Discuss about the Globalization And Its Impact On the Business.
Globalization defines a process by which regional and national economies, societies and the culture have become integrates through the global network related to the communication, trade, immigration, and transportation. The globalization is increasing and has created the major impact on the business in the current scenario. Moreover, the manager of the company should stay ahead at a game to perform their responsibility in the competitive market. In the current past, this phenomenon was absorbed towards the economic side of the world which include trade, FDI, international capital flows and others. The emergence of globalization brought numerous numbers of benefits to the international manufacturers and the national economies (Beck, 2018). In simple words, globalisation is a term that is used to identify the way through which the countries, people and the trades across the world are getting interrelated with the help of the forces like technology, transportation, media and global finance which makes it easier for the goods, people, services and ideas to cross the borders and boundaries (Economics Online, 2018). This transaction takes places between the countries and affects the business that is conducted by companies in the current environment.
Along with this, the globalization has also created the impact on the business today and this impact can be positive and negative which is discussed in the report. The business activities that are performed by the company are possible with the help of globalization only. This is the fact that the globalization is a force that shapes the contemporary world, environment, business and the society. Moreover, the report includes the outsourcing and offshoring that contributes to globalization with the use of the company as the case study. This is the fact that there are numerous companies who make use of the outsourcing in which they contract the work out to any of the external company and offshoring that is getting the work done in the different countries which are possible with the help of the globalization. Along with this, there are numerous challenges, opportunities and problems are associated with the globalization that is presented in the report with the help of the company. These challenges and problems might affect the operation and might leads to the closure of the business in the competitive market. Along with this, the opportunities of this phenomena support the company for the expansion of the business. The phenomena of globalization can offer the tremendous opportunity for the growth of the economy which directly leads to the improvement in the life of many people. Along with this, it provides an opportunity to rise in the living standard of the people in the economy.
The company that has been selected as the case study is Ford Motor Company. The company is a well-known Amercian multinational company with the headquarters in Dearborn, Michigan, a suburb of Detriot. The company was established by Henry Ford in the year 1903. Ford Motor company deals in the commercial vehicles under the Ford Brand across the many areas of the world and falls under the automobile industry.
Globalization is a continuous process through which they can link the people, regions, cities and different countries closer together. Globalisation has brought numerous changes in the business which is related to the rise in the competition and the changes in the technology (Financial Times, 2018). The company needs to consider few points to face the effect created by the globalization of business today. Below given are the positive and negative impacts of globalization on business.
The globalization has brought the rise in the competition among the companies. This competition can be related to the products and services cost or price, target markets and many others. Due to the rise in the competition growth companies and foreign brands have been obliged to enhance their standards and customer benefits which positive affect numerous people across the world (Lawrence and Weber, 2014). With the help of this positive effect, the company can provide the effective services to their customers.
Globalization brought the rise in the level of the technology used in the today’s world. There are many international and entrepreneurial forms who have obtained the help of technology to generate the new opportunities in business. The rise in the technology provided the support to the small firms to implement the advanced technology which is a positive example (Baylis, Smith and Owens, 2017). Example of advanced technology is increasing in the use of E-commerce procedures in the business.
The rise in the employment was possible because of the globalization as this phenomenon linked the movement of people from country to other through which the people of different countries got the jobs easily (Mayer?Foulkes, 2015). This reflects the concept of the outsourcing as most of the companies offer the work related to supporting, marketing and accounting to the developing companies like India, Nepal, etc.
The emergence of globalization has created a negative impact in the form of a rising in the prices across different areas. The rise in the competition among companies in the developed companies forced the firm to reduce the cost of the products and services.
The developed countries faced the problem of the job security because the globalization leads to the rise in the outsourcing of jobs from developing countries. This has reduced the job opportunities in the developed countries (Hirst, Thompson and Bromley, 2015). The business today tries to manage the price of products for which they always look to hire cheap labor from the developing countries. This is one of the negative impacts of the globalization.
The globalization has brought tough competition in the national and international market due to which the managers of the company might not able to manage the operations of the company effectively (Deresky, 2017). The international managers need to identify the ways through which they can stay ahead of the game. The rise in the competition will enforce the manager to bring some strategies through which the company can stay ahead of the game. These strategies are discussed below: –
The international managers should ensure that whatever they are offering is different from the products and services of the other companies in the market as this is the only way through which the managers can contribute in managing the effective position in the market (Hoberg and Phillips, 2016). This will help the company to face a strong competition and they will be able to generate the effective competitive advantage.
Cost leadership strategy is forming a competitive advantage for a company by having the lowest cost of the operations in the industry. The manager should follow the lowest cost strategy in which they should try to manufacture the products and services at lowest cost so that they can provide the products at lowest prices in the market (Banker, Mashruwala, and Tripathy, 2014). This is an effective way to which they can lead to the customer satisfaction in the market. Moreover, they can generate the customer loyalty which is essential for the international manager to lead in the game.
The international manager should always analyze the market effectively because this is the only way through which they can understand needs of the customers available in the market. It is essential for the business to understand the needs of the customers present in the market because then only the company will be able to satisfy the customers (Babin and Zikmund, 2015). Moreover, this research will help the international manager to understand the nature of the market according to that they can make the changes in their strategy of the business. There are many companies who take the advantage of globalization in performing the research.
The manager should ensure that they are employing the diversified employees in which they hire the people from the different cultures. This is possible with the help of the globalization as this concept has provided an opportunity to the companies with the use of which they can hire the employees easily (Saxena, 2014). The hiring of diversified employees is essential because this is the way through which the manager can get some information about the culture, taste, and preference of the different countries where they are operating their business.
Offshoring refers to as the getting the work done in a dissimilar country. On the other hand, outsourcing refers to as the contracting work out to an outside business. Offshoring is often assessed for the transferring of the jobs to the other countries. The outsourcing and offshoring contribute to the globalization. The outsourcing provides the opportunity to the companies to get the work done from the external business which is possible in through globalization only. The development of the communication, global networks, public and freely available information makes the people believe that the world is different. The outsourcing offers an effective implementation of the concept in both developed and developing countries. On the other hand, offshoring also contributes to globalization. There are numerous companies who are getting the work done in the different country. The getting the work done from the different country contributes in globalization because this is the way through which the political connection between the countries gets stronger and this is essential for the effective globalization (Domazet and Bulajic, 2012). The outsourcing makes the work of bringing towards the people and easy movement of the services and people. This leads to the enhancement of the globalization in the developed and developing countries. (Refer Appendix 1 for more details related Outsourcing and offshoring contributes to globalization)
There are numerous companies who are involved in outsourcing of the services from the different countries. One of them is Ford Motor Company who recently began to outsource most of work from the accounting department to India. The company conducted a research and found that the developing countries like India can offer a high level of the quality and dependable services. This ultimately makes them outsource their software development centers so that company can effectively manage their e-commerce solution across India (Contractor, et.al, 2010). The company outsourced and offshore their operations of a call center to India because they were able to find the labors at low wages. Being in India, the company was able to use the flexible pricing options, premium quality services with the effective technological infrastructure and capabilities, IT strategies and many others. The company generates the high employment in the country. This outsourcing has contributed by providing the support to the globalization across the world. In the current business scenario, most of the companies are outsourcing projects to offshore companies to save costs because in developing countries they can easily get the work done at low cost.
There are some of the challenges, opportunities, and problems that globalization presents which are faced by the ford company in the current market which is explained below: –
There are numerous problems which are faced by the company because they took a step to expand their operations. Considering the example of the ford which is a case study organization for this task, the company found numerous problems like; –
Health issues to the employees: – The call centers in India are one of the emerging industries in the current scenario. The problem arises when the employees have to be available for the clients from UK and US. Due to the difference in the time zone of India and other countries, most of the work is supposed to be done on night shift only. Moreover, the rise in workloads to the anxiety and related disorders is one of the issues which are faced by the company. Most of the employees are not comfortable in working for the night because of their health issues. Therefore, this reflects that working across the borders is also not easy for the companies (Raja and Bhasin, 2014).
Customer satisfaction: – The company always tries to offer high customer satisfaction which was not possible due to some of the issues like all-time pressure, reading prescript, conversations on the phone and dealing with hostile customers make it difficult for the executive to leads to the customer satisfaction. In addition, they found this is happening because of the high workload and this might leads to an effect on the health of personnel. The employees of the company might face a health issue like repetitive brain strain.
Food habits: – The change in the shift timings of the company might affect the food habits of the company. This change in the food habits makes the people adopt the late night partying, smoking, boozing, and drug addiction.
Conclusion
In the end, it can be concluded that the globalization has brought the vast changes in the economy. The globalization has created the favorable and adverse impact on the working of the business today. The major impact of globalization is on businesses due to which the international managers form strategy to be ahead in the market. These decisions are linked with the strategy of the company that is prepared to form an effective position in the market. Outsourcing and offshoring contribute to globalization are explained with the help of the Ford company. Ford Company is performing both the activities of Outsourcing and offshoring. Along with this, the challenges, opportunity and the problems that are created by the globalization is also discussed with the help of Ford Company.
References
Babin, B.J., and Zikmund, W.G. (2015) Exploring marketing research. UK: Cengage Learning.
Banker, R., Mashruwala, R. and Tripathy, A. (2014) Does a differentiation strategy lead to more sustainable financial performance than a cost leadership strategy?. Management Decision, 52(5), pp.872-896.
Baylis, J., Smith, S. and Owens, P. eds. (2017) The globalization of world politics: an introduction to international relations. Oxford University Press.
Beck, U. (2018) What is globalization?. New Jersey: John Wiley & Sons.
The contractor, F.J., Kumar, V., Kundu, S.K. and Pedersen, T. eds. (2010) Global outsourcing and offshoring: an integrated approach to theory and corporate strategy. UK: Cambridge University Press.
Crane, A., & Matten, D. (2016) Business ethics: Managing corporate citizenship and sustainability in the age of globalization. UK: Oxford University Press.
Dabrowski, M. (2017) Costs and Benefits of Monetary Sovereignty in the Era of Globalization. In Beyond Transition. New York: Routledge.
Deresky, H. (2017) International management: Managing across borders and cultures. India: Pearson Education.
Domazet, D. and Bulajic, A. (2012) Globalization and Outsourcing and Off-Shoring. Journal of Emerging Trends in Computing and Information Sciences, 3(9).
Economics Online (2018) Globalisation [Online]. Available from: https://www.economicsonline.co.uk/Global_economics/Globalisation_introduction.html [Accessed on 20th May 2018]
Financial Times (2018) Definition of globalization [Online]. Available from: https://lexicon.ft.com/Term?term=globalisation [Accessed on 20th May 2018]
Gilberthorpe, E. and Hilson, G. eds. (2016) Natural resource extraction and indigenous livelihoods: Development challenges in an era of globalization. New York: Routledge.
Hirst, P., Thompson, G. and Bromley, S. (2015) Globalization in question. New Jersey: John Wiley & Sons.
Hoberg, G. and Phillips, G. (2016) Text-based network industries and endogenous product differentiation. Journal of Political Economy, 124(5), pp.1423-1465.
Kaynak, E. and Fatemi, K. (2014) Globalization and East Asia: opportunities and challenges. New York: Routledge.
Lawrence, A.T. and Weber, J. (2014) Business and society: Stakeholders, ethics, public policy. Tata McGraw-Hill Education.
Mayer?Foulkes, D. (2015) The challenge of market power under globalization. Review of Development Economics, 19(2), pp.244-264.
Raja, J.D. and Bhasin, S.K. (2014) Health issues amongst call center employees, an emerging occupational group in India. Indian journal of community medicine: official publication of Indian Association of Preventive & Social Medicine, 39(3), p.175.
Saxena, A. (2014) Workforce diversity: A key to improving productivity. Procedia Economics and Finance, 11, pp.76-85.
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