This essay discusses the statement “Globalisation is a process referring to the increased interdependency of national industries and markets, worldwide. However, this process can either succeed or fail, depending on how it is managed”. In this essay, the various definitions of globalization are discussed along with developing a deeper understanding of the emergence of global markets due to globalization. The impact of globalization on national and international markets are discussed along with discussing the effectiveness of supranational organizations in managing the globalization effectively thereby, determining the success or failure of the approach. Globalization provides an opportunity for the business organizations to reinvent and rediscover them continuously for the sake of business expansion. The ability to rediscover them continuously allows the business organizations to create an increased awareness in the global market. As a result, the businesses organizations are able to create attract foreign investors and customers thereby, facilitating globalization. Thus, globalization provides an opportunity for the national business organizations increase their dependency globally. However, the process of globalization has equal chances of success and failure based on how it is managed. This essay also discusses the reason for the creation of a global market for the national business organizations.
As mentioned by Kramsch (2014), globalization is defined as the increasing economic interdependence of the countries globally by maximizing the variety and volume of cross-border transactions in terms of goods and services thereby, influencing the international flow of capital by involving infusing technological advancements rapidly. Thus, globalization provides an opportunity for mitigating or removing the national and international barriers thereby, facilitating the flow of capitals, services, labour, and goods. The concept of globalization also highlights the increased rate of integrating societies and economies around the world thereby, influencing the economic growth of the country. Globalization helps in the worldwide production of markets by accessing a wide range of foreign products for the business organizations and target customers (Crane and Matten 2016). However, as argued by Baylis, Owens and Smith (2017), the contribution of globalization is greater financially, as this influences global financial markets thereby providing better access to external borrowers. Reports suggest that by the end of 21st century, globalization facilitated more than $1.5 trillion national currencies. This eventually promoted the freedom of exchange of goods and capitals between the countries. However, the approach of globalization needs to be managed effectively, as the rate of success and failure is highly influenced by the effective management of globalization process. The globalization approach can be used by the companies as this provides a worldwide market for them and the people thereby, providing the opportunity for accessing more products from different countries. As commented by Lingard and Sellar (2013), globalization is defined as the global changes that enable the business organization to move from self-contained countries to a more integrated world. As a result, the natural business organizations tend to go out of the national market and look for the establishment in the global market.
As commented by Hirst, Thompson and Bromley (2015), globalization encourages customers and producers that benefit the division of labour and economic scale. Globalization leads to a competitive market that helps in reducing monopoly profits and incurs revenue that provides an opportunity for the business to seek cost-reducing innovations. However, as criticised by Vahlne and Ivarsson (2014), globalization gives rise to inequality in terms of wealth and income. This is because of the increasing gap between the rural and urban countries such as Brazil, India and China. As a result, social, financial and political tensions are prevalent thereby, constraining the growth of the potential market. Thus, many of the under developing countries are still devoid of the basic technological advancements that eventually hampers their progress and growth. Globalization provides an opportunity for the national business organizations to investigate their options outside the national market.
The need to survive in the national market for the business organizations has led to globalization. As commented by Kaplan (2014), a country’s market consists of different and numerous national business organizations. Thus, the market of the home country consists of numerous business organizations belonging to the same sector. As a result, the level of competition tends to intensify with time, as the business organizations find it hard to attract customers and expand their business. Thus, solely running a business at the national level is risky and challenging for the business organizations, as it is difficult for them to sustain in the overly competitive national business market. In order to sustain in the competitive market, the business organizations prefer globalization (Sorrells 2015). Globalization provides an opportunity for the national business organizations to enter the global market and analyse new opportunities for business expansion. As a result, the business organizations are able to establish a business in the host country, expand business and attract new customers.
However, as criticized by Martell (2016), globalization is created due to the urge of the national business organizations to create a global brand presence. On the other hand, some of the national business organizations are well established in the national market with no or fewer competitors. Nevertheless, still, the business organizations tend to expand their business globally in order to create and ensure global brand recognition. Thus, the business organizations are able to reduce the cost and remove barriers between the national borders. This provides an opportunity for the national business organizations to facilitate and regulate the flow of services, goods, capital and work force. As a result, the national business organizations are allowed to influence the economic interdependence of the countries globally by maximizing the flow of volume and variety. Globalization provides an opportunity for the business organizations to ensure global market brand presence by penetrating the market of host countries. According to the statement provided it could be said that the national business organizations have the opportunity to penetrate the market of the host countries and decrease the national barriers.
As commented by Cavusgil et al. (2014), the main purpose of globalization is to facilitate foreign investment and bringing in the economy for the country. The government uses the economy and finance gathered by the country due to globalization for other growth purposes of the country. It has been seen that with time the market of the home countries of the national business organizations tends to become saturated. This is because of increasing number of similar business organizations in the same market. As a result, it becomes difficult for the national business organizations to expand their business and attract new customers. Thus, globalization provides an opportunity for the national business organizations to go to international markets and establish a business. However, from the government perspectives, globalization is the process by which they facilitate foreign investment. However, as argued by Soliman (2013), foreign investment provides an opportunity for the country to incur more economy for the country by welcoming foreign and international investors. As a result, the government of the country is able to provide varied and new options in terms of products, services, employment and business to the entire population. Thus, it is essential for the country and the national business organizations to facilitate globalization for the sake of the economic benefit of the country.
Globalization is highly influenced by political, ethical, economic and cultural factors of the country and the national business organizations. As commented by Chung (2014), international cooperation is promoted due to the political perspective of the country. Globalization is only possible when the government of the government formulates rules, legislation, laws and policies that encourage and influence foreign investments. Thus, it is essential for the government of the country develops foreign laws and legislation that influence foreign investments and globalization. Once the need of globalizations has been understood, it is necessary to create global markets appropriately so that both the host and the home business organizations and the country are benefitted. As a result, the cross-cultural awareness and the sense of global civics are facilitated. The country needs to enhance their global relationship with different countries in order to facilitate globalization by improving cross-national agreements and co-operations. The global markets are created by various international business opportunities such as import, export, franchise, market acquisition and merger or joint ventures. The national business organizations can use the aforementioned approaches for creating the global market by promoting and influencing the foreign investors and investments (Malhotra 2014).
As discussed above, globalization provides an opportunity for the national business organizations to increase interdependency by mitigating the cross-country borders. The franchise is one of the approaches that facilitate globalization. According to Bond and O’Byrne (2014), the franchise is an agreement between two parties that gives authority to one of the parties to market a product or service using the trademark of another party. Thus, one business organization gives the right to run under the trading name of another business organization. Therefore, franchise facilitates globalization, as this provides an opportunity for the foreign investors to run or conduct business in the host country under the name of national or host business organization. In this way, the both the national and the international business organizations are benefitted, as they are able to expand their business, penetrate the new market and give new options to the customers thereby, increasing the customer base. Globalization by the franchise is advantageous as this has a higher success rate with the established brand, quicker start-up and benefit from national promotions. Thus, franchise helps in mitigating the trade barriers, tariffs and export fees thereby, boosting the economy and increasing wealth. However, as criticized by Twarowska and Kakol (2013), globalization is better explained by import and export, as this provides an opportunity for the business organization to reduce dependency on the existing markets. Both import and export provide an opportunity for the national business organizations to exploit international trade technology by extending sales of the existing products. Additionally, globalization by import and export enables the business organizations to maintain cost competitiveness.
The international joint venture is also one of the approaches of promoting globalization by setting up partners of different nationalities. As commented by Beamish (2013), joint venture promotes globalization by providing access to additional financial resources and sharing the risk of co-venture. By establishing a joint venture, the national and the international business organizations agrees to share profit, loss and control in a specific enterprise. As a result, both the national and international business organizations are able to share the profits and risks. Joint venture promotes globalization by providing an opportunity for the national business organizations to go global, collaborate with business organizations in the host country, and sell their products and services. However, as argued by Dan (2013), joint venture ensures less control of the national business organization over the business decision compared to the international business organizations. Also, globalization by joint venture promotes shared risks and uncontrolled and unmonitored increase in the operating cost. Thus, the aforementioned factors are the major reasons and ways of the creation of global markets.
Globalization provides a wide range of opportunities for the multinational companies. As commented by Peng (2016), the multinational companies are to access wider markets due to globalization. It has been seen that due to saturated market in the home country, the national business organizations tend to facilitate and prefer international expansion. Thus, opening branches in different countries for market and business expansion, the national companies tend to become international and globalized. Due to globalization, the multinational companies have access to wider markets and are able to penetrate new markets. As the multinational companies are to access wider market, they are to set new target customers and market that helps in business expansion and generating revenue. However, as criticised by Hamilton and Webster (2015), the access to wider markets highlight the potential threats of failure for the multinational companies at the global platform. This is because the multinational company has less practical knowledge about the market, customers, political, legal, economic, social and technological aspect globally. Though the multinational companies can analyse the macro environment of the host country before global expansion, conducting the business physically is much difficult.
Establishing the company in a different country requires adequate and experienced labour force for the multinational companies. As commented by Kumar (2014), it is evident that the labour force in the home country is expensive for the national business organization. As a result, the national business organizations have to bear huge financial expenses on the labour force. In order to combat the huge financial expense of labour, the business organizations tend to take help of globalization. For example, the cost of the labour force in the US is much higher compared to that in India or Bangladesh. As a result, India and Bangladesh have the manufacturing units of various multinational companies due to the cheap labour force. Thus, globalization is an option for the multinational companies to cope up with the high labour force in the native country. The financial expenses saved by the company can be used in another purposeful manner. However, as argued by Smith and Anastakis (2014), hiring and using the labour force from another country has potential risk factors associated with it. The potential risk factors include labour strikes, quality compromise, training the labour force, monitoring the labour force and additional financial expenses for setting the entire manufacturing unit in another country. However, due to globalization, the multinational companies easily cope up with the short-term financial expenses by securing cheap labour for them. Globalization also provides an opportunity for the multinational companies to form a partnership with companies in other nations. For example, many Asian, European and America, companies have a corporate partnership with companies across the continents. An example of the successful partnership due to globalization is the corporate partnership of Sony Ericsson MP3 players between European Ericsson Company and Japanese Sony Company (Arthur and Garside, 2018). This kind of corporate partnerships due to globalization minimizes costs and maximizes quality by considering and playing the strengths of the multinational companies globally.
Due to globalization, the multinational companies encounter challenges, as they have to operate at a global level with countries with different and distinctive laws and legislation related to foreign investments and investors. As commented by Marom and Lussier (2014), the success or failure of globalization is largely determined by on the methods used for managing it. As the multinational companies operate at a global platform, it is essential for the companies to regulate their business appropriately. Thus, it is essential for the multinational companies to manage globalization effectively in order to ensure success and mitigate the chances of failure. As commented by Vahlne and Johanson (2013), analysing the external and internal market of the country by the multinational companies is one of the essential methods of managing globalization. Analysing the internal and external environment of the country is necessary for the multinational companies, as this allows them to gather a deeper understanding of the global platform. However, as argued by Soltes and Gavurova (2015), conducting an internal and external analysis of the environment of the country provides an overview of the situation but does not give the practical experience. Conducting internal and external analysis of the country’s environment provides an opportunity for the multinational companies to know the culture, employment, laws, legislation, product or service of the global platform. Based on the data of the gathered from the analysis, the multinational companies need to devise operational, business and financial strategies and conduct business accordingly.
Another method of managing globalization by the multinational companies is communication. As mentioned by Grady and Grady III (2013), effective communication helps in keeping the multinational companies updated with the progress of all their outlets and branches. Thus, it is essential for the multinational companies to ensure effective communication among the different branches globally to manage globalization effectively. Effective communication helps the multinational companies to keep track of the progress of the different branches and develop business strategies in future accordingly. The inability of the multinational companies to manage globalization effectively results in huge financial loss and loss of business. Another method of managing globalization is the use of technology. However, as argued by Savrul, Incekara and Sener (2014), the use of technology is most important in managing globalization. By using technological advancements, the multinational companies can manage, monitor and regulate the financial, business and operational activities of the different branches at a global level. Moreover, the multinational companies can use technology to investigate the market of the host country, understand the demands and expectations of the target customer, monitor the competitors and ensure marketing and sales (Wetherly and Otter 2014). Moreover, the multinational companies can use technology to maintain their supply chain management, marketing, advertisement and sales. This is because the use of technology provides an opportunity for the multinational companies to conduct the various organizational operations according to the convenience and without being present at a particular place physically. Thus, it is essential for the multinational companies to manage globalization by effective communication, use of technology and analysing the internal and external environment of the country to sustain in the global market (Johnston and Marshall 2016). Unable to manage globalization appropriately leads to failure for the multinational companies thereby, resulting in loss of business, market, customers and incurring a huge financial loss.
In this essay, it can be concluded that globalization is the key to determine the success of the business organizations. In this essay, the given quote ‘Globalisation is a process referring to the increased interdependency of national industries and markets, worldwide. However, this process can either succeed or fail, depending on how it is managed’ is critically evaluated by defining globalization along with providing a deeper understanding of how global markets are created. The essay mentions and discusses the necessity of globalization for the multinational companies and the effectiveness of managing globalization effectively. From the essay, it can also be concluded that globalization is the key that determines the success of the multinational companies. This is because globalization provides an opportunity for the multinational companies to facilitate interdependency between cross-borders by overcoming the national and global barriers. Additionally, globalization also allows the business organization to enter and penetrate the new market for business expansion. The multinational companies use globalization as the approach to revive and expand their business due to saturation and extensive competition in the national or home country market. From the essay, it can also be said that failure to manage globalization effectively leads to loss of business, customers, market and finance for the multinational companies. Thus, the multinational companies can use technology, communication and conduct internal and external environment analysis at a global scale for managing globalization effectively and mitigating the potential risks of failure.
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