The Advantages and Challenges of Globalisation for European Business Organisations - Literature review Example

Running Header: Globalization Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction Globalization is the process by which societies, regional economies, and cultures have become incorporated. This is in through a global network of trade, transportation, and communication. It is also referred to as economic globalization that is, the integration of national economies into international economy mainly through capital flows, spread of technology, trade, foreign direct investment, and migration. Amy (2004, p. 17) argues that Globalization is usually driven by various factors like biological, economic, socio-cultural, technological, and political factors. It can as well be described as increasing connectivity, integration, and interdependence on a global level with respect to ecological, economic, political, cultural, and technological factors. Globalization is crucial in ensuring border barriers are broken between various countries, governments, communities, and the economy. It involves blurring of borders between various financial markets. According to Geoffrey (2009), they are various advantages associated with globalization. There is easier and speed transportation of people and goods between various countries. There is also increased free trade between various countries. According to Bhagwati (2004, p. 89), Globalization increases the economic opportunity and prosperity in the developing world among other advantages. However, some disadvantages are associated with globalization. Such advantages include increased flow of skilled and non-skilled labor from developed nations to developing nations. However, globalization has various disadvantages including causing international tension and trade disputes with no arrest to the process among others. According to European Commission (2010), European Business Organizations was created between specific interest groups from the European Commission and EU business associations in non-EU business countries. The main objective of the group is promoting views exchange between host countries and those associations as well as establishing a relationship between the commission services and these organizations. As illustrated by Debra & Colin (2006, p. 134), European Business Organizations are located in Chile, China, Argentina, Armenia, Korea, Japan, Macedonia, India, Ukraine, Vietnam, Russia, Malaysia, USA, Taiwan, Sri Lanka, Singapore, and Philippines. Advantages of Globalization According to Craft (2000, p. 123), Globalization as a way of increasing economies integration in terms of information, technology, goods, and services benefits adversely the developing countries. It is a process whereby everyday experience life that was marked by ideas and commodities diffusion is becoming standardized all over the world. Globalization in European Economic countries has been contributed by increasing sophisticated technologies and services in transportation and communication sector. Other factors that have contributed include mass migration, movement of people and mass migration, a level of economic activity outgrowing national markets through commercial groupings and industrial combinations that cross national frontiers and international agreements that decrease the business cost in foreign countries. Sheila (2004, p. 67) argues that globalization ensures that huge potential profits to organizations and countries. However, differing expectations, legal systems, cultural and values, unexpected global effect-and-cause linkages, and living standards have complicated this. Globalization involves increasing degree of connection between various countries and their economies. According to Clinton administration, globalization had the potential of harmonizing customs, politics, ushering in prosperity, democracy, and development. Globalization has led to many implications for various national economies. It has led to intensified competition and interdependence in the world market economies. These reforms in economy have resulted to various significant benefits or advantages. They are various advantages that are associated with Globalization in European Business Organizations. It has led to increased trade between various nations. According to Buzzle.com (2009), it has also increased liquidity of capital; this has allowed investors in developed nations to invest in the countries that are developing. This is through being permitted by investing on the untapped resources of various developing countries. Globalization also ties global mass media together in the world. This is through the reduction of mass-global space considerably. It has also allowed increased communication flow that allows sharing of crucial information between various corporations and individuals all over the world. This helps to keep people informed about the international events through various television channels. The news is transmitted around the world immediately it takes place. This has also led to increased ease and speedier transportation of people and goods to various parts of the world. Global communication networks have improved greatly resulting to easier flow of crucial information to organizations and individuals levels. This is playing a crucial role of spreading democratic thoughts among countries globally due to globalization. Globalization has led to world economies development facilitation through free movement of capital (EconomyWatch, 2009). This offers access to the foreign investment to various nations such as USA. Countries are able to invest in one another as well as developing trade with other countries. Businesses are also capable of opening and selling their commodities in newly created foreign markets. Global market is a more free and open even in a faltering economy hence making world a better place. According to Wolf, (2004, p. 98), globalization has also led to cultural barriers reduction hence increasing the global village effect or making global village become real. There has also been propagation or spread of democratic ideals to developed nations. Globalization has led to greater interdependence of various nation states. Globalization has led to reduced occurrence of war between various developed countries. This is through reduction of warfare occurrence among European Business Organizations to greater extents. Globalization has increased in environmental protection in various developed states. Globalization has gone beyond the concerns of the economy to addressing other issues of the environment like global warming. According to European Business Organizations, people working in a global way are capable of reaching far-reaching consequences. Commercial markets globally have become flexible among European Business Organizations due to globalization advent. This has made the international companies not be restricted by geographical countries borders of various states. This has led to enhanced free international trades among various countries all over the world. Globalization is also advantageous as it insists on increasing mutual dependence among various countries around European Business Organizations. There has been increased productions of total output levels of a nation. This is mainly due to increased competition within the existing world market as quality of the products demand increases. This has led to improved lifestyle of the overall population. Extensive competition and cheap imports internationally has kept a check on prices. This has led to lower rates of inflation that in most instances have interrupted the growth of economy as well as nation’s development. Globalization of economy in European Business Organizations has ushered in the concept of open economy where there is a far-reaching promotion of inventions and technological growth. This involves the importation of new concepts from other parts of the world. Globalization is advantageous in that it reduces blockage of culture and differences among various nations through mutual compassion and fellow-feeling encouragement. This is through the acceptance of diversified cultures by various people around the world. Globalization has been the main pillar of raising standards of living and poverty reduction globally and in particular European Business Organization. Movement of goods, people, and ideas has been made less expensive by globalization as well as being at a faster rate. This has also increased the access to various types of items and other related goods mainly due to availability of cheap means of transportation. This has lead to goods and services being produced in one part of the world become increasingly available in almost all parts of the globe. This is mainly through international travel that is more frequent. Globalization has been said to increase the economic opportunities and prosperity in the developing countries. It has enhanced the civil liberties with more effective utilization of resources as all the countries participate in the free trade at a profit. Globalization is a positive-sum chance whereby technologies and skills enable an increase of the living standards throughout the globe. Globalization has enhanced the information flow among various geographically remote areas. It has also enabled a broad access to a variety of consumer and organization’s commodities. Globalization has led to privatization of several utilities such as water, telecommunications, and power. This has increased the access of these resources to the society worldwide. Challenges of Globalization According to Anders (2008, p. 78) there have been negative effects that have been caused by the rise of globalization. Such effects have rose in a number of ways. Such areas that have been affected by globalization include industrial, financial, economic, health policy, political, informational, language, competition, ecological, culture, social, technical, legal/ethical, and religious. There has been increased inequality and environmental degradation that has generated some significant opposition internationally. Globalization is believed to have eaten away at its competitive edge in agriculture and industry lowering the quality of life. Globalization challenges include failure of it to occur and extend automatically to all nations. Globalization in most instances leads to instability and particular in the developing world. The other great challenge is addressing the fear of industrial world global competition. This is likely to lead to an inexorably race to the bottom in the environment, employment practices, labor rights, and wages. In most instances, globalization and its complicated problems might be an excuse of avoiding the search for new ways towards cooperation in the overall interest of people and countries. Globalization has also been blamed for increasing the gap between the rich and poor among and within the countries. Globalization has also brought about great challenges in labor and environmental standards. In advanced countries, globalization has led to the weakening of environmental and labor standards as they compete with less-regulated producers in the developing countries. Another challenge of globalization is increased flow of skilled and non-skilled jobs mainly from developed to developing countries as various organization try to seek for cheaper labor. Globalization also faces another greater challenge; it increases the chances of economic disruptions to other nations in case one nation is affected. This is due to interconnectedness of these markets. The collapse of subprime mortgage market in United States resulted to global financial crisis and recession. This affected almost every nation in the world. The corporate influence of nation-states exceeds by far the influence of civil society organizations as well as average individuals. Moore & David, (2009, p. 132) argues that globalization poses a major challenge in that there might be limited cultural expression as the world media is controlled by a handful of corporations. It might also result to reactions as it becomes violent in an attempt of preserving cultural heritage. The free movement of goods and people between various organizations and countries might unintentionally lead to a greater risk of disease transportation among several states or countries. Such diseases include Tuberculosis (TB) and HIV. In 2006, the number of people with TB was higher among foreign-born people in US. It was 10 times higher than those who were born in United States according to Shirley (2004, p. 150). Globalization has made various international organizations like World Trade Organization infringe to both national and individual sovereignty. Globalization increases the chances of civil war occurrence within developing countries and open war between countries. This is as they try to get resources from each other. Another major challenge of globalization is the decrease of environmental integrity. This is due to polluting corporations take advantage of developing countries’ weak established regulatory rules. According to Alfred & Marika (2005, p. 57), Globalization has made small business to meet a great challenge of trying to establish them. This is mainly due to larger organizations that have already established themselves hence having stronger foundation in business world. Globalization has also led to growing wage gaps between the educated and uneducated in both developing countries and developed countries. Globalization and market reform that reflect and reinforce their integration into the global economy is likely to exacerbate inequality in the short run. This might raise the social tensions and political costs of inequality that is associated with it. Globalization has made some powerful economies to rule over the international economy. This makes the less developed or well up economies feel suppressed by them. This may likely interfere with the economic relations and ties among those states or organizations involved. The major regional economic blocks such as Europe, Japan, and America have dominated the European Business Organization. This has led to other countries like feel suppressed due to the domination by those countries. The three major countries are responsible for 43 percent of global capital transactions with the rest countries taking the other percentage. It is clear that the developing countries have not yet taken the advantages of globalization. This is a great challenge that globalization is facing. Many developing countries are blaming their sluggish of development on the globalization that has made developed countries take the advantage over them. Globalization has not contributed towards the distribution of income between developing and developed countries. McAlister, (2005, p. 250) argues that globalization has led to industrial closure of some companies in some countries as others produce products at a lower cost than the others have. Chinese cheap textiles have flooded US, European, and African market in recent decades. This has definitely resulted to closure of some industries as well as loss of jobs due to influx of cheap Chinese goods in the market. Globalization has also led to the shift of industrial activities to areas that have less workers safety regulations. Globalization has led to emergence of economic powers. Globalization has created a major challenge in the culture of European Business Organization members. Globalization has combined several cultures making it something different. Food has been the major part of culture that has diversified greatly. Americans are now eating Japanese noodles while Australians are eating classic Italian meatballs. Globalization has caused a great influence on the food globally. This has caused a change in the economy as several organizations or business try to establish in the hotel industry in selling foreign foods. Due to shift of industries as globalization establishes various industries and agriculture in the Midwestern United States hence lowering life quality in the society. There has also been a major brain drain as professionals and experts seek for opportunities in well-established organizations or countries. In India, students moving out to seek for higher studies cost it a foreign exchange outflow of over $10 billion annually. Conclusion Globalization has been defined in general terms as the process of integrating people and nations economically, culturally, and politically into a larger community. Globalization has brought people and nations together as technological innovations have dissolved the barriers of distance and time enhancing information flow promoting greater understanding and awareness. Globalization is a synergistic and complex process whereby technology improvements has combined with markets deregulation and open borders to bring about the expanded flow of people, information, services and goods. This process has integrated businesses, people, nations, and nongovernmental organizations into one great network. Globalization has led to promotion of several aspects including growth, harmonization, efficiency, convergence, homogenization, and democratization. Communication has been made easier due to increase and growth of technology such as internet. Despite many advantages of globalization, there have been challenges that are associated with globalization. Globalization has been known to produce social and economic dislocations. This has aroused public concerns over job security, economic gains distribution, as well spreading fears over the growing concentration of economic power. Other challenges that globalization has brought around include the increased harm to the environment, danger to public health as diseases spread easily from one region to another due to increased movements. Globalization has led to labor shift as well as brain drain among some states. This is due to rise of wages differences. Globalization has also led to shift of various industries as they seek to establish in countries where regulatory laws on environment and employment are not strict. The globalization process will lead to higher unemployment levels in the developing countries. References Alfred, P & Marika, L 2005, Challenges of globalization: new trends in international politics and society, Transaction Publishers, London. Amy, K 2004, ‘Globalization’, Economic Review, vol. 17. no. 3, pp. 16-19. Anders, A 2008. Challenges of Globalization: imbalances and growth, Peterson Institute, New York. Bhagwati, J 2004, In Defense of Globalization, Oxford University Press, New York,. Buzzle.com 2009, Advantages of Globalization, viewed on 19 Oct. 2010, http://www.buzzle.com/articles/advantages-of-globalization.html Craft, N 2000, Globalization and Growth in the Twentieth Century, IMF Working Paper, Washington. Debra, J & Colin, T 2006, European Business, Taylor & Francis, New York. EconomyWatch 2009, Advantages of Globalization, viewed 19 October, 2010, http://www.economywatch.com/economics-theory/globalization/advantages.html European Commission 2010, International affairs European Business Organizations, viewed 19 October, 2010, http://ec.europa.eu/enterprise/policies/international/listening- stakeholders/european-business/index_en.htm Geoffrey, L 2009, Advantages and Disadvantages, viewed 19 October, 2010, http://www.darkseptemberrain.com/ideas/advantages.htm McAlister, E 2005, ‘Globalization and the Religious Production of Space’, Journal for the Scientific Study of Religion, vol. 44 no. 3, pp. 249-255. Moore, K & David, L 2009, Origins of Globalization, Routledge, New York. Sheila, L 2004, Globalization and Belonging: The Politics of Identity in a changing World, Rowman & Littlefield, London. Shirley, J 2004, Challenges of globalization, International Review of Management, vol. 44, no. 3, pp. 143-154. Wolf, M 2004, Why Globalization works, Yale University Press, New Haven. Read More