Threats and Opportunities of Globalization - Essay Example

Globalization also allows businesses to take up cost-cutting measures by outsourcing production to countries where they can avail the benefits of cheaper labor, raw material, equipment, processing, etc. that being said, operating in an international market also poses several threats to some of the major ones being compliance to laws of specific countries of operations and increased competition For example, Nike outsourced its production to Asia and was criticized greatly for not considering the significant amount of child labor used in the factories there. Thus, the need to have a strategic competitive edge is imperative for success in this era of globalization.

For governments, globalization is seen as a threat as well as an opportunity. On one hand, it hampers the growth of local industries and adds the aspect of uncertainty to the economic construct of a country. This is why many countries make it difficult for foreign companies to enter and operate in the home country, as a measure to protect their local industries to promote self-sufficiency For example; China has restrictive import policies so that the local industry does not suffer as a result of increasing trade. On the upside, globalization opens doors to trade and investment, boosting the economy (Imf.org). It also allows greater consumer power of choice and the influx of foreign business helps in the development of technology and communication locally. Lastly, it helps countries to maintain positive relationships with each other, contributing to world peace and regional harmony like the trade relationship between the US and the European Union aimed at bringing both regions together through trade. Agreements like transatlantic trade and investment partnerships regulate and support such trade relationships. Read More