Impact of Globalization - Literature review Example

Name: Institution: Course Title: Course Lecturer: Date of Submission: Globalization entails considering the world or a part of it as a single market in which to conduct business (Joshi, 2009). For instance, some firms have production and research facilities around the globe where they conduct their research hence networking their research, production and marketing in a global context. Globalization opens new markets and sources of knowledge for a firm which enhances their competitive advantage. Multinational firms can therefore sustain their competitive advantage in the international market by strategizing on developing and leveraging their distinctive internal capabilities as well as seeking to improve and develop new ones. Chaichian, (2014) Indicates that globalization is a process through which enterprises get involved in international markets. It’s also defined as international integration arising from the interchange of world in regard to products, ideas and other aspects of culture. This is enhanced through international business which collectively describes all commercial transactions that take place between two or more regions, countries and nations beyond their political boundaries. Perlmutter (1969) notes that, despite the international business being around for quite sometime, it has grown and become more complex over the past three decades. More and more firms are looking for global market opportunities more than before and in that way influencing the lives of billions of people world wide. This paper looks into how globalization has impacted India as a developing country both positively and negatively. Globalization has opened doors to new prospects in developing countries such as India. This has been brought about by access to international markets, importation of skills and expertise in addition to technology which has enhanced productivity and living standards (Neil, 2005). However, despite all the positivity brought about by globalization, it has brought about new challenges as well. The economy of India was opened up in the nineties after a period constrained by barriers to trade and investment liberalization. This is however in the past as the opening up commenced in the nineties has gone on to lower the barriers to trade and giving way to globalization. This came on the back of policy measures undertaken due to the need for multinational organizations which enhanced a more open economy. Some of the measures taken by India were eradication of the industrial licensing regime and reduction in tariff rates among other factors (Jayashankar, 2008). Trade liberalization and involvement in the global market has improved the country’s GDP by far thereby improving the country’s global competitive position. Through globalization, the world has become more interdependent. Global firms are able to produce their products and services in different countries and serve customers on a global platform. In India it entailed eradicating the trade barriers that existed and integrating of the country’s economies through financial flow, trade in goods and services and corporate investments between the country and other nations (Sharan, 1981). This has been brought about by the advancement in technology mostly in communication and transportation. The Indian government took great steps in allowing direct foreign investments in the early nineties which has benefited the country largely. Through strategic international alliances, mergers and acquisitions, a firm is able to access a mode of entry into a particular market in the global scale. International mergers can also be aided by countries undergoing transition such as the developing countries (Chaichian, 2014). This is because foreign investments can have substantial effects and importance towards achieving a successful economic transition. Through globalization, a number of foreign multinational firms invested in India especially in the pharmaceuticals, petroleum, and manufacturing industries. Most of these firms commenced their operations in India by setting up industries in the country. This helped to reduce poverty by a large scale as many local individuals or rather labor force were employed in these industries which further helped to lessen the levels of unemployment in the country. However, Sparks (2007) indicates that one of the greatest achievements of globalization is enabling people from one country (another country) such as India to communicate with people from other nations. Other benefits and setbacks accrued by India as a result of globalization are as explained below. The foreign investors also brought in high levels of technology which helped to advance the Indian industry and economy technologically. Some of other merits brought about by globalization to India include; increase in exports. This is because with globalization, the country products could be sold to international markets around the globe as well as imports. Reduction in poverty levels as a result of increased employment led to a more stable economy which led to a drastic reduction in the need for economic aid. There have also been reduction in the long term rates of inflation and goods and services are no longer scarce since they are readily available in the global market (Sharan, 1981). There has also been improvement in the quality of goods available, with the country becoming more vibrant and competitive in the international market. Through globalization, India was able to acquire skills and expertise that did not exist in the country before in an earlier time. As foreign investors set up their industries in India, they imported some human resource whose competency and skill set are of essence to business success. Working with these skilled and competent personnel resulted in transfer of the expertise and skill set to the host country. Perlmutter (1969) notes that, through globalization, there are a lot of shared interests such as information. For instance in India, it enabled the country to learn about other cultures and acknowledge them. It gives a country an opportunity to share and negotiate on a global platform as a result of integrating their cultures. This helped to shed ignorance and improve tolerance of other cultures and acknowledge them which in turn enhanced peaceful coexistence through culture acknowledgement. Through globalization, India was able to integrate itself in a political pool of countries that seek to keep in mind the benefit of the whole world at large. This is because through globalization, everything is shared together socially, economically, culturally and also politically (Sparks, 2007). Different countries can come together and voice their concern about things they feel are not favorable to them such as global warming, exploitation of natural resources and pollution. Since some of these elements affect the whole world, they are addressed in a global political view point. Hence through globalization, India has the same voice with other countries. Through globalization, India experienced some set backs as well, for instance, foreign firms brought in competition to the local companies. With foreign products being more appealing with regard to quality and price, they assumed a larger market share than the local companies hence reducing their profitability by large margins (Jayashankar, 2008). This is also attributable to the fact that multinational firms are well backed financially by their parent companies hence having a competitive edge over local companies. This was experienced in India as most of the companies in the pharmaceutical, manufacturing and chemical industries experienced drastic reductions in their profits following investment by foreign firms. Another setback was that with the technological advancement brought about by globalization, some tasks were assumed by machines hence leading to loss of jobs to some individuals. This was mostly witnessed in the cement and manufacturing industries. Another disadvantage of globalization is introduction of substandard good. This is whereby some multinational firms dump sub standard or substitute goods in a foreign country like India. This comes as a result of restrictions of such goods in other countries hence taking advantage of developing countries that are still embracing globalization (Neil, 2005). In addition, through globalization, increased opportunities have been created. However, it brings about some neocolonialism in that the multinational firms have the bargaining power to drive things according to their desire (Joshi, 2009). Despite eradicating poverty through creation of employment, foreign firms (large foreign firms with ill intentions) take advantage of the state in developing countries by paying the workers poorly since they are available in abundance. This means that the revenue generated benefit the developed countries greater as compared to the developing countries they have invested in such as India. Moreover, the developing nations are manipulated into making political decisions according to suggestions of the developed countries so that they can retain their position in the global scenario. Chaichian (2014) notes that with globalization, disruptions in one nation could lead to disruptions in other nations as the flow of goods and services between the countries would be affected. Globalization also tends to absorb the culture of the host nation. For instance, after a number of multinational firms opened up their industries in India, they brought along their culture. This tends to influence the citizens who feel more attracted to the foreign culture and tend to adopt it. Some of the companies also disregard the culture of the host country leading to cultural conflicts (Sharan, 1981). On the other hand, globalization has intertwined countries such that products from a particular country can be accessed from anywhere in the world hence losing their cultural value and uniqueness. References Chaichian, M. (2014). Empires and Walls: Globalization, Migration, and Colonial Control. Leiden: Brill. Joshi, R. (2009). International Business, Oxford University Press, New Delhi and New York Jayashankar, M. (2008). Indian Economic Superpower: Fiction or Future?. World Scientific Publishing. Neil, M. (2005). The internationalization of retailing: Implications for supply network Restructuring. Aug 2005; 5:449 -473 Journal of Economic Geography. Perlmutter, H. (1969). The tortuous Evolution of the Multinational Corporation Columbia Journal of world business IV (Jan-Feb) 9-18. Sharan, V. (1981). Non tariff barriers in international trade and India’s Exports.  Journal of Social and Economic Studies. Sparks, C. (2007). Globalization, development and the mass media. Los Angeles: SAGE. Read More