Discuss about the Globalization and Complexity of Business Environment.
The new global trends in the business environment has led to the transformation of the social, political, economic, and educational factors across the world. This has been as a result of different forces such as information technology and communications revolution (Keohanen and Nye 2000, p.106). Globalization has led to free trade which has greatly impacted the integration of the economic, communication, and the information revolution. Entrepreneurship in this age has taken an advantage in facing the challenges imposed by the global economy. The business environment rapidly has changed in the economic events, whereby it’s seen that the private sector has emerged to be the most essential contributors of the growth of economy and the public sector has reduced its influence (Farazmand 2004, p.24). The entrepreneurs have defined some new rules where they engage with the economic challenges as they deal with emerging opportunities in the business market.
Technological advancements and financial liberalization are some of the factors which have been as a result of globalization. This has been sustained by the policymakers in different countries who have engaged in open, rule-based, and liberal global trading systems which are necessary for the global economy progress (Al-Rodhan and Stoudmann 2006, p.22). The flow of goods and services, labor, development of financial institutions, access to information and communication, and capital within the free trade regions across the world have ensured an entirely cohesive global economic system having a tremendous opportunities and scope which has been achieved by the high levels of worldwide economic linkages and reliance than before.
Globalization has made a great impact towards making the countries in the world be a global community. The goods that were available in the western countries have been accessible throughout other parts in the world (Dreher, Gaston and Martens 2008, p.1008). The developed areas in the world are enjoying the benefits of the advancements in science and technology with the industrial progress which are now available in the developed countries with the objectives of improving the growth of their areas. Globalization has also influenced the economies in the world and has now been continuously been integrated such internet and mobile phones have led to bringing people together. Through globalization, work has been outsourced to various parts of the world since the availability of the internet connections and the improvements in the infrastructure makes people reach various destinations in short periods of time (Cheney, Christensen, Zorn Jr and Ganesh 2010, p. 50). Development and economic growth in the global economies have been as a result of the structural changes in investments, gathering of the business initiatives, transformations in the production processes and adopting of the new ways of marketing. This has led to the effective incorporation of new technologies, communications, and information in the enhancement of competitive benefit in the international trade, this has led to a change in the business environment.
Globalization has seen the economies, cultures, the regional economies, and societies integrated through a global network. The globalization process has involved a number of aspects which have been as a result of the swift development in technology which has made the global communications to be possible, improvements in transportation which have ensured that travelling is made frequent and faster, political developments (Gharajedaghi 2011, p.767). These have led to the production of greater opportunities for various companies across the globe who have now opened up additional markets that have ensured the consumer harmonization which has led to the shared values of culture and has provided more competitive platforms that have low costs in the business environment in different countries internationally and has enabled access to raw materials, the opportunities of investment, and resources.
Innovation has also acted as a catalyst in the global economy which has driven the economic growth and has been led to change. The availability of the human resources, technical skills, capital endowment, and the attainment of education have been essential prerequisites for vesting in the global economic changes and has facilitated the incorporation of labour in various businesses (Farazmand 2004, p. 14). The continuous upgrading of skills and lifelong learning and also the structural reshuffle of the workplaces have been essential in the contemporary economic profiles of the countries. The economy has also been fueled by research, technology, human capital, and development have greatly contributed to the increased productivity and the economic performances in most of the countries. The global opportunities have led to high tax level competitiveness, investments in research and development, training emphasis and learning, and the businesses clusters of excellence which have all been directed towards the global markets and global economy (Nell and Andersson 2012, p.270).
Globalization through the international communications, global production, and markets have promoted the global activities in relation to currency trade. The major international currencies are now circulating globally. The currencies are now accessible throughout the world and are moving electronically in a faster way (Keohane and Nye Jr 2000, p.100). Most of the bank cards are now extracting cash from the automated teller machines which are now available throughout the globe. The payment methods such as the credit cards are used in payments in various countries across the world. With people moving from different countries to another and the restrictions of trade having reduced, local markets have opened up for more investors to trade their businesses. Telecommunications have been established in most of the countries which have now lead in the innovations and pass their technologies to the other countries in the globe which are in need.
Most of the successful global markets have been as the result of privatization of the state-owned industries (Crane and Matten 2016, p.346). Most of the industries have increased the demand by consumers through their attempts to expand and extend their value chain across the global markets. The impacts of globalization in the 21st century has seen the increase in the transaction levels across borders. In order to protect the yields and maintain its competitiveness, the businesses are continuing to develop a wide range of impression as the lower cost has ensured the realization of the economies of scale. Additionally, the multinational corporations have been as a result of globalization. They have ensured they take the vital role in the process of globalization as depicted from the international investment influxes. Their concentrations within Europe have led to size restraints which have led to some geographical areas to encounter competition from the global market (Prasad and Prasad 2007, p.67).
Globalization has also increasingly made and expanded the foreign trade across the world (Sheppard, Sarros and Santora 2013, p.270). The things which were found only in the countries which are developed have found a way to other countries. Most people get access to whatever they want from different countries. Through this, the countries which are developed export their goods to other countries. Countries are now carrying out their businesses through the international trade and they import or export their products without limitations in the countries they want, in turn, the corresponding countries engaging in trade with them get an advantage (Dreher, Gaston and Martens 2008, p.46). Certain organizations have also been developed with the aim to regulate the trade activities between different countries across the globe in order to have a fair trade. The worldwide organizations of trade have turned to be strong international organizations which have influenced governments across the globe to follow the international regulations, policies, tax, copyrights, and tariffs. The nations which are now dependent on the global financial markets, foreign capital, and trade have greatly increased. The specializations in the labor and the capital demanding goods have bridged the wage gaps existing between the rich and the poor countries (Dunning 2014, p.444).
Globalization has also led to the improvements in the quality of the product as a result of the global competition. Customer services priority approaches to the production levels have also improved the quality of services and products offered. As the local companies try to fight the foreign competition, they have been compelled in raising their standards to customer satisfaction levels in a way to survive in the competitive global marketplace (McGrath, Mac Grath and MacMillan 2000, p.107). The productions of new brands in the international market have also created competition in the markets to make it a survival for the fittest situation. The dynamics of the international trade flows have been different from the traditional patterns of trade. The global trade has greatly been influenced by the international corporations and have accounted for more than two-thirds of the global business. In addition, there has been the internationalization of the production methods which have resulted in the growth of vertical specializations in the international trade. Subsequently, there is the marked increase in usage of the products which are imported and the components of production of goods which are exported from the developing countries.
Globalization has affected the led to the fluctuations of prices in the business market. As the competition in the market continues to increase, the developed countries have been forced to significantly reduce their prices on commodities (Innes and Booher 2010, p.66). In order for them to retain their customers, they have been forced to cut down their prices of goods which have been disadvantageous to them since it has reduced the prices of goods. This has been disadvantageous to them since it has reduced their abilities in sustaining social well-being in their respective countries around the world.
Globalization has enabled the developing countries across the globe to carry on businesses with other nations across the world promoting their economic growth and solving most of the problems within the business environment. In the past, most of the countries were unable to deal with the world economies due to the trade barriers, with globalization, this has been made a possibility since there has been the existence of free trade between different nations (Onetti, Zucchella, Jones and McDougall-Covin, 2012, p.335). Most of the nations have taken steps in the opening of their markets through the removal of charges in performing business in their respective countries and have expanded their trade. Globalization has thus made the relations between the developed and the developing countries stronger, with each country depending on the other.
Developing countries have been seen to depend on the developed countries for the resources and technology but on the other hand, the developed countries have depended on the developing countries for the raw materials, and markets for the industrial goods. One of the important benefits of globalization is that the goods and the people are easily transported and enhance a fast trade between the individual countries and lead to the lessening of war possibilities between countries (Fuchs 2007, p.64). Communication growth between individuals and companies have helped greatly to raise a free trade between countries which has led to the growth of the economy by a great margin. Most of the developing countries have greatly benefited from globalization but others have left to lag behind. Some of the developed countries have set up their companies and industries to the developing nations and taken the advantage of the low wages and caused pollution in the countries having poor regulation of pollution. The situation of factories and companies in the developing countries have adversely affected the economy of the developed countries and increased unemployment level (Shenkar, Luo and Chi 2014, p.70).
Globalization has also integrated the global economies through investments and trade and also the production of goods and services which has enhanced the global competitiveness (Hitt, Ireland and Hoskisson 2012, p.600). Internationalization of various economic activities of production, capital, marketing, and standards are as a result of same. The fast growth in the network trading assemblies and components have led to high levels of specialization, developments of lean methods of production and higher disaggregation of production (Frame 2002, p. 556). A great force has been influencing the growth of the global trade and investments which has been as a result of liberalization of the international financial transactions and also the exchange of capital controls.
The financial innovations and the technological advancements have triggered the demand for more appropriate international exchange systems (Lim, Morse, Mitchell and Seawright 2010, p.490). This has necessitated the coming up with developments of good financial systems, and also coming up with sound monetary and fiscal policies. This has led to the adoption of comprehensive programs in some countries for the economic reforms which have been involved the coming up with various institutions and local financial marketplaces and adoption of a constant macroeconomic policies (Hirst, Thompson and Bromley 2015, p.77). This is in contrary with the previous methods which relied much on the governmental controls in regulation of the global payment and exchange systems which included the capital transactions.
A great part of currency flows in the global marketplace has led to more reliance on the interbank markets and has coordinated the demand and supply of the foreign exchanges. Trends towards the adoption of more flexible exchange rates in the global marketplace have partly been responsible for contemporary movements towards the exchange of currency (DiMaggio 2009, p. 54). As the countries are eliminated of the restrictions of exchange for the international transactions, this has liberalized the capital movements and has created favorable conditions which are conducive for development of the global markets where the rates of exchange are have been seen to be flexible. The increase of capital flows has been exceptional in the countries as a result of consistent currency and policies of exchange. The policy responses to the inflows of capital have involved giving a more flexible environment in the arrangements of rate exchange.
In conclusion, globalization process having involved most of the countries around the globe, the developing countries have remained to be affected either positively or negatively as a result. The progressively interconnected economy in the global market has been as a result of the global economic co-operation, reforms on the international system of finance, the free and fair opportunities of trade for the developed countries, and the structural economic reforms which have encouraged the growth of economy and eradication of poverty in poor countries (Farazmand 2009, p. 1005). All this have been as a result of the overriding objectives of the comprehensive macroeconomic conditions with strong non-inflationary development. In the new business environment, the entrepreneurs should avoid complexities in the business markets through an articulation of rational vision and exercise an effective leadership strategy and also come up with competitive business strategies. They should also create interactions which would allow them come up with new ingredients for the economies to enhance competitiveness in the global markets (Jones and Fleming 2003, p.460). The business strategies should also embrace flexibility and have a quick response time and active approaches towards the economic opportunities.
References
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Crane, A. and Matten, D., 2016. Business ethics: Managing corporate citizenship and sustainability in the age of globalization. Oxford University Press.
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