Everything you need to know about Globalization

The Impact of Globalization on Global Business

Because of the technological revolution, the globe has shrunk to the size of a small market in which people can quickly interact, manufacture, distribute, purchase, and share goods and services. Globalization of industry refers to a company’s freedom to travel from domestic and foreign markets. The current trading patterns have evolved as a result of globalization. For starters, it has made it easier to contact foreign businesses. Second, as a result of globalization, the industry has become extremely competitive. As a result, the quality of goods and services continues to improve. Third, globalization encourages competition and the advancement of emerging innovations that enable global business growth. Fourth, more business opportunities continue to develop with an increase in globalization. Fifth, most of the markets globalize rapidly leading to easy access to products and services from any part of the world. Sixth, with globalization, access and transfer of information has increased thereby enabling consumers to make wise decisions before purchasing or paying for services. Finally, globalization has changed the procurement and outsourcing strategies employed by many organizations. In essence, globalization has induced positive changes in global business leading to new opportunities, new technologies, increased economic growth and improved business practices.

Globalization and International Trade

First and foremost, globalization promotes both domestic and international trade (Ali, 2000). Due to globalization, the value of international trade rose to $8 trillion in 2005 from $296 billion in 1950. Apparently, globalization has set a high value and tonnage of international trade. It is easy for one nation to trade with another country. In some cases, countries from one region have formed a trade block to eliminate trade tariffs and other barriers that could hinder exchange of products and services. An example is the North American Free Trade Agreement that includes nations such as Mexico, Canada, and the United States. In this trade block, all members freely trade with each other. Other examples are the European Union, Arab League, European Free Trade Association, Caribbean Community and Governments of respective countries agree to form policies that will promote togetherness of all member states and enhance business. Globalization also influences international trade by promoting the formation of policies that regulate movement of goods. Several regulatory authorities have the mandate to improve the efficiency of the business. They lower transportation costs, customs duty and trade tariffs. Through globalization, it is easy for nations in different trade blocks to integrate. Besides, it is possible for some governments to copy and apply trade regulations used in foreign countries to develop their domestic business policies and practices. All these strategies ensure a strong relationship exists among all nations, thereby promoting growth and expansion of international business.

Globalization and Technological Innovation

Second, globalization has influenced the development of new technologies and innovation (Hill, Cronk & Wickramasekera, 2013). New information and communication technologies are emerging as the best tools for promoting international business. For example, social media has become a fundamental instrument for any producer, manufacturer or service provider to market the business to a large audience. According to Hill, Cronk & Wickramasekera (2013), technology contributes to exchange of culture and business practices among people from various parts of the world. Besides, people share information, ideas, and opinions on how to conduct their businesses. From these interactions, people acquire knowledge that makes them innovative. Technology promotes industrial growth and human resource management. Technology and innovation has increased production according to the quality desired by consumers. Besides, technology makes it possible to manage people, who contribute the labor used in production. Human factors are the major determinant of technological revolution. As people interact due to globalization, they continue identifying new technologies that can improve communication, movement, production and make a general life easier. On the other hand, technology impacts financial markets by providing a platform for secure domestic and international transactions. The technology also allows storage of financial or business data which traders on stock markets can access easily.

Globalization and Increased Competition

Third, globalization has increased the level of competition in both domestic and international markets (Needle, 2010). In the emerging markets, globalization stimulates innovation that leads to development of quality products. Therefore, companies have to maintain their brand by focusing on the quality of their products and services to maintain a highly competitive position. However, it has become difficult for some companies to remain market leaders for long due to intense competition. Similarly, the international trade has become competitive due to availability of many products and services, which also have many substitutes (Hill, Cronk & Wickramasekera, 2013). Therefore, companies have to maintain a large market share by satisfying their customers. The high competition also allows consumers to access various types of commodities either on domestic or international markets. Therefore, customers can easily select their preferred products.

Globalization and Business Opportunities

Fourth, business opportunities and investments have increased due to globalization (Stuart, Sarow & Stuart, 2007). Many young people can access resources that enable them to develop new business ideas. Such ideas grow into businesses that offer employment to other people. Due to trade relationships among countries, it has become easy for investors to move from their nations to foreign markets. For instance, investors in the financial sector have managed to establish banking institutions in most of the emerging economies. Besides, some manufacturing industries are relocating their operations to nations with cheap and readily available materials. Such investments not only create employment opportunities but also set new competition and quality measures. Furthermore, elimination of trade tariffs enables many countries to import or export their products (Needle, 2010). Therefore, new markets have been opened for all types of products and services. As a result, the growth of cities that act as trading hubs or zones has increased tremendously.

Globalization and Access to Products

Fifth, globalization promotes access to products and services in any part of the world (Hill, Cronk & Wickramasekera, 2013). Because of intense competition, many businesses consider using a unique marketing strategy to access customers. The first factor considered is product promotion, which involves adverts through social media platforms. For instance, producers of electronics and clothes prefer marketing them on Facebook, Twitter, and Instagram to attract the millennial population that forms the largest percentage of consumers. The second factor is product positioning and placement. Businesses have taken the initiative of placing their products and services as the best, thereby convincing consumers to purchase them. Besides, most of the commodities are nowadays placed near consumers. Some companies also provide consumers with an option of paying a small fee for the products to be shipped to their homes. Both domestic and international businesses have adopted this product positioning method as a competitive advantage to woo customers. The customers are the greatest beneficiaries of all these business practices.

Globalization and Access to Information

Sixth, globalization has enhanced access to information by both businesses and customers (Crane & Matten, 2016). Many countries share information on the current financial trends, production technologies, human management practices and customer relations. Through this information, most businesses have improved their operations by focusing on satisfying customers through effective customer service and quality products. At the same time, organizations share policies on the best mechanisms of motivating employees, thereby increasing their productivity. Employees, on the other hand, can easily communicate with their counterparts in the same industry and compare their working conditions. This information enables employees to demand their rights at the workplace. Consumers also have increased access to information on the latest products, prices and best producers (Ali, 2000). Such information enables them to make correct decisions when purchasing their commodities. Besides, the information cushions them from exploitation by unscrupulous business people. In essence, the information shared widely has enabled most businesses to streamline their practices to avoid losing customers.

Globalization and Procurement and Outsourcing

Lastly, globalization has transformed the procurement and outsourcing strategies used by many businesses (Crane & Matten, 2016). Nations such as the US prefer outsourcing their manufacturing activities to developing countries including India and China. Companies outsource their activities to lower their operational costs and achieve high outputs. Besides, new communication technologies promote transparency in procurement, hence improving management of the supply chain. An effective global supply chain contributes to a stable performance of the business.

Conclusion

In conclusion, globalization has had a significant impact on the development of business processes. It has promoted the growth of international trade by increasing the tonnage of product and their value. Besides, new technologies and innovation enhance access to information and interaction among businesses. Furthermore, customers have an opportunity to choose products that match their preferences because globalization creates free markets where producers from all parts of the world can exhibit their commodities. Moreover, globalization has led to the establishment of new business practices that protect consumers from exploitation by business people. Finally, globalization has induced new changes into procurement and outsourcing with a major focus on improving supply chain management and increasing production at lower costs.

References

Ali, A. (2000). Globalization of business: Practice and theory (Vol. 200). Psychology Press.

Crane, A., & Matten, D. (2016). Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.

Hill, C. W., Cronk, T., & Wickramasekera, R. (2013). Global business today. McGraw-Hill Education (Australia).

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Needle, D. (2010). Business in context: An introduction to business and its environment. Andover: South-Western Cengage Learning.Top of Form

Stuart, B. E., Sarow, M. S., & Stuart, L. P. (2007). Integrated business communication in a global marketplace. Hoboken, N.J: Wiley.