The Issue of Globalization - Report Example

By: + Issue This Brief (BN) is imperative as it will help in highlighting the issues concerning globalisation. Because globalisation is often criticised and praised by popular institutions, there lacks a clear understanding. This BN will analyse if globalisation indeed impacts the international marketing; also, how does it affect this arena? Background Often, globalisation is blamed for a number of issues that bedevil the international marketing occasionally. Some have called for abolishment of globalisation citing the intricacies it comes with especially in regard to countries’ economy. On the other hand, others have attributed to the development of many areas including technology and infrastructure to globalisation. In light of these issues, it was vital that a study take place, and this BN outlines the findings. Summary The technology has advanced greatly due to countries embracing globalisation, and the scenario would be different in the absence of the same (Hobbs et al, 2014). Additionally, traffic infrastructure has rapidly developed because the international marketing has demanded the same. Nonetheless, there is duplication of products because competition is seldom controlled. Finally, the ever-rising demand for innovation tends to have a negative impact on the players’ profitability. Conclusion and recommendations Upon reading this BN, one will clearly realise that the paper highlights more benefits than negative impacts of globalisation. The reason for this is that the benefits outweigh the demerits of globalisation. When competition increases, the consumers have the freedom to choose from a variety. Secondly, the prices will most likely be low thus enabling the consumers to spend money on other commodities. Consequently, the international trade will be balanced because people can make purchases from various markets. The few demerits can be mitigated by ensuring regulations are in place to limit over-duplication of products. Globalisation today Globalisation tends to attract debate for two major reasons: the source and the impact it has on the international marketing. To some, globalisation is a traditional occurrence that was practiced even before the 21st century. Conversely, others content this notion by citing the recent technological developments as the only way globalisation was possible. Similarly, as the issue of origin attract differing opinions, so does the impact globalisation has concerning the international marketing. Interestingly, the debate does not lie solely on the whether it is a modern or a traditional occurrence. Some argue that it has adverse effects on countries’ economy while others rebut this notion. This paper seeks to analyse globalisation aspects with relation to the international marketing. Ambiguity of globalisation Often, there tends to be a confusion of what exactly entails the issue of globalisation but as this section will highlight, this word is used more in regard to international trade. According to Cerny (2009), globalisation refers to the increased interdependence of economies in regard to finance, trade as well as macroeconomic policy. Others described globalisation as the diffusion of values, technology and practices that influence lives globally (Pieterse, 2012). Still, it is explained as social geography reconfiguration that is characterised by supra territorial growth between various groups of people (Srivastava, n.d.). While the above explanations and descriptions of the term globalisation may vary in wording, the central word coming out clearly is cross-border relations. That is to say that a country is no longer relying solely on its resources but others’ as well. Three words are closely associated with globalisation: liberalisation, internationalisation and universalisation (Srivastava, n.d.). Liberalisation is used to imply that countries decide to lighten the trade restrictions that tend to stifle the ability to go about trading activities. Nothing explains this part better than a case of the Indian economy. It was reported that in 1991, the country’s economy suffered adversely where its currency reserve crippled to $1billion. After embracing the LPG policy (Liberalization, Privatization and Globalization), the country’s major sectors, agriculture financial, industrial and health, improved tremendously (Dharini, 2014). Earlier, the country’s restrictions on foreign investors were somewhat punitive thus making it hard for others to invest in the country. However, upon realizing the error and subsequently improving, the country experienced an economic turnaround (Sweeney, 2014). Internationalisation is then used to mean the act of countries have friendly inter-border relations which favour the business environment (Sweeney, 2010). When this happens, the countries concerned ensure that third comparative advantage is used in influencing the other’s economic status. Expertise, investment opportunities and other relevant economic drivers are shared without the usual restrictions. Business people from either country are allowed entry into the other without much bureaucracy unlike the others who are not involved. On the other hand, universalisation means that goods and services are spreading globally (Dharini, 2014. A case in point involves an American-based, multinational company, Wal-mart where it has over 27 stores worldwide. While it may an American-based company, its decision to go multinational would not have been possible without globalisation. Causes of globalisation Traffic infrastructure Improvement of traffic infrastructure has escalated the spreading of globalisation mainly because airline companies have increased rapidly. Consequently, travel and transport of people and goods has been tremendously improved thus making trade less tedious. Additionally, containerisation has recently improved significantly unlike in the 70s when the more expensive inter-modal method would be used. As a result, the transport of heavy and bulk goods has been efficient. With many countries reducing the stringent rules on imports, this then has seen the spreading of goods in almost every corner of the world (Taylor, 2010). Search for employment In addition, the increased labour mobility where people are willing to travel from their countries to others has also been cited as a major reason for globalisation. For instance, there is a significant number of UK residents working in the US. Similarly, US residents often leave the country to other nations like Australia, UK and others meaning nations tend to have a variety of expertise. In addition, availability and affordability of labour have been instrumental in ensuring that globalisation has demolished the once-protected barriers (Rosewarne, 2010). The developed countries have since relaxed the once-stringent rules about citizenship and employment. Subsequently, this has seen many people live and work in various parts of the world where their skills are utilized locally. Trade blocks Further to these causes, the emergence and subsequent development of trade blocks in various continents has orchestrated the popularity of globalisation. Take the European Union (EU), for instance, whose rules have been set in a way that the European countries can work easier than before in terms of trade. Various countries have signed Free trade Agreements (FTAs) which essentially will see trade relations improve in the continent (Sohn and Lee, 2010). When such trade blocks are formed and such agreements stipulated, globalisation spreads pretty faster. Technology The invention and subsequent advancement of technology has not only helped globalisation, but also solidified it. The internet has become a phenomenon saving unfathomable amount of money because some products can be purchased online. Interestingly, the internet has not transformed the sale of products alone; services are offered online without having to spend a lot. For instance, counselling, training and even writing services can happen online where both the seller and the buyer are anonymous to each other yet this seldom affect the quality of services (Green, 2007). Therefore, one could conclude that a number of issues have caused globalisation, and not one cause could be attributable. Implications of globalization This figure will give a preview of implications of globalisation ----------------------------insert table/diagram x here ----------------------------------------------- Figure1.0 (Source: Author) In light of the above causes, one can clearly see that the major implication of globalisation is the international trade. That is to say, companies can have their presence in many parts of the world, which consequently create more possibilities for profitability. International marketing is normally driven by the fact that companies can now open their branches elsewhere. While there has been a criticism of the negative impact of globalisation, this one benefit if exploited properly, helps companies in increasing their revenues. Normally, a company has to contend with a myriad of challenges when operating in a single country. However, with technology having advanced tremendously, companies can operate in multiple countries from one location. In addition to having a probability of increasing profits, companies have a platform to choose for the labour force. Currently, companies normally offer jobs to the locals where a branch is being set up. In short, if a company chooses China to be its next destination, the Chinese will benefit. When this happens, the variance in terms of wages favours the company since there is no universally agreed wages for all countries. When a firm is able to have low-cost labour, the end-result is the increased profit which could then enable the company remains profitable internationally. Once this is achieved, the international trade will remain intact because without stable profit margins, company can hardly compete internationally (Moore, 2009). When globalisation is embraced, especially the international marketing thrives with availability of labour. These assertions are informed by an analysis on the UK’s labour outlook where it was reported that as of 1993 the number of foreigners working here stood 2.9 million. However, in 2013, the number had shot up to 6 million meaning that all these were direct beneficiaries of the globalisation. Further companies in the UK increased rapidly between year 2000 and 2013 from 3.2 million to 4.9. These companies employed an estimate of 24.3 million where 15.2% were foreign-born (Rienzo, 2014). When there is supply of labour, the international marketing can work efficiently because of the guarantee. This figure below shows the employment trend caused by globalisation in UK. ----------------------------insert table/diagram x here ----------------------------------------------- Figure 2.0 (Source: Rienzo, 2014) Monopoly has almost varnished with the emergence of other companies offering similar services. With competition comes variety of products, which then make it possible for consumers to make choices as per the need and demand. International marketing has seen companies that had influence on their products face stiff competition from others. Furthermore, this supply has also seen the pricing become more affordable to many thus fulfilling consumers’ needs. Needless to say, the demand curve shows that when supply is low but demand high, prices tend to be high as well. Therefore, having supply for many commodities but a number of companies help save money for the consumers. Consequently, consumers can spend money on a variety of products which in return helps the international marketing because one consumer can buy several products (DeMauro et al, 2008). Advancement of technology can be attributed to globalisation since competition levels have forced companies to become more innovative. Today, the internet and phones are vital in the international marketing because they significantly influence it. According to Hobbs, Kerr and Smyth (2014), for globalisation to be fruitful, technology needed to be improved. When the technology improved, companies selling their products found it quite easier to do so because the sale could be done from one location. It is common to find companies headquartered in one country doing business in other parts of the world. This would not have been possible if there were no means to ensure the product reached the destination. Similarly, the sale of product would be impossible if in the first place globalisation was not practiced. Notwithstanding the seemingly benefits listed above, globalisation comes with its fair-share of negative implications. First, there tends to be a duplication of products by various companies where there is little distinction between the products sold. For instance, the cellphone market today is filled with many companies producing the gadget yet the primary function of the gadget is to communicate. Whenever this happens, Green (2007) argued that the companies have to share the profits thus making international marketing rather unfriendly. Had there been a control of the products, it would be beneficial to most organisations in the international marketing because the supply would be lower in comparison to the demand. A demand for innovation may stifle a company’s resources because without it other organisations will pose a threat. As noted elsewhere, one of the key drivers of globalisation is innovation where companies’ survival is dependent on the level of innovation. Often, companies have to spend a considerable amount of money and resources to withstand competition. In return, this has reportedly reduced, to some extent, the profit margins (Green, 2007). The impact this is likely to cause to the international market is that in the end some companies may succumb to competition. This would likely result to monopoly by a few companies, a situation that would see consumers’ needs limited to the available options. One attribute of globalisation is that the international trade is intertwined with countries and this could be catastrophic at times. For instance, the financial crisis that hit the world in 2008 was thought to have originated from the US. Despite this occurrence happening in one country, it ended up affecting others because globalisation is somewhat reliant on other countries’ economic performances (Hermann, 2010). In light of the above, this could have adverse effect on the international marketing because if one country is affected, the companies relying on it could be affected too. Therefore, macroeconomic instability is another implication that is not precisely avoidable with globalisation. Diagrams Figure 1.0: Foreigners workers in UK Foreign-born in numbers Year % increase 2.9 Million 1993 7.2% 6.2 million 2013 15.2% (Source: Rienzo, 2014) Implications of Globalisation Figure 2.0 (source: Author) Further reading Bigman, D. (2002). Globalization and the developing countries emerging strategies for rural development and poverty alleviation. Wallingford, Oxon, UK, CABI Pub. in association with the International Service for National Agricultural Research. Using agriculture as the item of research, Bigman’s book analyses the impact of globalization on agricultural sector in three main continents. Drawing facts from Nigeria, India, and Latin America, the book focuses on how change in internationals has revolutionized the agricultural sector. Faúndez, J., & Tan, C. (2010). International law, economic globalization and developing countries. Cheltenham, Edward Elgar The authors have assessed the international laws and trades before and after neo-liberalism. Further, the author looks at the crisis, which could be turned into opportunities through globalization. Because of the comprehensiveness, credibility, and presentation of this material, it is relevant to the research. Griffith, D., Tamer Cavusgil, S. and Elgar,, E. (2008). Emerging themes in international business Research. Journal of International Business Studies, 39(7), pp.1220-1235. A highlight of the trend involving emerging markets is offered in this journal article. Besides deriving the statistics from highly credible sources, the article offers vital recommendations on how to approach globalisation. Jacoby, D. (2010). The Economist Guide To Supply Chain Management. London: Profile Books. This book offers a trend created globalization where profitability and challenges often encountered are explained. In addition, the author uses the Wal-Mart as a case study where the book outlines the profit path taken by the firm due to embracing globalization. Kolk, A. and Margineantu, A. (2009). Globalisation/regionalisation of accounting firms and their sustainability services. International Marketing Review, 26(4/5), pp.396-410. With emergence of competitors in almost every field, the authors analyses the sustainability of accounting firms. The relevance of this material lies in the author’s critical analysis of the long-term effects of globalization. Peterson, E. (2005). Can Labor Standards Improve Under Globalization?: Labour and Globalisation: Results and Prospects (review). Labor Studies Journal, 30(2), pp.99-101. There is a disparity between the wage structure and labour with the increased competition. Peterson shows that the supply of labour exceeds the employment meaning the wages are low. This material is relevant in this research as it highlights some of the effects of globalization. Sabri, N. (2009). Causes of high volatility and stock market crises in the developed economies. IJBG, 3(4), p.415. Globalisation has brought about interdependence of economy, and this situation is volatile. The performance of one country’s economy affects the other. The material’s information is vital to understanding the risks of globalization in stock markets. Bibliography Cerny, P. (2009). Multi-nodal politics: globalisation is what actors make of it. Rev. Int. Stud., 35(02), p.421 Dharini, V. (2014). New Economic Policies: Liberalization, Privatization, Globalization New Economic Policy. Journal of Social sciences, [online] 5(11). Available at: http://www.kcgjournal.org/ss/issue11/dharini.php [Accessed 18 Feb. 2015]. Di Mauro, F., Dees, S., & Mckibbin, W. J. (2008). Globalisation, regionalism and economic interdependence. Cambridge, UK, Cambridge University Press. Green, A. (2007). Globalisation and the changing nature of the state in East Asia. Globalisation, Societies and Education, 5(1), pp.23-38. Herrmann, P. (2010). Globalisation revisited. Society and Economy, 32(2), pp.255-275. Hobbs, J., Kerr, W. and Smyth, S. (2014). The perils of zero tolerance: technology management, supply chains and thwarted globalisation. IJTG, 7(3), p.203. Moore, M. (2009). Saving globalization: why globalization and democracy offer the best hope for progress, peace and development. Singapore; Hobeken, NJ: John Wiley & Sons Asia). Taylor, R. (2010). China’s Developing Infrastructure: The Impact of Globalisation. Transit Stud Rev, 17(4), pp.668-685. Pieterse, J. (2012). Periodizing Globalization: Histories of Globalization. New Global Studies, 6(2). Rienzo, C. (2014). Migrants in the UK Labour Market: An Overview | The Migration Observatory. [online] Migrationobservatory.ox.ac.uk. Available at: http://www.migrationobservatory.ox.ac.uk/briefings/migrants-uk-labour-market-overview [Accessed 18 Feb. 2015]. Rosewarne, S. (2010). Globalisation and the Commodification of Labour: Temporary Labour Migration. The Economic and Labour Relations Review, 20(2), pp.99-99 Sohn, C. and Lee, H. (2010). Trade Structure, FTAs, and Economic Growth. Review of Development Economics, 14(3), pp.683-698. Srivastava, V. (n.d.). The Paradox of Globalization: Nation States and the Rise of Supra-National Corporations. SSRN Journal. Sweeney, B. (2010). The internationalisation of competition rules. London: Routledge. Read More