Key Drivers Associated with Globalization in the Context of Growing Economic Interdependence - Assignment Example

Name Course Institution Instructor Date 1. Discuss key drivers associated with globalization in the context of growing economic interdependence. Globalization is the increased interdependence of global economies due to increased international trade. It has had major impacts on many countries both well developed and developing. Advancements in science and technologies, and economic trade policy changes are the two key drivers of globalization. Technological innovations have enhanced communication. Currently, nations are adopting and improving these technological innovations to enhance communication systems. Similarly, technological advancements have greatly influenced transportation in terms of efficiency and costs. Containerization for example has enhanced international transportation by reducing costs. Shipping and airfreight charges have been decreasing since their inception. Countries have focused on developing their road infrastructure to provide more options in transportation means and at the same time boosting trade with other nations. More focus has been put on increasing foreign direct investment through the improvement of road infrastructure. This has led to increased movement of goods both perishable and non-perishable. Improvements in transport sector have also led to global production owing to the fact that raw materials can easily move from country to another. Major improvements in communication and information processing technologies have been seen in the recent past. Many countries are focusing on developing internet technology. Email and video conferencing is a common aspect of today’s management. Multinational corporations are on the rise due to this technology. It has made management task easy owing to better coordination and control. Moreover, many of these corporations have developed intranet and extranet connectivity. Extranet has eradicated the problem of distance and time. With extranet, corporations can communicate with other organizations, customers and suppliers globally. Extranet is an advancement of internet and Email. It is more secure compared to use of Email since it does not allow un-authorized third party access. A more secure means of communication within an organization is the intranet technology. Like Extranet, it is more secure. Adoption of intranet and extranet technology has resulted in improvement in communications and management. Developments in communication and information processing have accelerated globalization. Changes in economic policies are also a key driver to globalization. Emergence of institutions such as World Trade Organization (WTO), General Agreement on Tariffs and Trade (GATT) and regional trade agreements have helped in removing trade barriers. Prior to the formation of these institutions, there were many trade barriers and most of them were in the form of high tariffs. These bodies have aided in providing average tariffs for goods. Compared to the past, trade policies have been adjusted to give more room for free trade and investment. 2. What do you understand by the term “culture shock”? In an international business environment, how can culture shock be reduced? With increasing globalization, there is a growing and necessary need for business people to move across and interact with different cultures that are diverse from their cultural understanding. These moves comes with challenges ,chief of them being culture shock, where individuals encounter challenges in understanding and interacting with these new cultures. Culture shock can be defined as the psychological troubles felt by individuals residing in a new environment with unfamiliar culture. Culture shock is part of the adaptation to a new environment. It can occur in any situation where international managers are compelled to adjust to a different set of social standards and characterized by disorientation, confusion and feelings of uncertainty. In many cases, this feeling is experienced by new expatriates. Successful international managers are less confronted by culture shock compared to one time international managers. An individual confronted with culture shock goes through some stages. At first, an individual’s initial experience in a new culture is exciting, full of observation and discoveries and generally enjoyable. After this period is what makes culture shock proper and this second stage is rejection period which is marked by criticism, resentment and anger. This happens due to failed expectations based on familiar cultures and the individual feels disillusioned. The third stage involves regression and isolation where an individual becomes critical of aspects of the new culture. This stage comes with shifts in behavioral patterns and anxiety which can last for up to two months. Fourthly, an individual adjusts, adapts and integrates into the new culture and finally independence sets in. At this stage an individual is integrated into the new culture where they appreciate similarities and differences. The environment becomes enjoyable and one can make independent choices. However, as individuals move to new environments or adjust back to previous cultural settings, they experience a reverse culture shock due to a shift from the routine cultural environment. Culture shock can be disastrous and in many cases lead to repatriation of the assignee. Expatriate training is one of the key ways of curbing culture shock. Through training, expatriates can be able to develop empathy and avoid stereotypes. Cross-cultural training and development programs provide opportunities for expatriates to understand the culture of another country and develop adaptive ways towards it. Provision of cultural adjustment skills is also another strategy for curbing culture shock. Cultural adjustment skills include language skills and knowledge of existing religious systems of the host country. Giving support to individuals will also help in reducing culture shock. 3. Describe China’s transitional economy. How does China’s economy today differ from that prior to the “open door” policy? China is known for unprecedented growth with her constant Gross Domestic product remaining at about nine percent annually. This growth has been seen since the period of economic transition. Economic transition began during the period of reforms in the late 1970’s. It was rather a stepwise undertaking. Initially, China relied heavily on Agriculture for its economic development. Reform process began in the rural areas of this country. They were later introduced to the urban regions. Reforms saw the introduction of new policies i.e. open door policy which allowed foreigners to operate freely and invest in China. They were allowed to operate in special economic zones which were introduced during the first phase of reform period. This was seen by reformers as a way of enhancing country’s growth. The second phase of reform period saw the elimination of barriers of foreign capital participation in local enterprises. In addition to this, open door policy during this stage aided in the elimination of the initially used policy of profit transfer. It was also during second phase of reforms when China government made a decision to join World Trade Organization. Major changes which took place during these two periods were aimed at creating an environment favorable for free trade. Importantly, tariff rates reduced extensively in the two stages of open door policy. As a result of stepwise open door policy, foreign direct investment increased. Currently, China is experiencing unprecedented growth than before the open door policy period. China was experiencing fiscal problems due to various revolutions which had taken place. For example, The Great Proletarian Cultural Revolution of 1966 resulted to a number of factories being shut down. The Great Leap revolution of 1960’s which was introduced to enhance socialism also failed because it encouraged urbanization. China relied on Agricultural production before reform period. China was a collapsing economy prior to agricultural reforms. Open door policy restored motivation among the peasants who had earlier been demoralized by prices of their products. Over-reliance on agricultural sector worsened the situation. Open door policy created a route for industrial development and commerce. Foreign direct investment increased as a result of increase in foreign direct investment. Currently, China is still at the forefront in economic development that can be attributed to reform period. 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