Afghanistan and Somalia, which have experienced long-term conflicts due to ethnic tensions, war and tribalism prevents chances of development. In development of countries, a major factor lies on the position of the country in the world map and climate. Most countries that are located in the tropics are poor while those in Europe and North America flourish (Hibbs and Olsson, 2004). This is because the tropics have scarce water, diseases flourish and less fertile land while the other parts of the world have fertile lands, good rainfall and temperate climate. Hence, it is difficult for countries in the tropic to come together with the countries in North America and Europe. Location of the country relative to trade partners and other countries may undermine chances of becoming a united world. For example, it is harder for countries that are far to do business because of transport and communication cost (Hakanson and Nobel, 2000). In addition, the distance itself prevents long lasting relationship between different countries. Moreover, different countries have different resources that they may not wish to share. For example, South Africa has diamonds and gold while Saudi Arabia has vast oil wells. Hence, the idea of sharing the natural resources may prevent the chances of different countries coming together (Hibbs and Olsson, 2004). Technological advancement within different countries limits extend in which countries can conduct business easily. Infrastructure especially in transport network prevents successful communication and transportation of goods and services due to poor infrastructure or different rules in utilizing transport technology (Hakanson and Nobel, 2000). Moreover, difference is amount of energy that is available may prevent creation and development of certain industries within some parts of the world. For example, some countries use nuclear energy or have vast amount of oil reserves while other countries especially in Africa and some parts of Asia lack enough energy that can spur economically or technological development. Additionally, industrial development, extent of technical research and the labor that are capable to utilize the technology is lacking in many countries. To advance in technology, it requires investment of large capitals in which some countries may not afford. Hence, such complications and discrepancies prevents various nations coming together to ensure that the world is homogenous (Hakanson and Nobel, 2000). The general trends that different countries are taking and economical changes affect the way that countries can accomplish their duties. For example, in the recent past there has been a fluctuation in the prices of crude oil (Moore, 2009). Those countries that produce oil will make alliances with countries that produce oil e.g. OPEC. Moreover, there are trade unions that are developing that has strict restrictions of joining them because of geographical position or ideologies that these unions hold. For example, it is hard for an African country to join European Union and it is also hard for an Africa country to export products and services to others unions such as TAFTA (Gallie et al, 1996). The rate of unemployment is increasing especially indicated by the current recession. This also changes the buying behavior of the consumer and reduces disposable incomes. Thus, due to risks associated with recession, unemployment and different policies may prevent countries from coming together. Different countries have different ideologies and principles regarding industries that are not local. Many industries assume that utilizing a superior business model will enable extend to which the corporation can maximize the economies of scale. Hence, it is important for an organization to understand standardization and localization to improve the position of the products that are produced (Pearce, 2006). Moreover, corporations should analyze differences and similarities across countries to ensure that commonalities are unlocked in terms of similarities and develop strategies that will remove the idea of obstacles from different countries. Thus, it is important for corporations to maximize on arbitrage. Moreover, it is important for companies to reconcile difference and similarity to ensure that economies of scale are championed. Hence, corporations should organize their activities into autonomous bundles of activities e.g. product development in that standardization and economies of scale are crucial whole other factors such as manufacturing and procurement are arbitraged. Thus, the difference in principle and ideologies of different countries in the world calls for different strategies depending on the requirements and day to day activities within the given country (Roth and Morrison, 1992). For example, the marketing strategy that is used in the United States may not apply when it comes to Egypt because of either religion or moral ethics. Diversification and collaboration between different industries may likely improve the position of a company in the global market. References Beattie, J 2004, Other Cultures, London: Routledge Publishers. Boiun, O 1998, Different Paths to a Market Economy, New York: OECD Publishers. Drucker, P 2006, Innovation and Entrepreneurship, London: Harper Business Publishers. Gallie, D., Penn, R. and Rose, M. 1996, Trade Unionism in Recession, London: Oxford University Press. Granovetter, M. and Swedberg, R 2001, The Sociology of Economic Life, New York: Westview Press. Hibbs, D. and Olsson, O 2004, ‘Geography, Biogeography, and Why Some Countries are Rich and others are Poor’, PNAS, Vol. 101, pp. 3715-3720. 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Roth, K. and Morrison, A 1992, ‘Implementing Global Strategy: Characteristics of Global Subsidiary Mandates’, Journal of International Business studies, Vol. 23, No. 4, pp. 715 – 735. Read More