Issues on Market Globalization - Term Paper Example

International Business –globalisation of markets Introduction The appearance and the development of the concept of globalisation worldwide has been related with the need of governments and commercial firms to improve their position in the global market; through the years different strategies have been employed for the achievement of the above target. Meetings are also held in order to help governments and firms to align their policies with the rules and the demands of globalisation; the World Economic Forum at Davos is among the most important meetings of this type – held recently on the 27th up to the 31st of January 2010. The specific Forum reflects the trends in globalisation as developed both in the literature and the empirical field – i.e. the daily activities and policies of governmental and non-governmental organizations. The concept of globalisation has been considered to include seven different forces: in this paper, emphasis is given on the globalisation of markets – one of the seven forces mentioned above. The trends on the globalisation of markets – as highlighted in relevant studies – could help to understand the importance of this concept for the increase of the effectiveness of governmental and commercial strategies. The globalisation of markets has affected the strategies and performance of governmental and non-governmental organizations – referring especially to the commercial firms – both positively and negatively. The specific issue is highlighted in the study of Perrone et al. (2010) who focus on the effects of globalisation on small and medium enterprises – a study which can be used also in order to evaluate the effects of globalisation on large and multinational firms. In accordance with Perrone et al. (2010) ‘globalisation represents a threat, since new emerging companies are entering their domestic market, but on the other hand, it represents the opportunity to enter new emerging and growing markets’ (Perrone et al., 2010, p.356). From another point of view, globalisation can highly affect a speficic part of commercial firms: the corporate governance (Berry, 2010, 234); the different principles and cultures of the global market and the national market could negatively affect the firms that try to enter the global market. The importance of culture, the social ethics and the political system – actually referring to the traditions, the social principles and the politics of a specific country - on the success of the efforts for entering the global market is also highlighted in the study of Standing et al. (2010, p. 56). The above study refers to a specific part of the global market: the e-global market. In regard to the global commercial market, globalisation seems to highly affect particular industries: in a report published by OECD the maritime industry and the air transport industry are highlighted as examples of commercial sectors that are strongly affected by the principles of globalisation (OECD Transport, 2010). Because of its complexity, the concept of globalisation has been interpreted usind different approaches: the theory of imperialism as developed by Rosa Luxemburg has been used by Veneziani (2009, p. 195) as a theoretical basis for the explanation of ‘the emergence of international exploitation’ (Veneziani, 2009, p.195). Towards the same direction, Kaskarelis (2009, p. 132) has emphasized the relationship among globalisation, democracy, culture and the environment. 2. WEF & Davos 2010 – overview The efforts of the experts participated in the Economic Forum at Davos (2010) focus on the achievement of the following target: ‘to drive the Global Redesign Initiative (GRI) forward by narrowing the scope of the wide-ranging efforts to shape feasible proposals into actionable solutions’ (World Economic Forum, 2010). This is a general description of the activities of the Forum’s members. The following sectors are likely to be mainly affected by the decisions taken during the specific Economic Forum: a) institutions – referring to both governmental and non-governmental organizations; emphasis is given on the potentials of global governance, b) the social principles and c) the human rights. However, this year’s meeting in Davos was strongly differentiated from the similar meetings in the past: the failure of existing financial system to protect national economies has been one of the issues most highlighted by the representatives of the countries that participated in the Forum at Davos (Financial Times, 1 February 2010). In a relevant report published in BBC News it is noted that this year’s Economic Forum in Davos ‘ended with few new plans or real achievements’ (BBC News, 31 January 2010); the failures of the capitalism were identified but no drastic actions were proposed. It was rather an initiative left to the discretion of the governments and regulators worldwide. 3. Contribution of ‘Davos 2010’ to the globalisation of markets – other relevant initiatives The results of the Economic Forum at Davos (2010) can be characterized as satisfactory using the view of Perrone et al. (2010) on globalization; as noted in the introductory section of this paper the study of Perrone et a. (2010) emphasizes on the dual character of globalization: as a threat and as an opportunity; the main aspects of the Economic Forum at Davos (2010) lead to the same assumption: globalization has been considered as a threat – an issue clearly set by Nicolas Sarkozy during the specific Forum (Financial Times, 2010) – but also as an opportunity – in accordance with ‘Larry Summers, the chief economic adviser in the White (Financial Times, 2010). The Economic Forum at Davos (2010) has also contributed to the development of another sector: the corporate governance (see also the relevant study of Berry, 2010, in the introductory section of this study). Indeed, the Economic Forum at Davos (2010) showed the importance of an alternative method of corporate governance: the one used in China. In accordance with a relevant report one of the most important contributions of the Forum at Davos 2010 has been the emphasis ‘on the China’s decisive and meritocratic leadership’ (Financial Times, 2010). The issues of culture, social ethics and political system that have been related with globalization (Standing et al., 2010), were also examined at the Davos 2010 Economic Forum. The relationship among globalization and these concepts has been made clearer through the speech of Nicolas Sarkozy who emphasized on the weaknesses of capitalism and its negative effect on national economies (BBC News, 31 January 2010). On the other hand, the presence of politicians at Davos 2010 was quite limited; the views on the interaction between the globalization and the political systems/ economies worldwide can be characterized as rather indicative. One of the main assumptions resulted from the Davos 2010 Economic Forum has been the fact that the key criterion of globalization, i.e. the integration of national markets (Budzinski, 2008, p. 10, Worthington et al., 2006, p. 367) has not been achieved – despite the efforts made annually by the members of the Forum for the increase of the power of globalization in all markets. The specific priority of the globalisation, i.e. the integration of the global markets has been strongly doubted by Homann et al. (2007) who noted that in the past – reference is made to 1913 – ‘the markets were more integrated than today’ (Homann et al., 2007, p. 11). At Davos 2010 it has been made clear that the principles of globalization continue to affect industries with different characteristics (like the air transport industry and the maritime industry mentioned above in the report of OECD Transport 2010, BBC News, 1 February 2010). At the same time, the direct relationship between globalization and politics has been emphasized; the reference to the concepts of imperialism (see the view of Veneziani, 2009, above) and democracy (Kaskarelis, 2009) was not direct at Davos 2010; however, the views of the participants (BBC News, 31 January and 1 February 2010, Financial Times, 2010) lead to the assumption that it is because of the influence of globalization on political decisions that the negative effects of globalization were not effectively confronted – referring to the initial signs of the current financial crisis. 4. Conclusion – International Business (IB) recommendations to Governments and Companies Globalisation has many different aspects. The examination of its elements has led to the assumption that there are seven forces that tend to influence the development of globalisation in the international community; the globalization of labour (Heise, 1998) and the globalization of culture are indicative forms of globalization – or else forces of globalisation. Markets internationally are also likely to be affected by globalisation – the relevant interaction leads to the concept of the ‘globalisation of markets’, a concept which usually leads to ‘the stretching of capabilities in supporting customers in unfamiliar markets, the internal competition for funds in pursuing multiple international markets, the importance of word-of-mouth marketing, and the pressures on R&D functions’ (Winch et al., 2006, p. 73). Countries that have applied the principles of globalisation are likely to achieve a higher performance compared to those countries that do not promote globalisation (see Figure 1, Appendix). However, in many cases the responses of the customers to products that do not enforce on their national identity are negative; the specific issue is highlighted in the study of Kapferer (2008, 458); the case of Clairol (a US brand name) that become Wella (Europe) is used as an example by the above researcher to show the potential influence of globalisation on the marketing policies of firms worldwide. The need to respond to the customer demands in the international market – as indicatively explained above – has led firms to change their existing marketing practices and adopt new marketing policies that would be able to enforce the organizational performance worldwide; the above initiative led to the development of the concept of international marketing (Doole, 2008, p.3) the appearance of which is directly related with the globalisation of markets. From another point of view it is noted by Cherunilam (2008, 86) that the influence of globalization on a market’s structure and performance is highly depended on this market’s characteristics; financial markets worldwide have proved that globalization can have negative influence in periods of severe financial crisis – taking into account the fact that globalisation in this case supports the direct influence of one market from another, a phenomenon that led to the rapid expansion of recession worldwide since the initial appearance of the crisis in US in 2008. In accordance with the issues developed above, the expansion of globalisation in markets around the world could lead to significant gains (Roy et al., 2006, p. 84) but it could also lead to problems that are difficult to resolved – referring especially to the lack of effective rules for the regulation of the global market (Howells et al., 2007, 389). In this context, the principles of globalisation would be applied by governments and commercial firms internationally but only under the condition that appropriate measures would be developed for the protection of the national markets – in the context described above. References Berry, H., 2010. Corporate governance: beyond convergence? A comparative analysis in the wake of the global credit crunch. Global Business and Economics Review, 11(3-4), pp. 234-250 Budzinski, O., 2008. The governance of global competition: competence allocation in international competition policy. Edward Elgar Publishing Cherunilam, 2008. International economics. Tata McGraw-Hill Doole, I., Lowe, R., 2008. International marketing strategy: analysis, development and implementation. Cengage Learning EMEA Heise, W., 1998. Portability of qualifications: an answer to the qualificational demands of globalisation? Journal of European Industrial Training, 22(7), pp. 289-300 Homann, K., Koslowski, P., Luetge, C., 2007. Globalisation and business ethics.Ashgate Publishing, Ltd. Howells, P., Bain, K., 2007. Financial markets and institutions. Pearson Education Kapferer, J., 2008. The New Strategic Brand Management: Creating and Sustaining Brand Equity Long Term. Kogan Page Publishers Kaskarelis, I., 2009. Free market economy, representative democracy, cultural globalisation and the protection of the environment. International Journal of Environment and Sustainable Development, 8(2), pp. 132-150 OECD Transport, 2010. International Maritime Shipping: The Impact of Globalisation on Activity Levels, Volume 2010, Number 1, pp. 41-65 OECD Transport, 2010. International Air Transport: The Impact of Globalisation on Activity Levels, Volume 2010, Number 1, pp. 66-105 Perrone, G., Scarpulla, L., Cuccia, L., 2010. Developing business networking opportunities for SMEs through business ecosystem and ICT. International Journal of Entrepreneurship and Innovation Management, 11(3), pp. 356-367 Ramos, J., Ballell, P., 2009. Globalisation, new technologies (ICTs) and dual labour markets: the case of Europe. Journal of Information, Communication and Ethics in Society, 7(4), pp. 258-279 Roy, K., Sideras, J., 2006. Institutions, globalisation and empowerment. Edward Elgar Publishing Standing, G., Stockdale, R., 2010. Managing the transition to global electronic markets in the resource engineering sector. Journal of Enterprise Information Management, 23(1), pp. 56-80 Veneziani, R., 2009. Global Capitalism and Imperialism Theory: Methodological and Substantive Insights from Rosa Luxemburg. Review of Political Economy, 21(2), pp. 195-211 Winch, G., Bianchi, C., 2006. Drivers and dynamic processes for SMEs going global. Journal of Small Business and Enterprise Development, 13(1), pp. 73-88 Worthington, I., Britton, C., 2006. The Business Environment. 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The view from Davos, [internet], available at http://www.weforum.org/en/knowledge/KN_SESS_SUMM_30297?url=/en/knowledge/KN_SESS_SUMM_30297 Appendix Figure 1 – Performance of economies under the influence of globalisation (Source: World Bank, 2001, in International Monetary Fund) Read More