Critical Issues In Business: Literature Review On Globalization

Literature Review:

Discuss about the Critical Issues in Business.
 

Globalization is a worldwide economic activity which includes open markets, competition and free movement of labors, services, capital, goods and knowledge. Globalization provides various benefits to economies of world by creating opportunity of hundreds of jobs globally. This study inculcates the critical literature review about globalization. This literature review presents a brief description of globalization with its uniqueness. This report also discusses about various advantages and disadvantages of globalization at a global level. Furthermore, this study analyse the role of leadership in a globalized organization.

Robertson (2012) defines Globalization as a process which refers to integration of different countries economies together leading to creation of interdependence between all people of this world. In other words, it is a process in which different country’s economy, market, industries, cultures, and societies are integrated with each other through a global network. It is a social process in which constraints of cultural and geographical distance are declining. It is also depicted by Findlay et al (2012) that globalization is also known as a dispersion of industries and service activities across the global boundaries through sharing of assets and joint ventures. 

According to Mak et al (2012) in present times, every company wants to increase its sales and services for profitability. These companies are expanding their business activities in the international market. In this way, globalization is helpful in providing freedom of trade leads to improvement of transportation system. So, this topic is chosen because it is a new and emerging topic in the industry sector and also helpful for organization’s development globally. Globalization is relevant topic for discussion because it tells about reduction in the emerging barriers in global trade and covers broad aspect of international marketing.

Globalization includes a greater aspect of carrying trade among different countries of world (Maertens et al, 2011), It provides a freedom to expand businesses in one’s home country and abroad by exchange of goods and services. The governments do not have any excessive control on these exchanges of goods and services. In other words, it allows free trade between two or more countries or nations.

Further, Lane (2013) metions that globalization controls different kinds of national and international economic activities by integrating the national economy to world economy. Globalization provides an opportunity to domestic organizations for easy access to the world market. By globalization a domestic firm can operate its business activities internationally and sales its product and services in the international market which was cannot be possible before introduction of globalization.

Reason Behind Selection of Topic

According to Jamieson (2012), globalization provides a rapid growth to the organizations in the international financial market. Through the extension of globalized communication and transportation system, it diffuses the technologies and ideas for the benefit of whole mankind. The globalization makes available more choice and quality at the right price for the consumers without the restriction of goods and services in seller and buyer market. It is also helpful in raising and upgrading the standards of lifestyle of people across the world.

Kuhn (2011) discussed that globalization is an opportunity through which organizations can gain the technological advancement that leads to increase in economies of scale and efficiency.  It also improves the mobility of capital and increases the interconnectivity in global financial markets.

Globalization leads to increase in GDP of a nation with the increase in trade volume of import and exports. Globalization also increases competition among the MNC’S which decreases prices of products and services ultimately benefiting the customer. 

People are easily spreading out their innovations and ideas at the global level with the help of globalization as it provides freedom of sharing knowledge (Furlong, 2013). Through Globalization more job opportunities have been created which raises the standard of living and provide permanent solution to unemployment problems in under developed or developing nations. Globalization leads to increase growth rate of the economy through maximisation of labor productivity. Along with this, globalization facilitates in expanding consumer durables market which helps in meeting out the rising demands of the customers. Globalization is essential because it creates new opportunities and utilizes the resources effectively and efficiently. Simultaneously, with the help of globalization an organization can easily expand its operations throughout the country and can easily maximize productivity which ultimately increases revenue Clarke (2013). Moreover, the government also provides the rebate in taxes, customs duties, etc., because of globalization policy which is relatively helpful for the global companies in order to maximize the production efficiency.

In the views of Ivanov and Webster (2012), globalization enhances the free trade agreement between the countries.  But at the same time, globalization has also reduced cross culture barriers in the business, which is quite helpful for the host country to enlarge their operation with another country. Though, globalization has increased the education level benefiting the people in getting jobs at global level. On the other hand, globalization helps in reduction of possibilities of war between different nations as cross cultural integration is created by globalization policy. Apart from this, effective globalization policy raises the competition in the market and due to which market offers various goods and services at a fair price benefiting the customers. Globalization has negative impacts on overall world because enlargement of new technology creates disturbance in natural environment leading to birth to various chronic diseases. Globalization urges the need for acquisition of resources for organizations in order to innovation of new products and management of demand and supply (Doiz et al. 2013). In this way organizations are carrying out the activities of mining, drilling and cutting of forests which are degrading environment causing harmful effects on human life.

Uniqueness of Globalization

Rosière and Jones (2012) stated that globalization is comparatively helpful to raise the gross domestic product (GDP) of the nation.  Thereby, wider market increases competition and raises the demand for the product and services. Concurrently, quality of product is also increased through the technological advancement because of globalization. Additionally, globalization expands the distribution network between different nations that is quite helpful in delivering goods and services to the customer on time. Hutchings, et al. (2012) states that due to globalization, a country drops its own culture laws and regulation, which ultimately impacts economic growth rate of the country. On the other hand, globalization has also influenced the uneven wealth of distribution because globalization can’t able to reduce the poverty instead the wealthy still wealthier and poor even poorer. Thus, it leads to creation of monopolist in the societies having all the resources.

As per the views of Ariely (2012) through globalization, communication between nations has increased tremendously leading to friendly and cordial relations. It is because effective communication is helpful for the country to enlarge its business relation. Furthermore, organizations can easily enhance their investment in a new project at a global level with the help of globalization policy and thus helps in maximization of profits. Along with this, globalization enables the organization to sell its product and services across various nations without any restrictions and can earn huge profits. In addition, Tan (2012) globalization has also impacted the disparity because profit of an organization is reduced in the host country because of high labor rate in host country as compared to any other underdeveloped country.

In the current environment, globalization is essential for nations because it helps in availing various goods and services at a cheap rate (Vogli 2011). Along with this, skilled workers are also benefitted through globalization because they can work at global level and maximize the country revenue and can make contribution in GDP of a nation. Globalization plays an effective role in developing the business opportunity but at the same time, it also creates the monopoly situation due to the economic development of disparity. On the other hand, it increases the cut-throat competition which is not good in the long run as it will promote unethical and illegal practices. Consequently, globalization affects the local market of a nation because of dominance of MNC’s in market.

According to Hasen (2011), the term globalization is a powerful process of the new economic world. It includes the most significant forces to determine the future way of business. In this action there are mainly three factors or drivers of globalization which are as below:

Advantages and Disadvantages

First driver of globalization is the development of communication and transportation which accelerate the pace of organizational operations for the world market. This driver gives pace to innovative communication products for use at low cost. The company may be able to manage a standardized technology and communication such as; computers, internet, software and infrastructures through Globalization.

The second driver is developing the world trading system. It provides a standard leading system of free trade across the national boundaries by removing the barriers to business. It is also helpful in the transfer of knowledge across the world. So, the term globalization is used for the development of the community by a developed trading system.

The last and third driver is an expansion of economies in emerging market. The entrepreneurs are investing their capital in the world market with the help of globalization. So, the globalization is derived to elevate the economic productivity. 

As per opinion of Kädtler and Sperling (2013) globalization has increased the emission of carbon dioxide due to new technology machines. As a result, it degrades the health of environment which impacts human health. Along with this, oil prices have been increased due to globalization. In spite of this, globalization has raised the investment opportunity for the developed countries as compared to the underdeveloped country. On the other hand, London and Schneider (2012) states that globalization creates the various issues such as cultural diversity, environment pollution, political issues, etc at the time of business expansion. But at the same time, a leader has to overcome above issues through his effective communication skills and decision making power.

A leader has to face various problems in a globalized company i.e. government policy and regulation, new technology for business expansion, and new innovative goods and services. Along with this, a leader has to analyze future uncertainties of the business at the time of expansion of business globally. A leader has to minimize the globalization issues through effective relationship, creativity. In consequence, company will able to sustain its operation for a long time in the global market (Potrafke 2015).

There are some challenges in globalization policy, which have to be faced by the government, organization, society, and other factors associated with it. Consequently, developed countries get more benefited through globalization in comparison to undeveloped countries. On the other hand, many developed organizations have a fear of instability due to globalization. Thus, it will impact the economic growth and firm operations (Conversi 2012). Globalization has increased the cut-throat competition in the market. As a result, organizations have to face fear of losing skilled employee due to change in wage rate or technology constantly. As well as, organization have to follow labor rights, employment practice, and environmental practices to overcome the global challenges (Robertson, et al. 2014).

As per the opinion of Strange (2011) due to globalization an organization has to face several challenges at the time of business expansion such as communication gap, availability of resources, culture diversity, and economic conditions. So that above factors influences the business sustainability. A leader has to reduce the above business challenges through knowledge and skills, by following rules and regulation of the country, hiring of local employee, etc so that the organization presence can be enhanced at global level (Doiz, et al. 2013).

As per the views of Hutchings, et al. (2012), there are many risks which have to be faced by the organization at global level at the time of expansion of business operations. Because of Globalization, many organizations have to face the cultural related issues such as time zone, language barrier, religious difference, etc that creates problem in future sustainability of the firm. But at the same time, organization builds the effective infrastructure to overcome the above cultural issues. On the other hand, regulatory policies have dramatic impacts on the revenue of the firm and its future sustainability. Thereby, the organization makes well managed regulatory plan for effective operations. Globalization has maximized the risk to company as it leads to fluctuation in interest rate and exchange rate. Thus, globalization will impact upon the financial performance of company and the capital investment of company (Vogli 2011). 

Waltman et al (2011) mentioned that in present time business organization are operating their business activities in global environment with the help of effective leadership program. In the globalized organizations, there are many challenges which require a comprehensive response from the leaders. Therefore, the leaders must be prepared with every possible resource for the solution of these challenges and should make best use of available resources from the engaged environment.

 It is also said by Colvin (2011) that in the globalized environment leaders have to face a complexity in organizational activities but they should manage all the expectations of stakeholders in a proper way.  Due to globalization, there will be employees from all over the world with different culture in organization. So, a leader is required to collaborate between different cultures and should have the capabilities to deal with employees having different. The success of a globalized company can be ascertained by the effectiveness of leader.

 In international organizations the leaders should inspire or motivate the employees through coaching and mentoring programs so that they can work smartly and can easily face all the cultural challenges (Mee, 2012). The leaders should build a strong team and manage them in such a way that they can easily compete in international market. The international organizations require mostly expert leaders to make a sure growth in emerging market with a long-term outlook. Because in present time the international market is more complex so the leaders of globalized organizations should have appropriate technical skills to compete with other organizations.

It is also depicted by Zajda (2015) that the globalized leaders should mainly focus on values. They should use high level of emotions and self-awareness to connect between the employees from different culture and different nations. Leaders should also know to manage off shoring in which jobs can be exported from developing countries where labor costs are low. This helps the global organization in reduction of overhead costs.

Conclusion:

From the above study, it can be concluded that the globalization is helpful in expanding the business to the world market at a global level. It is a process which enhances free movement of goods, services, labor capital and knowledge in the economy that increases the GDP of a nation. The following study also concluded that the globalization accelerates the pace to an organization entry into the international market through which globalized firm can improve its efficiency in global competition. Furthermore, this study discussed that the globalization provides innovative and quality services at reasonable price to the customers. It is also concluded that the globalization is a platform where the companies operate their activities in the world market by integrating different cultures and technologies for the overall development of world and standard in living.

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