GLOBALISATION 1 Essay Example
Background and Introduction
Businesses and individuals can move from one region to another or even share information and ideas in the comfort of their homes. Technological advancement and the need to explore have improved business interactions and engagement. Businesses are able to operate and complete transactions even though the businesses are located across the world. To fulfill these requirements, whether as an individual or as a business, globalization is important in the achievement of organizational goals and objectives. Globalization is commonplace in the society and also elaborates on numerous functions. For organizational management, there are advantages and disadvantages of globalization and usually depends on the type of organization, and the location of the organization. For example, a small business and a large business are affected differently by globalization. However, if globalization is integrated well into an organization, the organization, whether small or large, benefits immensely.
The essay outlines the meaning of globalization in relation to management especially on Small Medium Enterprises (SME) and Multinational Enterprises (MNE). The essay then discusses and analyzes the advantages and disadvantages of globalization. The significance of taking the approach of SME and MNE is to determine whether one sector benefits more compared to the other or there is a correlation of benefits and challenges of globalization.
Part A: Globalization
Globalization is the integration and interaction of governments, companies and people of different nations through a process that is driven by investment and international trade and supported through information technology (Potrafke & Ursprung, 2012). Globalization and associated process have effects on economic development and prosperity, on political systems, on culture, on human physical wellbeing and on the environment across the world. Globalization is a controversial topic because opponents and proponents present different perspectives (Spilker, Schaffer & Bernauer, 2012). Proponents argue that globalization allows undeveloped countries and citizens to raise their standards and develop economically while opponents state that it creates an unregulated international free market, which benefits those organizations, which are multinational (Kousadikar & Singh, 2013). Therefore, according to the opponents, the local industries and companies are disadvantaged because of the strength associated with international corporations (Liou, Rose & Ellstrand, 2012). Globalization resistance is evident in the manner in which governmental institutions and through popular perspectives has resulted in governments and people to try to manage the flow of ideas, goods, labor, capital that defines the current globalization requirements.
Globalization also raises additional challenges for the management. An organization benefits from globalization but the management should be effective in ensuring appropriate strategies are integrated into the entire process. Globalization comes with social, cultural, political, legal, environment and technological challenges (Spilker, Schaffer & Bernauer, 2012). The management should determine the strategies to counter challenges associated with such complications. For example, reviewing and analyzing a region before establishing a business is the appropriate strategy to determine whether the business would be viable.
Different definitions of globalization exist because of the ideologies and perspectives of definers (Liou, Rose & Ellstrand, 2012). For the purpose of this essay, the definition preferred is allowing integration and interaction of world business factoring into consideration the political, social, economy, legal, environmental and technological variables. Without these components, globalization cannot surface.
Part B: Conditions for there to be Advantages of Globalization
Both SME and MNE benefits through globalization. Globalization enables these companies to access more revenue streams (Liou, Rose & Ellstrand, 2012). For example, the local/domestic market may be saturated, and expansion of business through the availability of opportunities is possible in the global market. Therefore, venturing into the global markets enables an organization to generate additional revenues while minimizing any associated costs.
Globalization also benefits the SME and MNE because of resource requirements and the need for raw materials. Companies develop products through effective supply chains, and globalization enables an organization to access the right resources (Spilker, Schaffer & Bernauer, 2012). For example, suppliers can negotiate and receive payments through online platforms and the goods or raw materials transported instantaneously. For example, an SME lacks enough resources to physical visits a consumer and the SME can use online platforms to engage with the consumers (Kousadikar & Singh, 2013). In addition, MNE can determine the regions where costs of operations are lower and decide to locate their respective businesses in such locations (Grau, Kuemmerle & Macchi, 2013). Therefore, globalization improves on resources and suppliers requirements and expectations.
Globalization also enables companies to address challenges associated with the market development and access to the larger talent pool. Globalization allows organizations to operate in different countries and also the market (Spilker, Schaffer & Bernauer, 2012). The economic world keeps fluctuating meaning that periods exist in which one country faces economic slump and if a business operates in different regions, it is easier to protect the organization from economic challenges. For example, the other country will complement the business activities resulting in prevention of economic challenges. In addition, a larger talent pool is available in which organizations can employ diverse employees with diverse credentials (Liou, Rose & Ellstrand, 2012). Employees are an asset to any organization and employing the right employees translates to higher chances of achieving organizational goals and objectives (Kousadikar & Singh, 2013).
Developed versus developing countries
The developed and developing countries benefit differently when it comes to globalization (Perpelea, Alia & Perpelea, 2014). Most of the MNEs are from Western countries and have resources that enable these organizations to manipulate the domestic market requirements. In addition, the multinational have the political and economic support. However, the developing countries have to acquire the multinational products because of the materialistic nature of advertisements and engagement (Spilker, Schaffer & Bernauer, 2012). The developing countries acquire international product without considering the influence on domestic industries and businesses. If critiqued effectively, globalization benefits the developed countries more that the developing countries.
Successful global organizations
Numerous variables can be used to determine a successful global organization (Spilker, Schaffer & Bernauer, 2012). Some of the variables may include the number of branches across the world, the number of countries the organizations exist, the diversity of the employees and the nature of products and services provided. Some of the successful global organizations include Google, Toyota Automobiles, and Hilton Group of Hotels (Liou, Rose & Ellstrand, 2012). These organizations have branches across most countries and their respective products can be accessed from any region of the world provided technological is support in the stated localities.
Part C: Conditions for there to be disadvantages of globalization
A globalized economy is sometimes dangerous. The operations of the economy are interlinked and integrated, and a challenge facing one economy may affect the entire global economy. For example, the financial and credit crunch in the USA in 2007/08 affected the world economy (Llurda, Cots & Armengol, 2014). The effect is attributed to the banking systems and other fiscal requirements, which are interlinked. Therefore, the perception that a business access more markets is viable but also the businesses have to operate with a lot of precaution because of interlinked economic disasters (Liou, Rose & Ellstrand, 2012).
In globalization of business, the competitor is greater meaning that some companies are affected easily. For example, the large organizations have resources, which the organization can use to their respective advantage (Spilker, Schaffer & Bernauer, 2012). However, the small business lacks vast resources meaning that the competition would affect the smaller businesses more. Competition affects the way business is done and any strategic requirement, and small companies are affected more. The large companies can withstand pressure for longer compared with small companies (Ćetković & Žarković, 2012). The larger companies in additional can change strategies easily because these organizations access resources easily (Liang, Lu & Wang, 2012). Thus, competition would affect the small companies more than the larger companies.
The purpose of globalization is to engage the different stakeholders in doing business together. However, the developing economies can be stifled by the developed economies. The purpose of any country is to encourage economic development through creating institutions and structures to advance economic development (Spilker, Schaffer & Bernauer, 2012). However, globalization enables the multinational to open local shop or partner with local businesses affecting the local businesses that produces similar products or services. Therefore, the local industries would be unable to develop resulting in the country relying on foreign companies for development.
Developed versus Developing countries
The local industries are affected when it comes to the developing countries. The developing countries face numerous challenges in economic and other development requirements because of the political and infrastructural requirements (Spilker, Schaffer & Bernauer, 2012). Corruption also contributes to inefficiency in the developing countries meaning that an international company may important and sell the products at a lower cost compared with the domestic market. Corruption drives up the cost of operations while the global organizations do not suffer corruption related complications (Syed & Shaikh, 2012). In addition, the local market continues to acquire the global organization products and services without investing in the local industry. It results in an imbalance of trade, which in the long run, affects the developing country compared to the developed country (Croitoru & Stănescu, 2013).
Global Organizations who have Suffered under Globalization
Global organizations have been operating effectively but entering into certain markets and operating effectively is a challenge to numerous multinational organizations. In perspective, organizations suffer due to globalization but the management strategies employed usually addresses the problem (Spilker, Schaffer & Bernauer, 2012). For example, Google is facing challenges in China because of legal and governmental role. McDonald’s faces challenges in penetrating the Latin America markets. Therefore, the level of failure is debatable since companies reorganize and re-strategize to change business approaches to reflect the requirements of the organization and external environment (Birău, 2014).
Globalization is important in the advancement of the world economy. Globalization enables interaction and integration of different regions and countries in fulfilling economic requirements. Globalization is important for the management because the management can benefit through an increase in the market, revenue generation, and balancing an economic challenge. For example, slumping in one economy does not affect the organization adversely. Therefore, strategic management is important is mitigating the challenges associated with globalization. Frequent review of the markets and understanding the variables, which guides the market are important.
The local markets should introduce measures against the dominance of global organizations. For example, improving the quality of the products and services is among the numerous options for a business to survive a demanding business environment. In addition, the local governments should develop measures and strategies to counter the influence of global organization. For example, legislative change and include of business restriction measures are some of the approaches, which can be employed to address the disadvantages of globalization.
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