Impact Of Globalization On The Car Industry: A Research Study

Description of Research

The business environmental operations tend to be complex, dynamic that has numerous impacts on the organization. The business environ is broad and entails human, financial and physical resources that determine the strength and weakens of the business. In some cases, the environment tends to change due to many reasons, such as globalization. Over the past few decades, globalization on the business performance has received global attention. It is estimated that the economic contribution from the business operations covers about 65% of the GDP of most of the countries in the world. For example, in East Asia, business organizations form the significant players of the exporting industry thus accounts for about 45% (da Rosa, de Mello & de Castro, 2018, p.76).  Numerous authors view globalization as an opening of the international borders that allow free movement of foreign investments, information, and technology, thus facilitating the development of the country. According to Berge, (2012,p.5), the inter-linkage between the nations occasioned by the high speed of social, economic, technological and political is more complex as well as multifaceted phenomena. The paper thus aims at exploring the impact of globalization on the car industry; with emphasis on the performance, quality and quality, and revenue collection.

Globalization was initially regarded as approaches to the big business entities, however, in the current world; both the small and medium business organizations get affected by the effects of globalization. Certainly, globalization affects business performance in both negative and positive ways, thus it is instrumental for small business to understand the concept of globalization to enable them to remain relevant in the current competitive business world (Saeed, Zulfiqar & Rathore, 2015, p.298). This paper thus explores the impact of globalization on business performance in various countries. The study aims at defining the term globalization with respect to the business aspects, and explore the impacts of the globalization on the business activity; thus on the performance of the business.

First and foremost the study is beneficial to me as an individual as it enhances my understanding on the globalization and its influence on both the local and universal business that will be essential to both the class work and future professional career. Additionally, at the end of the paper, I will be able to promote my research work performed. Secondly, the results of the paper will significantly benefit the academia and researchers that are in the field of globalization and international business since the study will add value to the existing international business and globalization information. Thirdly, the information will be beneficial to the Car Industry and other business organizations that are thinking of going global, since they will have extensive information to help them determine the best decisions to make by evaluating past information.

The second chapter presents the literature review of globalization and business performance from the past studies. The study entails definitions, theoretical background, and theoretical framework and research gaps.

It is observable globalization has numerous definitions depending on the context used. A good number of globalization’s definitions are grounded on economic scopes similar to one accepted by the World Economic Forum.  According to W .E. F, Globalization refers to the digital revolution and economic development that are supported by the enhancement of communications and transportation infrastructure, and elimination of capita transfer barriers (da Silva, Santos & de Morales, 2017, p.77). On the same note, IMF refers to globalization as the interdependence of the country’s economic status that results from the free movement of money across the borders. According to globalization refers to the process of enhancing the inter-connection of social and cultural aspects, gaining of the political interdependence, growth of economic status, integration of the financial and market (Aman, 2018, p.568). For the purpose of the study, globalization thus refers to the enhancement of the market and trade beyond the borders of a nation.

Significance of Research

Small and medium-size business organizations refer to the organizations that are operating within the boundaries of the country. The Car Industry plays weighty roles in increasing the country’s economy through asset creation, job opportunity provision, and innovation input. In most of the countries, the large percentage of GDP is collected from the Car Industry, since they are the most populated than the multinational business organizations.  Jürges, Sahi, Rios, Reich, Bhamra, Howard, Slater & Nick(2018,p.5)  denotes that Car Industry do not only positively impact the economic status of the country but also eliminate monopoly by the MNEs through entry into the market, thus relieving them the power to determine prices of the different product.

A conceptual model of globalization on Car Industry

The conceptual model that describes the effect of globalization on the quality of life (QOL); the model offers relevant understand the influence of globalization on the industry since it denotes globalization as the diffusing of products, services, capital, technology and workforce across countries.

In the current world, globalization is a buzzword that has transformed numerous aspects of life, business operations included. The constant integration growth of societies and national economies thus has formed the basis of global discussion. Globalization aims at eroding the national boundaries to integrate national economies, thus facilitating easy movement, communication and capital transfer across the nations (Martens, Caselli, De Lombaerde, Figge & Scholte, 2015, p.220). There are difference globalization concepts: political globalization, financial globalization, cultural globalization, and economic globalization. For the purpose of the study, the researcher covers the economic globalization that is interconnected to the globalization of production, globalization of market, globalization of competitions, globalization of technology and globalization of corporations and industries.

Globalization aims at increasing and developing countries status to achieve greatness through interconnecting the exchange streams, enhancing technology, back, allowing free movement of people, transforming the cultural composition and purchase behaviour, and among many others. The constant growth needs a country’s’ needs such as workforce, quality of cars among others tend to create a market space for acceptance of international goods thus developing the business entity within the country. Evolving worldwide business thus is directly related to the speeding up of global cooperation’s and practices; since the development of the overall transport and correspondence business designs expands the dispersal of thoughts, products  , data, capital, and individuals(Hagiu & B?rbulescu, 2017,p.186). Globalization may influence the improvement of development capacities in the organizations.

Different impacts on the development abilities of the organizations incorporate the dissemination of learning identified with licenses and other licensed innovation rights. With the transnational enterprises, innovation interests in the organizations are expanding. The most critical explanation behind finding universal corporate innovation exercises in the travel industry firms has prepared their staff. Scattered innovation exercises of firms require superb correspondence, what’s more, other infrastructural offices. The nations looking to pull in innovation ventures ought to build up such infrastructural offices on a need premise. 

Pandian, (2017,p.910)  identifies majorly four forces of globalization: Macroeconomic such as society’s rapid population growth and acceleration of technological transfer; political factors include deregulation and trade liberalization ; organizational factors include global strategic plans; and lastly the technological factors such as the improvement of the communication and transport channel help in advancing the business activities.

Literature Review

Over the past few years, the cost of shipping in the oceans has dramatically dropped as a result of the containerization. The low cost of cauterization thus have enabled bulk shipping alongside other efficiencies, thus it has made for the manufactures to bring car brands such as Fiesta close to customers making the global market contestable.

Due to the rapid sustainable technological advancement across the world, the cost of passing information from one person to another in different geographical location has reduced, thus making it very easy to gain information. The technological growth has enabled the car industry production quality, quantity and quality as a result of the new strategic operations that are the major source of convergence and divergence (Pavlínek, 2012, p.280). The application of technology and innovation tends to vary across the countries, thus resulting in the varied car; for example, Honda and Toyota have a similar manufacturing level of quality and quantity but differ in the manufacturing practices. Honda assembling point is under one building that allows better integration, while Toyota has separate assembling points.  

Numerous economists believe that the increase in the minimum efficient scale in some industries has increased (pirková, Stehlíková & Zúbková, 2016, p.1768). The rising of the small and medium business tends to satisfy the selling requirements of the industries.

The desire of business to gain from the minimum labour cost, production and distribution costs has impacted business organization s to adjust the amount of tax to attract foreign investment.

 According to some historians, globalization dates back during the Maurya Empire in India formation of the 320 BCE. Maurya Empire became the first societies to come up with a cross-border business. The first international trade conducted by Maurya was between Europe and Asia, thereafter in the second century BCE, China established the Silk Road that cut across Asia, Persia, India, and Rome that facilitated both trade and religious organization’s movement. Kwame, (2014, p.19) states that globalization was initiated through the environmental; aspects such as the exchange of crops and animals between the communities that continued to develop across the centuries. By 1300s, international trade was facilitated through ocean transport, leading to slavery among many nations. During the 1700s, slavery formed the cultural globalization after the entry of colonials into many African nations, however, the colonial during the nineteenth and twentieth century, the slavery business deteriorated following the rise of new nations with business relationships facilitating more international flow of goods. During the twentieth century, most of the nation’s begun to utilize the resources to build a military for protection and settle international disputes; thus prompting the establishment of the World Bank followed by the International Monetary Funds in 1945 and 1947 respectively. These organizations were aimed to assist in the regulation of the economic relationship among the countries. In the past few years, the development of radio, television, and internet facilitated the information passage across the world thus speeding the globalization rate.

Car Industry in different countries is affected by the globalization in the same manner but address the effects differently to remain relevant in both the local and international markets. The most common approach adopted by business organizations are the: acquisitions of the local government support in safeguarding them against stiff competition from the international business organizations; and clustering into one category to enhance competitive advantage(Solticzky & Bíró,2013,p.28). The car industries have made tremendous development and growth as a result of globalization According to James and Steger (2014, p.19)   car industry is characterized by the multi-country region production of spare parts; some of the regions include NAFTA, MERCOSUR, and ASEAN among many others.  In the past years like between 170s, the car manufacturing sites were majorly constructed based on the incentives, however, with the development of the consumer markets across the world, the car industry production sites intensified in many regions.

Definitions

The study aims at identifying the impacts of the globalization on the business performance, thus the drawing will occur from the environmental organization literature. However, because of the numerous environmental dimensions, extensive exploration must take place to understand, and to reduce conceptual ambiguity (Blanton & Blanton, 2016, p.665). Among the major environmental conceptualizations: macro-envelopment, task environment, resources pool, aggregation, and sub-envelopment, the paper thus focuses on the macro-environment or the globalization. The macro-environment tends to be the most significant environmental conceptualization since it encompasses both the lower and the higher constructs stated above.

The business environment offers numerous resources that directly or indirectly influence the growth and sustenance of the business in the market. Thus the major three sub-dimensions of the environmental dimensions include capacity; growth/decline; opportunities/threats.  According to Kochuthara, (2014, p.57) during globalization, business organizations are directly or indirectly affected by these sub-dimensions, thus the study hypothesis that there is a candid association amid globalization’s dimensions and the business performance.

Global Market Opportunities refers to the advancement of the market, investment and trade potentials and accessibility of production resources that are facilitated by the globalization (Srivastava, 2013, p.327). Global markets are enhanced through the global removal of trade restrictions, privatizations, information technological advancement that are foster rapid growth of numerous economic statuses. Thus from the first hypothesis of the study is:

H1: Car industry performance is positively influenced by the globalization

According to Asghar, Naveed, and Saleem (2017, p.420), the global transformations in terms of social, economic, political and technological advancement are attributed to the globalization. The changes are indisputable and have importantly affected the business operations especially the information technology. In the current world, computer usage is an integral part of the globalization that has facilitated the growth of the business through numerous facets. Globalization provides business organizations with an opportunity to create wealth through various ways such exposition of product into various international markets, construction of new ideas through information sharing and employment of highly trained experts such as managers. On the same note, Beckers and Kawakami (2017, p.6) stressed that the application of internet in the business arena opens opportunities to new ideas and market for the expansion. From finance and task the executives to correspondence and document stockpiling, these advancements have streamlined the manner in which organizations work, as well as made procedures unimaginably shoddy. Joined with the application economy, Car Industry now has enhanced answers for working together, conveying, and teaming up continuously.

It is the aim of most the business organizations in offering good product quality at affordable prices to customers to capture a large number of customers that will assure the sustainability of the business in the competing market. Multilateral trade thus allows the national requirements for various car types to meet specified safety and health standards that are transparent and non- discriminatory between the local and foreign sources. However, the introduction of the international trade facilitated the growth of intense competition between the local product and the foreign product, thus many companies opt to look for better ways of capturing the attention of the customers. Perceiving the significance of the advancement of a new car with a worldwide market centre and related possibility factors, we exactly test regardless of whether such improvement does indeed affect the execution of NPD programs. Second, the researcher s study on how this relationship is directed by various organizational structures, forms, and fluffy front-end NPD activities, as almost certainly, the relationship relies upon ?rm capabilities with respect to these factors. The common ways include the improvement of the product quality and reduction of the product prices that will positively impact the experience of the customer. According to Cavusgil and Kardes (2013, p.5) positive customer experience, enact repurchasing of the product thus improves the sales as well as the growth of the company.

Forces of globalization

Globalization is an effective way of opening business opportunity in the local and international market. Due to the improved communication and transport infrastructure, companies currently are able to operate in more than one market in the world, thus a small business that initially majored on the domestic market can expand into that markets by joining forces with an international organization such as supply and marketing agencies to supply the car types. Through, this joint venture, the organization is able to make more revenue (Frigant & Zumpe, 2017, p.660). The globalization impact thus is perceived as a prompt increase of the number of exchanges over the outskirts. It is evidential that the current multinational partnerships are the effects of the globalization, and attaining such organizational size, comes with a handful of benefits to the organization. A partnered business tends to have a better competitive advantage over single business entities as well as enjoy the economies of scales; since they have strong conjoined marketing strategies, management, and capital to overcome any possible obstacle.

Capital forms the basis of every business operations and the economy of every country. Availability of capital enhances the facilitation of various business activities such as payments for raw material; transportation of goods, payments of staff among other expense that facilitate the business exists in the market. With the onset of the international market, free money transfer through various international banks and money sending systems have enabled the payments and receptions of finances form the international sources. Online buying has facilitated the online purchasing, reception, and payments of goods, without the customers going to the variety of stores, especially the international stores. Additionally, the enhancement of the information technology has facilitated the communication between business partners that are in the different geographical location through simplified communication channels such as social media, video calls among others. The system thus has eliminated the traditional form of an onerous task, since it takes places in seconds. Lin, Lahiri, and Hsu (2017, p.1842) denote that transportation as the significant wheel of every business since it helps in connecting the product and the consumer. With the globalization, numerous transportation systems have been developed such as quick delivery, Airways among others that have enabled the reception of products by consumers irrespective of the locations. Consequently, the developed technologies in the transport system have enhanced the logistics, and supply chain as well.

During the purchase of car types, business organizations tend to receive profit that facilitates their growth. Globalization tends to open up new markets for various cars in the international platform, thus facilitating the international trade, thus leads to the availability of different car types. The new market provides an opportunity to increase sales more than the local market, thus earning the business organizations extensive profits and revenues.

Global marketplace threats are grouped into either global marketplace threats or global market doubt. In every business area, completion is a normal thing, since numerous investors tend to copy one another business ideas in the availability of free trade and movement across the borders. Completion among companies is healthy to both the customer and business as there is the availability of varies car types, as well as a motivation to improve to remain relevant in the market. However, with the globalization, stiff competition is experienced as several car types with different attributes tend to reach the local market, thus providing stiff competition to the local companies (Javaid & Siahmardy, 2017, p.27). The local companies with poor product attributes tend to lose customers over the new international product exposing the business entities into the verge of collapsing. On the same note, the international business organizations also to compete one another form new competitive landscape known as the ‘hypercompetitive markets’. The hypercompetitive markets tend to present enormous threats to most of the international business entrants that have not gained a strong competitive advantage on the global market, thus exposes them to failure (Samimi, & Jenatabadi, 2014, p.5). Therefore, form the above, the study hypothesizes that globalization dimensions such as such as stiff competition negatively impact the business performance.

H2: Car industry performance is negatively affected by the global competitive threat.

As noted earlier, globalization facilitates free movement of people, car, services and wide availability of information. The movement of people across the borders has dramatically transformed the nature of behaviours and culture of people in different locations due to inter-cultural. The behavioural change has posed difficulty to the business organizations in producing the right product to suit the customer’s needs that keep on changing every day. In the current business world, customers’ demands have become one of the most difficult aspects to predict, along with the competition responses thus making the global market to be insecure. Now that the global market is uncertain to most of the business organizations, the performance of the business thus is directly or indirectly affected (Pandian, 2017, p930). Consequently, during the globalization, the business organizations to capture both the local and the international market must carry out extensive market research and advertising. During such a process, most of the firms tend to ensure a lot of costs, especially when launching into foreign markets; attributed to transportation and transactions. The high cost definitely poses a negative impact on the financial status of the business. Therefore, it is hypothesized that the global market negatively affects business performance.

H3: Car industry performance is negatively affected by the global market insecurity.

The chapter represents the proposed research methodology that will be used in conducting the research regarding the impact of globalization on business performance. Generally, the chapter entails research design, sampling techniques, data collection, and analysis methods.

Research methodology refers to the systematic rules and guidance of data collection in research projects. According to Farghaly (2018, p.7), there are different research methodologies: exploratory, descriptive and explanatory. The choice of the method thus majorly depends on the objective of the research. Descriptive research aims at gaining accurate descriptions of a research topic through collecting data with the help of questionnaires, interviews, and observations techniques. The exploratory research aims at gathering data from the existing studies, followed by an extensive interview to capture the participant’s insights.  While the explanatory research aims at establishing the relationship between research variables through specific statistical surveys, historical surveys, and observations among many others.

The target of the research is to point the impact of the globalization on business performance, thus to establish this, the study should adopt a descriptive research design. According to (Kamalodeen & Jameson, 2016, p.8) descriptive research design aims at depicting the participants in an accurate manner. Descriptive research design entails gathering of information with a major objective of mapping out the status of the topic under the study. On the same note Dowling, Lloyd and Suchet-Pearson (2018, p.781) support one another that descriptive design helps in establishing the relationship between research variables, thus descriptive design is more appropriate for the study since it will enable to determine the relationship between the research variables: globalization and business performance.

According to Berry and Sauer (2018, p.2915) population refers to a cluster of elements that poses reference.  While dos Santos and Beck (2015, p.631) refers population as the set of elements that are investigated to provide a clear understanding of the topic.  The proposed study population thus is 10 business organizations; where 5 of them will be international business while the other five will be national business organizations.

Generally, sampling techniques are classified under two categories: likelihood sampling and non-likelihood sampling. The likelihood sampling dictates that participants are chosen on the basis of equal chance, thus every element has the same percentage of being included in the sample, while the non-likelihood sampling technique, dictates that each element does not pose equal percentage of inclusion since all member has got a different amount of required information(dos Santos & Beck, 2015, p.633). To reduce the researcher’s biases, the study will adopt likelihood sampling in choosing the business organizations to be questioned and surveyed to have accurate information on the topic.

Sample design respect to the steps undertaken in including and excluding the patients in the research project. Since the target of the paper is to discover the impacts of globalization on the business performance especially on the Car Industry, the researcher will have to collect the list of all the available business entities, through visiting the city business register. The likelihood sampling will enable the researcher to save time and resources since any business with the required characteristics will be under examination.

Data collection stage is the most significant part of every research project as it helps in obtaining numerical data concerning the topic under the study. The paper will use both the primary and secondary data collection methods to facilitate the collection of accurate information. The secondary data collection will help the researcher in exploring the existing studies through journals, articles books, and organizations websites among May relevant sites to provide a basic understanding of the topic (Kalnay & Takuma 2018, p.2888). Additionally, the secondary data will help the researcher in formulating the best way of collecting data in comparison to the past studies. On the other hand, the primary data collection that will be actual data collection will enable the researcher in having the actual figures, perceptions, views, and reasons regarding the topic.

Data collection techniques entail a process that is used in assembling information relevant to the study. These include interviews, surveys, observation and focus groups. For the purpose of the study, the questionnaire will be most appropriate.

The refresher will adopt research question technique to assist in achieving the objective of the research. According to Berry and Sauer, (2018, p.2917) the application of questionnaires in a research study helps in gathering information that can be generalized to the elements characteristics/action after the exploration. The researcher will design a questionnaire that will consist of majorly four parts: Part A, that will cover the company profile; Part B, will cover the measures adopted by organizations regarding the globalization; Part C, the impact of the measures adopted ;and lastly, Part D, the perceptions of the business organizations regarding globalization.

Every participant of a research is required to be fully informed on the purpose of the research and consent obtained. The participants will not in any way influenced by the researcher to obtain information that is perceived by the researcher as the correct, thus they will be free to quit at their own pleasure (Berry & Sauer, 2018, p.2919). The researcher will submit the ethical consideration for review and approval by the University Research Ethical Committee.

Data analysis process aims at deducing the statistics and information gathered to have a concrete conclusion on the topic under exploration. To confirm or fail the hypotheses, the researcher will employ correlation analysis to evaluate the information and determine the strength of the relationships between the variables. The results of the study will then be presented in form of tables, charts, and graphs for easy understanding and interoperations of the results (Berry and Sauer, 2018, p.2920). The researcher will perform data analysis by the use of the Statistical Package for Social Science (SPSS) version 21.0.  An applied t-test of 0.05 significant levels, descriptive correlation analysis will be performed to ascertain the relationship between the research variables.

To evaluate the impact of globalization on business performance, it is imperative to identify the causal relationship between globalization and business. For example, the research question might be; what are the specific effects of international trade on the local and international business organization? Thus, it will require the researcher to isolate the effects of the independent variable on the dependent variable. The descriptive researcher approach helps in identifying the patterns in data to respond to the research question. The method thus will help the researcher in identifying various aspects that are already known to the researcher such as the effect of technology on business, the effect of market availability to the business among many others. The use of both the primary and secondary data collection is appropriate to the study since both provide information that is interconnected to one another.   Secondary data collection methods through the exploration of the journals, books, and articles

Conclusions 

Globalization thus refers to the enhancement of the market and trade beyond the borders of a nation. From the literature review, it is evidential that globalization has a significant impact on the business performance irrespective of the size. The introduction of free trade between countries has facilitated free movement of car, labour, and information that in one way affect the activities of a business. Over the past few decades, globalization on the business performance has received global attention. It is estimated that the economic contribution from the business operations covers about 65% of the GDP of most of the countries in the world.  It is observable that globalization enhances the expansion of business as organizations strive to export cars into other markets as well as the partnership with other international organizations. Globalization brings about competitions that challenge the operations of the small business to improve the quality of car that eventually attract the attention of more customers.  

On the same note, globalization enables the adoption of technology and other business ideas as well as the manpower from the international locations that facilitate growth. However, it should also be noted that globalization to have a negative impact on the business operations, for example, the stiff competition tends to pose threat to the small and medium business, thus posing them into the verge of failure. The research methodology chosen is appropriate in confirming the above notion from the literature review since through questionnaires, the researcher will be able to get the insights of the business operators concerning the globalization on their business. The correlation data analysis thus will enable the researcher to determine the relationship between globalization and business performance. 

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