With the changes in economic condition and ramified business challenges, each and every organization wants to expand their business internationally to achieve the global success and growth. The whole world is shrinking and there is interconnection of the economies of different nations. The globalisation in the business has been taking momentum throughout the time. It has not only given opportunities to organization to expand the business but also poses high amount of challenges throughout the time. All this is happening due to the integration of people, markets, and the governments worldwide. The world is becoming a small village whereby there lies no problem for people to interact with each other and commence trade operations. This phenomenon of integration is termed as globalisation. All kinds of markets including, money and credit markets, financial markets, capital markets, insurance markets, commodity markets, consumer electronics markets etc. are almost integrated and are termed globalised (Beck, 2018).
Globalisation has recently paced up due to certain reasons. This rise is mainly on account of the developments that have taken place in the field of technology, transportation and communication. Availability of internet 24/7 has fostered this process completely. This has increased the use of social media worldwide and people are now able to communicate to each other transacting the geographical, political and racial boundaries. The need to meet personally has now been eliminated to commence any trade now. People can now conduct business meetings through online mediums and the payments can be accepted as well as made through online payment portals. Multinational companies have opened up new corporate horizons and the trade has been set free (Intriligator, 2017).
The following discussion shall open up new thoughts over the countries that have been affected, the positive impacts, and the negative impacts, on the onset of globalisation. Everything is presented with clarity.
Developing Countries
India, China, Iraq, Africa, Jordan, Syria, and Lebanon are among those developing countries that are been affected by globalisation. The globalisation not only provides the opportunities to these countries but these countries also get affected in negatively as well if they fail to manage their business plans in effective manner. An important role is being played by globalisation in these countries as far as economic and trade processes, education and health systems and aspects are looked after. The developing countries who were earlier deprived of the option to accommodate the international markets and international economies have found a new scope. With the inception of globalisation, the trade barriers have been removed and markets have been reformed. The market of developed countries has been made free from barriers to foster the entry for the developing countries. The developed countries see the developing countries as an outsourcing hub for raw materials, labour etc.
The transportation and communication facilities are becoming more developed and hence enhancing the way people transact trade now. The developed countries are now lowering down their costs by making the developing countries a hub for production, due to the benefits of low wages and low cost of production in those countries. Heath and education is also developing in these countries as due to the economic development these basic standards are also rising. The rising economies in these developing countries have led to a rise in the education and health care services that the citizens of these countries are bound to receive. The life expectancy of people has also increased. Cultural exchange has also become smoother due to globalisation. People are able to learn about different cultures through different television shows and movies. Technologies like satellite, television, radio and internet have made it possible for people to know about the trends being followed in different cultures and helps in learning new things learning different languages have become easy now.
In spite of all the good that is done for the developing countries, globalisation has increased the inequalities between the rich and poor. The gap between the both has widened. The labour class is exploited badly by the upper class. Further, due to the increased travel of people among different countries, they are acting as a transmitter of communicable diseases like swine flu, HIV/AIDS, and bird flu etc. The labours from developing countries are migrating to developed countries which are acting as a detriment for the developing countries. The cultural change happening due to globalisation has led to the developing countries losing their local essence due to western interferences (Krugman, 2017).
Developed Countries
Globalisation has been the most useful for the developed countries like China, United States, etc. Their economies already had access to developing countries, and now due to globalisation they have accessed more opportunities. As the countries tend to be closer than ever, it has become possible for people to make purchases overseas. There are no issues in people buying articles from foreign countries. Resultantly, the markets of developed countries are experiencing boom. Their sales have risen and new customers have been added to the line. In order to achieve cost cutting, the industries in developed countries are undertaking subsidiaries in developing countries to achieve lower costs on account of labour and production. Foreign direct investments are increasing in the developed countries as there are no entry barriers for capital investments too. The volume of exports in these countries has risen and there is a growth in the new market entrants (Potrafke, 2015).
Due to the rise in economy and market, jobs at a skilled level are demanding well qualified professionals. As a result, professionals from different countries are migrating to get better working opportunities in these countries. This has improved the quality of working and is providing a good platform to budding talent. Flexibility in labour mobility has improved the markets as well. As professionals are there, so specialisation can be achieved in processes now. A wide choice of goods is available to the customers and at a cheaper price at which they can purchase the same. The entry of new entrants in market has increased competition and that has put huge pressure on the existing players to improve the efficiency of working and reduce the market price. The growth rates have increased leading to an overall rise in countries’ Gross Domestic Product (Ratnam, 2014).
As already discussed globalised has done a lot good for the world and the same are put down as follows (Krugman, 2017).
· Rise In Market Effeciency
Every country’s economy is thriving to achieve efficiency in the operations. It’s the goal of every market to reach that equilibrium point where the customers are ready to buy commodities at a price at which the supplier is ready to sell it. This can be achieved when the customers are all satisfied with the operations and the product quality. This happens when the producer does not compromise with the quality. But the same cannot be done out of his own pockets. That’s when operation efficiency comes in picture. When all the businesses are working efficiently, the market is said to be efficient. With the globalised world, each and every organization that is operating their business on international market could easily tap other countries by undertaking the strategic alliance or marketing development strategy. It will not only increase their market share, strengthen the international brand image but also result to increasing the overall turnover (Hillmer-Pegram, 2016).
Due to globalisation, business houses now can avail cost benefits by outsourcing cheap labour and raw material. As a result, their cost comes down and they can serve the customers at lower prices and can add more items to the line to look innovative. The whole market efficiency is totally possible to be increased by judicially utilising globalisation benefits. Lowering down the final price to customer yet shall always be at the supplier’s choice. The supplier can use the profits to plough them back as investment for future (Codagnone, Abadie, & Biagi, 2016). It is analysed that due to globalisation of world many companies have easily expanded their business in long run (Scarse, Ganguly-Scarse, & Dutt, (2012).
E.g. multinational companies have started operating which use multiple countries in their production chain to gather efficiency.
· Benefits Due To Pressure Of Competition
Globalisation has removed the obstructions that were hampering free trade. Now because of this many businesses are crossing nation boundaries and transacting overseas. Even in the particular country new businesses have set up due to removal of regulations on opening up of new businesses. All the new business houses that have set up and the existing ones are no standing on a footing of competition. This competition has put a pressure on all the businesses to outgrow each other (Intriligator, 2017).
Due to competitive pressure business houses are bound to improve their services and operations. This also includes providing the goods at lower prices and with a better grounding than others (Roy, 2009).
· Foreign Investment
Globalisation has led to the integration of capital markets and has opened up the possibility of people investing cross border. The flow of foreign capital has smoothened. Along with developed countries, foreign direct investment is also increasing in developing countries. This is certainly a positive sign that globalisation has come up with (Jones, and Wren, 2016). It is the foreign direct investment made by international companies in the particular country. It plays major role in strengthen the value of the currency of the countries. If the flow of capital inflow is high then it will increase the capital reserve in account. It will not eventually impact the currency value on international level as well (Cramer, 2017).
· Legal Benefits
In order to strengthen the compliance with the policies and procedure in organization, it is required to implement the effective legal compliance department. A transparency is created and any sort of exploitation is unacceptable. Any serious matter is now handled in coordination by the security agencies of different countries. There is hardly any chance for the criminals to hide out now as the security is strengthened and professionalised. Democracy and prosperity has widened. Nonetheless, join venture, amalgamation and other procedural ways are accepted by the companies to strengthen the compliance program on international level while tapping the new market (Amoore, 2018).
· Increment In Foreign Trade
The trade barriers are all removed. The tariffs have either been lowered or totally done away with. Commodities that were any geographic specific are available all the way round. People are now aware of good quality and are ready to spend a little more to get served better. This has resulted in increasing the exports for some countries and resultantly imports for the other countries. With the interference of World Trade Organisation in all the trade affairs, trade has now opened up much well. Governments cannot interfere in the free flow of trade now and have to come up with policies that even increase the trade (Orbie, 2016).
· Technology Expansion
With the world’s diversities converging into unities, new technologies cannot be stopped from reaching the facets of every other country. Technology has risen up to new heights. Everything diverging from travel and transportation to communication has improved. This has allowed the knowledge transfers among people. Moreover, it is easier to transport technology from one place to another without any hassle. Now, companies can carry on operations overseas without worrying about how to transmit technology to the foreign operations. The widespread use of internet has made it easier for corporations to gather knowledge about new inventions in their respective fields (Narula, 2014). With the ramified technologies changes, organization should undertake the new technologies and machines to beat the completion on international level. It wills not only assists in customization of the services as per the client’s need but also attract more clients in market (Agba, and Odu, 2013).
· Better Education Opportunities
Students are now getting easy and less expensive access to foreign and prominent universities for higher education. It has become easier to get complete knowledge about different universities and courses that they are offering. More and more operations are now available to the students to choose from. The hindrances in getting permissions to study abroad have been loosening. Further, the students are also getting fine access to education loans. Scholarships are also available to the students based on their merit and ability (Zajda, 2015).
· Rise In Unemployment
Due to the increase in capital intensive production methods and the outsourcing of production functions by business houses to cut down the production costs, many employees are losing their jobs instantly. New jobs are being created but they are being fulfilled by skilled professionals only. Nowadays, with a rise in population, the supply of labour is much higher than the job availability. New jobs created cannot fulfil the level of unemployment prevailing in the countries globally (Bende-Nabende, 2017).
Due to globalisation, several countries are facing serious unemployment issues. E.g. after the scenario of globalisation popped up, Indonesia faced a serious problem of unemployment and poverty that it has never experienced in two decades (Gozgor, 2014).
· Exploitation Of Local Culture
Due to the spread of western culture globally, the local beliefs and values are losing their space now. People are adopting the culture and faiths followed in the western countries and are ignorant regarding their local practices and manners. This is a huge expense at the cost of society. It will not only impact the business but also lower down the overall outcomes of the business if not undertaken in the possible effective manner. Every company should adopt the local culture where it is going to start its new business after undertaking the globalisation business strategy. The local culture is accompanied with the social values, perception, belief of the client’s needs to be considered by organization while selling goods and services in market (Potrafke, 2015).
· Rich Are Getting Richer
Instead of diminishing the gap between the rich and poor and ending up the inequality, globalisation is widening the gap that the rich and poor have. The rich are getting more opportunities and resources to get benefitted with the policies that globalisation come up with. The poor are still doing it like earlier. They are the labour class and are just paid to do work to increase the profits of the rich. Ultimately, the rich are still in the money making process with the hard work done by the poor. At the corporation level too the same scenario can be observed. Globalisation has made it a green lush garden for the managers and owners, but it is still a dry land for the labourers and employees at a lower level. They are not the ones who are benefitted with the fruits that globalisation is serving. This level of changes in economy and negative impact on the global factors, every organization are facing trouble while tapping the new market.
· Migration Of Skilled Workforce
Globalisation has led the educated and highly skilled workforce to migrate to other countries to hunt for work. They have to leave their home countries in search of better opportunities. This is a huge burden for them and their families. This is also a drain of skilled human resource from the countries from which they are migrating. Being an intangible cost, it is almost neglected always. With the increase in the skilled workforce and increased employability of the employees, it will be easy for the organizations to overcome the business challenges and creating core competency on the international level. It is analyzed that when company runs its business in other countries then it will have to create core competency in either cost leadership or product differentiation strategy to win over the other rivals in the existing market. However, with the globalised economy, opportunities and challenge to run the business will simultaneously increases (Zajda, 2015).
Conclusion
These above factors have reflected the key outcomes and challenges which company has faced throughout the time. In order to get the most out of it, all the nations have to come together to save the benefits. New globalisation too has manifold aspects. Further, there is a need to accept the changes that globalisation shall bring to the whole world’s economy. Resistance to the new environment is to be collaboratively removed and new thought process is required to be accepted. After analysing all the positive and negative sides of the globalised business, it could be inferred that every organization before tapping the new international market needs to analysis whether the tapping new market will be result to create value on its investment or not. However, strategic alliance such as merger, amalgamation and joint ventures are the some of the strategic plans which could be undertaken by the organizations to tap the new international market. These strategic planning will not only assists in setting up business on global level but also assists in complying with the all the applicable rules and regulation in long run.
References
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Amoore, L., (2018). Globalisation, restructuring & the flexibility discourse. In Globalisation contested. Manchester University Press.
Beck, U., (2018). What is globalization?. John Wiley & Sons.
Bende-Nabende, A., (2017). Globalisation, FDI, regional integration & sustainable development: theory, evidence & policy. Routledge.
Codagnone, C., Abadie, F. & Biagi, F., (2016). The Future of Work in the ‘Sharing Economy’. Market Efficiency & Equitable Opportunities or Unfair Precarisation?. 22(7), pp.108-207.
Cramer, J., (2017). Corporate Social Responsibility & Globalisation: an action plan for business. Routledge.
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Hillmer-Pegram, K. (2016). Resilience to capitalism, resilience through capitalism: Indigenous communities, industrialization, and radical resilience in arctic Alaska. University of Alaska Fairbanks.
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Orbie, J., (2016). The European Union’s role in world trade: harnessing globalisation?. In Europe’s Global Role (pp. 51-82). Routledge.
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