Globalization Today - Report Example

By: + Globalisation today In the recent times, there has been a significant integration of ideas, products, cultures and technology. Unlike in the previous times when each country would seemingly have everything, the trend has changed with many different engaged in innovations and inventions. Since each of these prove to be vital to each country, the integration has been inevitable. Consequently, these occurrences, the issue of globalisation has happened where now countries freely share ideas, products and technology. Whereas this globalisation issue is seen as a modern one, others assert that it existed earlier. 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 and trans-planetary 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. 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. 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. 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 Improvement of 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). 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. Also, availability and affordability of labour have been instrumental in ensuring that globalisation has demolished the once-protected barriers (Rosewarne, 2010). The developed Further to these causes, the emergence and subsequent development of trade blocks in various continents has orchestrated the popularity of globalisation. Take, for instance, the EU 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. The invention and subsequent advancement of technology has not only help 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 has 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. For instance, (Herrmann, 2010) asserted that if a countrys’ economic status deteriorates, the company’s chances of survival are minimized. 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. As illustrated, the company, the country and the local people stands to benefit. When a company sets up a branch in a particular country, the latter’s revenue will increase because of the tax. Moreover, some of the citizens in the country will not only have jobs but also acquire expertise from the company (Moore, 2009). When globalisation is embraced especially by the developed countries, other developing countries stand to benefit more. 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 (Rienzo, 2014). 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. 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. In short, competition has been on the rise resulting in the supply of similar services or goods meaning that consumers have a verity to choose from. 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 their things hence making the economy grow all-around (DeMauro et al, 2008). Developing countries are able to access not just employment for their citizens but technological benefits as well. For instance, developing continents such as African not only get equipment such as computers, this expertise can be passed on to them. As noted earlier, a significant number of foreigners have benefited through employment in the UK. Obviously, these people will end up benefitting their countries they go back. Hence, globalisation could be said to be a balanced affair where all countries or companies trading have benefits, albeit in varied measure. Notwithstanding the seemingly benefits listed above, globalisation comes with its fair-share of negative implications. First, in case of economic breakdown it would affect, to some degrees, all the countries involved and even others. For instance, in 2007 the US economy suffered adversely when one of its major economic drivers, housing industry, was affected. Even though the issue seemed like a US-affair, Kolb (2011) noted that it ended up affecting other countries. Similarly, globalisation could have these effects because countries are relying on each other. Then there is the fear of currency and banking crises especially for the countries where financial institutions are weak. Herrmann (2010) noted that due to the ballooning and volatility of the capital flow, this increases the chances of having a currency crisis. Also, transnational companies have been blamed for focusing solely on profit making with little regard of the other countries. That is to say, when a company is offered a room for business in a foreign country, it disregards all other rules in order to maximise the profits. These cases are prevalent in the developing countries where governments fear that if seen to have stringent rules, the companies leave the country (DeMauro et al, 2008). Further, the labour becomes extremely cheap for some countries especially those without regulations in respect to wages. Surprisingly, this problem does not affect just the developing countries but also the already developed. For instance, the US president issued an executive order where illegal immigrants would be deported. Apparently, some of these immigrants were legally working in the country but at an astonishingly low wage. As a result, a section of Americans could not secure employment because the employers wanted to pay less. (The Whitehouse, 2014). In some countries-especially in African countries-, this practice of cheap labour is done in broad daylight because there are no laws stipulating the minimum wage. Some of the protectionists polices set by developed countries make it almost impossible for the developing ones to reach the export markets. Even though globalisation is all about relaxing some of laws viewed as hurdles to the trade, some developed countries somehow complicate the policies. Usually, the reason for this step is to ensure that the developing countries do not gain an upper hand or sell commodities at a lower price (DiMauro et al, 2008). Due to these measures, the developing countries have to keep relying on the developed ones in funds, which attract an interest rate. 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. Kolb, R. W. (2011). Financial contagion the viral threat to the wealth of nations. Hoboken, N.J., Wiley. 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. The White House, (2014). U.S. Immigration Reform at a Glance. [online] Available at: http://www.whitehouse.gov/issues/immigration [Accessed 18 Feb. 2015]. 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. 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