Advantages and Disadvantages of Globalisation - Essay Example

The problem with globalisation is that there is not enough of it’. Critically examine this ment and discuss the advantages and disadvantages of globalisation Contents Introduction 3 Discussion 4 Conclusion 11 References 12 Introduction The process of global integration arising from exchange of different views, ideas of the world with some aspects of different culture is called globalisation. The major factors of globalisation are the improvement of telecommunication, transport system, infrastructure, internet etc which influence and generate more independence in cultural activities and economy of a country or an individual. The use of this term increased since the mid of 1980.During the end of the 19th century world economy was heavily globalised. The cost of shipping reduces which resulted in the huge expansion of business. The International Monetary Fund (IMF) in 2000 identifies the basic four aspects of globalisation which are investment and capital movements, transactions and trade, migration of people and transfer of knowledge. Some environmental challenges like air pollution, climate change, over fishing are also related to globalisation. The process of globalisation affects all business and the process is also affected by social cultural resources, economic condition, organisations etc (Johnson and Turner, 2010). In this process organisation involves in the global scale business and its exercise power. It can be defined as a multi dimensional process which describes growing interconnectedness. It’s widely accepted key characteristics are the expansion of FDI, liberalisation of international trade, emergence of huge international money flows. All these result in increasing competition in the international market. It reduces national barriers and gives a huge impact on new technology. Growing pressure of the consumer and changing political environment are some of the drivers of globalisation. Different companies get involve in globalisation for increasing its sales, reduce its risk by diversifying and acquire resources. Based on these reasons companies form strategies for globalising its business. Peng and Meyer, 2011) after the world war two new phase of globalisation is observed. From 1940-60 transport cost decreased. Telecom and computer were launched and its cost decreased by 99%. The technology of Post-Fordism has represented small units of production into more cost competitiveness. Globalisation helps in the rise of Asian competition which is built on the base of low coat skilled labour. It leads to the increase of competition. The emergence of new economic system in global trading during 1980-90 created a huge impact on globalisation. It made an end of communism in USSR, Eastern & Central Europe. New economic superpower BRICs was emerged (Rugman and Collinson, 2012). Discussion Trends in Globalisation Globalisation influences the price, efficiency, coat and motivation of a business. It shows a global perspective of market and products. Business forms different alliances & network with different firms which help them to focus on the core activities of the business. With the emergence of globalisation different MNCS by foreign direct investments started operating in different multiple countries controlling production and services. Different types of costs are attached with globalisation. In one way it is beneficial because it reduce costs but in other hand jobs move to other countries. Off shoring also leads to the creation of new jobs in home countries as well (Joseph, 2006). A huge opportunity arises in developing the global market place. With the advancement of the technology it increases the standard of living of the people and their boosts income. A huge amount of integration for globalisation has created a good impact on human freedom by giving greater choice and spreading more information. Cross cultural understanding with the increase of democracy is the important results of globalisation (Ladi,.2005). The developing countries are getting the options like free trade which are helping them to grow more. From 1980 income head in the developing nations which have taken part in globalisation are growing at a rate of 3.5times faster than other developing countries which are not globalised. Therefore liberalisation of trade for globalisation has enabled the nation for its faster growth which reduces life expectancy and poverty to some extent (Gangopadhyay and Chatterji, 2005). But presently the world is facing different challenges of globalisation. It leads to a world where market force becomes dominant factor of handling economy. Unpredictability & uncertainty have become the major factors of it. It influences rapid movement of crisis from one nation to another. Globalisation creates threats in maintaining national sovereignty. Local businesses are hampered the most. Economic growth is an important result of globalisation but it also adds environmental stress like the growth in the consumption of non renewable resources of nature, different type of damages in the environment etc. Major global issues are promoted on the expense of other factors (Pakes, 2013). Advantages of globalisation Peaceful Relations Maximum countries got involved in trade relation with each other for globalisation. It helps them to develop their economic concision leaving behind the obstructers. Presently countries are trying to raise its capital to increase its standard for taking part in international business rather that involving in wars. This is how globalisation has introduced security and peace in international level (Schuster and Copekand, 2002). New Markets Globalisation dramatically increased the emergence of new markets. Many firms have initiated investing in various countries and reaching its maximum customers for their company. All the expanding market is helping the countries to increase its capital. Huge amount of foreign domestic investments are happening for improving the economic condition of the country (Johansson, 2002). Free trade The policy where countries do not impose taxes, subsidies, quota or duties on the export import of goods or services coming from other countries is called free trade. Some countries are there who have imposed free trade in many regions. This helps the customers to purchase services and goods at a low price (Floyd, 2000). Employment Opportunities Globalisation’s most benefited factor is it influence in the development of employment. For the emergence of new market many new companies are developing where a lots of unskilled and skilled labour is always needed. This leads to the development. Increases in immigrants are also there for getting better opportunities around the world. It results in the increase of the standard of living of the people (Hassan and Kaynak, 2004). Global Connectivity The process of globalisation helps to promote connectivity internationally. The technology of internet has made4 the world a small place. It helps to exchange ideas, thoughts etc which influence and boosts the mindset of people throughout the world (Hennessey, 2004). Quality Products Different companies’ competition at international level helps them to product innovative products. Quality of goods and service issues becomes important factors for the companies for holding a strong position in the global market. For this reason the consumers get benefited as they get quality product at a low price. Many substitute goods and services are available for globalisation which gives the customer the chance to select their product from a large variety of available goods in market (Hill and Jones, 2011). GDP Increase The gross domestic product is called GDP. It is the monetary value of services and goods produced in country within its domestic territory during a year. With the globalisation the market has widened. So the demand and scope of the product also increased. Producers manufacture their product and services according to the need and continue tapping the untapped market. This results in the financial gain of the company leading to the increase of GDP of the nation. Globalisation has doubled the GDP growth of the developing countries (Hitt, Ireland, and Hoskisson, 2008). Beneficial for Developing Nations In a large extent globalisation increase the economic condition of a developing nation. For capturing new markets developed countries invest in less developed or developing countries. This in a way helps the developing countries to establish good technologies, infrastructure of international standard. A huge amount of capital investment are involved which results in the economic development of those nations (Floyd, 2000). Equality International criminal court is formed for the influence of globalisation. Movements for international justice are also launched for providing justice to people at international level. Problems related to patents, world trade agreement, copyright laws are solved maintaining the global standard. Therefore it assures people of not getting discriminated on the basis of cast, country, creed, sex etc (Hassan and Kaynak, 2004). Travel & Tourism Tourism and travel have developed in a greater extent for globalisation. Many places are earning money for their famous tourist sports. It has become the main source for their capital generation. Various countries international trade helps to increase the amount of tourists in many places throughout the world (Hennessey, 2004). Transportation facilities An immense development of transportation regarding services and good are observed for globalisation. Earlier the things which were transported in one week are now transported in within a couple of days. For this development the price of transportation also decreased by reducing the product cost in the global market (Hussey, 2007). External Borrowing The main obstacle in the development of the poor countries is they are unable to invest adequate money in their companies. But with the development of globalisation those countries get the chance to borrow money from national, sub national & corporate borrowers to get better acce3ss in outside finance, loans, commercial borrowings etc (Jeffs, 2008). Unity in Diversity Globalization establishes social understanding and integrity throughout the world. The world has become a global village. It has removed many barriers and obstacles which earlier had divided the world in many grounds. Countries have developed many democratic ideas. A growth in cross cultural contacts and cultural diffusion helps countries to reduce their difference and generate companionship. Disadvantages of globalisation Monopoly The situation where one seller has a sole opinion or say for particular products is called monopoly. This situation arises when a product become the market leader in its particular field. The company of that product influences the global market and also may try to exploit its customers. The absence of close competitor of the company gives opportunity to the market leader to take full advantage in its selling power. Monopoly is not good as it expand the gap between developing and developed countries. Globalisation creates an impact in establishing monopoly business in many sectors. Conflicts Globalisation influences every economy to be at the top or to be the market leader. The developed countries that are the first placed economy are conflicting with each other for becoming the supreme power. It leads to the increase of violence & terrorism etc. This actions cause huge economic loss with the loss of human lives. Tough Competition Intense competition is the outcome of international trade. Local market gets dramatically affected by this. Recently with the improvement of the standard of living of the people, they spend out more money for a product which is also available at a low price. This happens for the modern techniques of branding and advertising. Local players don’t have so much funds to do big budget advertising so they suffered a huge lose for selling or exporting their products. As a result a shrink is seen in the domestic market. Disparity The development of globalisation opened new sides like employment, wider market etc but still there are some disparities regarding the growth of the economy. Structural unemployment is an important example of it. Developed countries are settling their factories in the developing countries where cheap labours are easily available. The developed countries take the major share of revenues and make maximum profit by using the resources of developing countries. These create a huge income gap between the developing and develop countries (Hassan and Kaynak, 2004). Environment Degradation The outlook of the economy is changed by the industrial revolution. Any industries are using natural resources by drilling, mining etc which creates a bad impact on the environment. Depletion of natural resources is becoming very intense day by day and they are in the verge of extinction. Deforestation reduces the forest covered area which effects the environment by climatic change, natural calamities etc. unequal Wealth Distribution Globalisation is responsible in much extent for making the rich richer and the poor poorer. In practical scenario it is not so effective for reducing poverty. Rather it has accumulated power & wealth in the hands of some powerful and developed economy. This increases the gap between underprivileged and elite group of people (Hennessey, 2004). It is eventually becoming a never ending gap which leads to inequality. Cultural loss Different countries have different culture and traditions. They follow it from a long time. But large number of people is moving in & out of the country for globalisation which create a huge impact on the culture of the country. Often people adopt culture of the country where they are residing. They forget their root and become interested to follow foreign culture. This leads to the rise of cultural conflict (Hussey, 2007). Health Issues Different types of health issues, new challenges and threats of epidemics becoming very popular for globalisation. A strong example of this is HIV. Its origin is in wilderness of Africa and now this virus has spread all over the world in a rapid speed. Different food items are exported and imported to many countries. The standard of food making and the safety regulations are different in various countries which can impose great risk of creating health hazards. Globalisation has many advantages as well as disadvantages. The disadvantages of it are creating a heavy impact on economic, environmental, social issues of many countries especially the underdeveloped and developing country. Many real world problems are overlooked in the light of globalisation. Use of unlimited natural resources and creating excessive pollution are some of the major problems of its. Though by globalisation the world have developed a lot but still now it has not become capable enough to handle the bad consequences which are resulted for it. There is huge increase of world’s coal consumptions. For example in 2001 December China joined WTO and in 2002 its coal use increased rapidly. This shows the negative impact of globalisation. With the development of China its reduction of natural resources are observed. Conclusion Use of coal leads to increase of carbon dioxide emersions and environmental pollutions. Globalisation is also responsible for the increase in the oil price. This is because huge consumption of oil is limiting the supply of it. The world has extracted most of the oil for developing itself and now it has become a threat to the world to conserve it. With the technological progress close substitute product of oil are found but those products cannot replace or generate the exhausted oil of the world. In the competitive nature of the global economy each country has to sell its services and goods in a low price by any cost. Those cost involves in paying the worker low wages, polluting the environment, using low priced fuels which increases pollution, debase the currency by printing money. Price of Import goods become very high for printing more money. This becomes a serious problem for the developing nation. Artificial high stock market, high interest rates are created for this. In the global market of increased competition many workers are facing problem in their work for which they are also sacked by the company which in other way increases unemployment. All these issues focuses that there is a major problem with globalisation. The advancement of all the aspects of globalisation is still not sufficient enough to handle the problems arising for it. It has lots of disadvantages which highlights its incapability to satisfy the requirements of the people. References Floyd, D., 2000. International Business Environment. Journal of Management & Development. Vol.15 (5), pp.48-52. Gangopadhyay, P., and Chatterji, M. 2005. Economics of Globalisation. England. Ashgate Publishing, Ltd. Hassan, S., and Kaynak, E. 2004. Globalization of Consumer Markets: Structures and Strategies. Philadelphia: Haworth Press. Hennessey, J., 2004. Global Marketing strategies, 6th Edition. Boston: Houghton Miffing. Hill, C., and Jones, G., 2011. Essentials of Strategic Management. London: Cengage Learning. Hitt, M., Ireland, D. R., and Hoskisson, R., 2008. Strategic Management: Competitiveness and Globalization, Concepts, Volume 1. London: Cengage Learning. Hussey, D. E., 2007. Strategic Management: From Theory to Implementation. Kent: Taylor & Francis. Jeffs, C., 2008. Strategic Management. London: SAGE. Johansson, J. K., 2002. Global Marketing: foreign Entry, Local marketing and Global Management, 3rd Ed. New York: McGraw Hill. 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