Distributional Effects of Globalization in Developing Countries - Literature review Example

Globalisation By Location Introduction Globalisation is the process by which national and regionaleconomies,cultures and societies have been integrated into the global network of transport, communication, trade, and immigration. Different changes have been made throughout the world to facilitate globalisation. Primarily globalisation in the recent past focused on the economic sector in areas such as international capital flow, trade, and foreign direct investment. Globalisation has facilitated the integration of businesses across national boundaries. Thus, globalisation has been characterized by some of the trends such as: Increase in export and import because of the lowering of trade barriers Collaboration between companies which form joint ventures from different countries Faster spread of innovations across the world Availability of variety of services and goods for consumers Since 1955, trade in international manufactured goods has grown on an estimate of 100 times that is from $95 billion to $12 trillion. The link between different nations and regions has grown immensely. Communication networks have increased resulting ina drastic decrease in communication cost. Transportation and immigration have also increased with a record of 200 million migrants around the world. Recently, the transportation of goods and people has increased with the increased in the number of flights (Lofgren &Sarangi 2009, p.89). There are over 2.3 million flights that travel per month. The world in today’s era is much more interlinked than the past. Over time, globalisation has been driven by a number of factors as discussed in this essay. Marketer’s drives Information technology has brought a great turnover in the marketing sector. Industries can share marketing ideas from one nation to another. Companies can research their competitors through the information technology for instance www.hoovers.com. Through the internet companies and industries can get instant feedback from the consumers all over the world. The world has become a village as a result of globalisation. Marketers can communicate in real time across the boundaries. The speed at which transmission of information moves from the sender to the receiver has changed, where information is exchanged accurately and fast(Lofgren &Sarangi 2009, p.119). Additionally, there is integration of different companies. With globalisation in the marketing sector, there has been a great influence. Over time, the customer needs have become common. People from the third world and developing nations have tried to adopt cultures from the developed countries. The developing countries focused on economic development while looking at the economic status of the developed countries. Cases of transferable marketing have increased as marketers use the same brand name across many boundaries. The channels of distribution have also increased. The developing countries export raw materials, and they receive the manufactured goods from the developed countries (Ahmad, 2013). Innovations on the marketing sector move from the lead countries such as Germany and Japan into the other countries. Globalisation facilitates the exchange of ideas from one nation to another. That is why customers in different parts of the world have the same customer needs. However, the common interest of customers depends on the degree of homogeneity of different conditions, cultural variables, and disposal income. For instance, Coca-Cola Company offers similar but not identical products all over the world. Other products such as oil products, accounting services, and computer Softwares look alike no matter where they are purchased. That shows that consumers in the recent past have similar needs. In the recent past, people’s culture affected the consumption and purchase of goods and services. However, globalisation has broken the cultural barriers, and people are adapting to a different standard of living. Additionally, the per capita income has increased with the increase in gross domestic product (GDP)(Lofgren &Sarangi 2009, p.73). Global branding and marketing have also become similar to consumption patterns becoming more homogeneous. For most of the companies to succeed in the marketing sector, they need to brand their goods according to the needs of the consumers. Additionally, global channels have emerged to satisfy the needs of the customers all over the world. The quality of the services and products has increased to satisfy the needs of the consumers. That is why most of the countries all over the world have engaged in importation and exportation of goods and services to cater for the needs of the consumers. Global distribution of goods and services has resulted in convergence of needs. Corporations such as Boeing and DuPont have increased the quality of their good to ensure that it is supplied to the whole world(Lofgren &Sarangi 2009, p.56). Increase in competition has resulted in an increase in quality of goods and services as companies strive to earn large profits in the global competitive market. Cost drivers Increase in globalisation alters the economies of scale of many industries. There is a need for an increase in the economies of scale because a single market cannot cater for the needs of the large population. The experience effects, economies of scope and scale, and factor costs of the product development assume a greater importance as they are determinates of the global economy. The manufacturing costs increases as the demand for goods and services increases immensely. Companies have to maximize their investment if they want to cater for the needs of the large population (Walsh 2006, p. 63). Apart from the manufacturing and distribution cost, the company should also consider the advertising cost. The advertising sector has greatly revolutionized as a result of globalisation. The companies are thus can come up with an advertisement made for a certain group of people. That is why there is the introduction of market segmentation where markets are categorized according to the needs of the consumers. Although, the needs of the consumers may be similar advertisement need to be done different in order to capture the attention of all. There are also different platforms for advertisement. Thus, the company should always identify the correct channel they should use to reach a certain audience(Zajda 2009, p.67). Additionally, as a result of globalisation the advertisement sector has come up with new ways of advertising the company’s products. Most the companies focused on the social media if they want to target the youth. Social media is a great platform for advertising. The companies also look at the objective assessment of the costs and global opportunities. The marketers are supposed to invest in scaled economies and control the costs that include developing logistics, overheads, and conducting a research (Walsh 2006, p. 102). Differentiation and cost leadership should be balanced appropriately. For instance, products may be produced on one product line but branded and positioned differently in order to meet the customer tastes. Global marketers combine the high differentiation with cost containment. Thus, the global activities that they are involved in contributing to economies of scale in marketing and production. Marketers have to ensure that they monitor costs because the customer values mostly depend on the price paid. The marketers have to identify whether the goods and services they are selling cater for the needs of the consumers. Scope economies and global scale have far reaching effects. As the new economies come in, they shape the strategies of incumbents in the global industries. It is hard for the new entrants to develop an effective strategy to thrive in the competitive market. The barriers to market entry get higher every day(Walsh 2006, p. 93). Thus, the regional and interdependent markets which have already strived will continually supply the customers with goods and services globally. If the upcoming industries want to thrive in the competitive market, they have to increase the production cost. That means that they have to produce goods and services of high quality more than the existing ones. Government drives Government rules and regulations have greatly contributed to globalisation for instance, privatization of some of the state-owned companies. Through privatization, the companies have increased their economies of scale. After the privatization of some of the companies the quality of goods and services increased (Fagan &Munck, 2009). The private investors are aiming at gaining profits. Additionally, most of the private investors target the global markets. Thus, they have come up with strategies to ensure that they cater for the needs of the global market. Privatization of companies is a drive that facilitates globalisation. Governments have also embraced free trade agreements with different nations. The factor has greatly resulted in globalisation (Rajagopal 2012, p. 15). Most of the governments have common marketing strategies. Thus, they affect the level in which the global policies can be applied. The marketing and advertisement strategies affect the global marketing policies. For instance, the media in most of the countries chooses what to advertise in their social media. Thus, the restrictions on marketing and advertising sector may be similar in most of the governments. Thus, most of the industries look into the advertising sector and ensure that they work in line with the regulations of their country. The marketing and advertising sectors in different states have facilitated globalization (Goldberg, Pinelopi,&Nina, 2007). Companies all over the world follow the SWOT analysis in coming up with marketing strategies. The governments all the world have investment policies and unrestricted trade. The country’s boundaries are opened. There are no restrictions in the trade industry. Over the past fifteen years there has been a shift towards open market policy in many economies. That is there is a shift in the open market economies of scale. The countries have also formed global strategic alliances. The financial markets have also come up with policies that promote globalisation in most of the countries. The industries have been encouraged to come up with strategies that promote globalisation, for instance, coming up with goods and services that cater for the large population (Rajagopal 2012, p. 52). The goods have to be manufactured and later branded to fulfill the needs of the consumers all over the world. Governments have also reduced the tariff barriersand reduced the non-tariff barriers, thus, increasing the level of the world trade. Reduction of tariff barriers is an important factor in shaping globally competitive environment. In the recent past, most of the companies relied on the government to make rules of the global competition(Tiplady 2003, p.89). However, with time this has changed. Companies do not relay on the government to make rules regarding the global market. Companies are only working on the needs of the consumers globally (Rajagopal 2012, p. 32). The companies have begun to pay attention to nonmarket dimensions of their global strategies which are aimed towards shaping the global competitive environment. The balance between the multinational corporations and national governments affects policies and regulations of the global competitiveness. That is the multinational corporations do not rely on the government policies. Over time, the multinational corporations have compatible technical standards. That is the differences in the government standards limit the extent to which some of the products can be standardized. For instance, in Japan the Motorola products were withdrawn from the market because they were operating in a prohibited frequency. Thus, the government can cause a negative or positive impact on the global markets depending on the restrictions they have set. Globalisation has taken a root in most of the countries because most of the countries possess uniform technical standards (Rajagopal 2012, p. 47). Competitive drivers Competition has led to the increase in quality of goods and service. For a company to thrive in the competitive field, it has to ensure that the products and services delivered to the consumers are of high quality. The competitive markets have come up with ways to ensure that products are distributed all over the world faster than before. A company that does not match up to the global markets it is picked off by the global players. Thus, a company has to do a research on market segmentation and the needs of the consumers in order to thrive in the competitive market. Companies should also come up with marketing strategies that ensure it reaches the targeted audience (Baguley 2004, p.93). The leading companies such as Coca-Cola and Nivea drive the globalisation process. Industry characteristics are great determinates of globalisation(Great 2009, p.23). The total industry sales are made up of import and export values in a country. The diversity of the competitorshavecreated primary players in the globalized operations. Companies have created interdependence between their competitive strategies in different parts of the world. Other factors that increase globalisation in the competitive sector include high levels of trade and competitive diversity. Competitors always aim at causing industry globalisation by producing quality goods and services for the wider population. The growth of the global networking has resulted in interdependence, in most of the countries. The organization and companies are becoming more internationally oriented rather than nationally oriented. Most companies focus on reaching the world, thus ensuringthat they operate on a global basis. The corporations have also formed global strategic alliances in the marketing sector. Most of the upcoming competitors focus on becoming global. Thus, competition has greatly heightened globalisation (Baguley 2004, p.93). Other Drivers Apart from the market, competitive, government and cost drivers of globalisation, there are also other factors that have facilitated globalisation over time (Ritzer, 2007). They include global communication, advancement in transportation and capital mobility among others. Global communication has facilitated the exchange of ideas from one nation to another. People can socialize through the use of the internet. Channels such as social media have facilitated the transmission if ideas, wants and social norms. As a result, people have developed homogeneous tastes as people exchange their ideas globally. Marketers have had a challenge in crafting messages that transcend the cultural particulars and appealing to all the people in different parts of the world(Baguley 2004, p.111). Technological advancement which is among the other drives has facilitated globalisation. Companies are using e-business and e-commerce in their business transactions. There is also development of telecommunications and microprocessors which have enabled computing to take place at a low-cost. Communicating through the internet is one of the cheapest modes of communication. The internet has also revolutionized the transportation industry, thus facilitating globalisation(Gangopadhyay 2005, 45). Capital mobility is also a factor that has facilitated globalisation. Companies can obtain finances from a variety of sources. They can secure funding from abroad and use it locally. As a result, there is domestic growth, which later leads to globalisation. For an organization to get funding, they must come up with a strategy that clearly shows that they can cater for the needs of the wider population. That is when the foreign marketers will come in to fund a program if it provides its services globally. Personal experience Globalisationhas had a great effect on my life. I am able to have friends from all parts of the world as a result of globalisation. This has been majorly facilitated by technological advancement. Technological advancement has also brought a turnover in the transportation sector. I can purchase a product from a different part of the world and acquire it within no time. Through globalization I buy goods online and they are delivered at my doorstep from any part of the world. Passing information from one person to another has become much easier because I get instant feedback. Nowadays I purchase a product or get an access to a service at any time of the day. Companies are working day and night to ensure that they cope up with the situations and the growing competition. Through globalisation, I have also managed to get great ideas from different people.Innovations are coming up as a result of globalisation. Thus, my creativity has moved to different levels over time. Discussing ideas with the people has increased my knowledge from different parts of the world. Through that I have invested in different areas thus increasing my salary. My standards of living has greatly increased as a result of globalization. Standards of living have advanced as a result of improvement in infrastructure, health care, education I can access online all the materials I require for learning and socials services. The nation is moving at a globalization pace. Thus, they are ensuring that they come up with better social amenities for their citizens. Through that, I have benefited a lot especially from the health centers and modes of transport. Conclusion As evident in this paper, globalisation is an extensively controversial process. Openness of the leading trading nations has a positive effect on globalisation. The leading trading countries are open to the world and are willing to share their ideas with different people. Most of the goods and services given by different companies such as soft drinks are already globalized. Most nations are abandoning their cultures and adopting new ways of living because of globalisation. People will always want to be identified with a globalised product or service. To draw a balance between the benefits and costs linked to this phenomenon, every individual need to come to an understanding of the undertakings and policy choices that face the nations and every individual. As discussed in the essay above, globalization has motivated the growth of the business ventures. There has been improvement in the business sector such as establishment of joint ventures, establishment of laws to protect the intellectual property such as the trademarks, copyrights and patents. Companies have also made higher profit because they are exposed to the global market. There is also reduced technological barriers in the movement of goods and services from one country to another. With this understanding therefore, it is possible to manage the effects that globalisation might cause to me as an individual as well as to the entire nation. Bibliography Ahmad, A. (2013). New age globalization meaning and metaphors. New York, NY, Palgrave Macmillan. http://www.palgraveconnect.com/doifinder/10.1057/9781137319494 Baguley, J. M. (2004). The globalisation of non-governmental organisations: drivers and stages. n.p. Fagan, G. H., &Munck, R. (2009).Globalization and security: an encyclopedia. Santa Barbara, Calif, Praeger Security International. Gangopadhyay, P. (2005). 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Globalisation, policy and comparative research discourses of globalisation. [Dordrecht], Springer. http://public.eblib.com/choice/publicfullrecord.aspx?p=571925. Read More