Global Business Environment - Coursework Example

Global Business Environment Assignment 1 Course Coordinator You-il Lee Name: Guang song Wang Student ID 110068745 11th May, 2013. Introduction and Definitions What do you understand by the Term Globalization? In business environments, the term known as globalization has been used to make reference to different phenomenon depending on the context of application in the whole world. As such, most individuals that hold up the general incorporation of markets universally have set upon it a positive association at the same time as those individuals involved in business but view it like a menace to the societal coherence and the same like a source of ideal capitalism that makes weak the overall wellbeing situation in individual states, have had to a very large degree associated global business with negativity and criticism (UN, 2001 World Public Sector Report; Fletcher 2001). In actual sense, globalization may be a subject that is considered complicated, and in itself includes a lot of different trends and behaviors observable in the social, economic, traditional and cultural contexts that would help define it (Bartlett & Ghoshal 2002). These features associated with it tend to have behavioral implications that accompany the dynamics of business markets (Daniels et al. 2007). As such, and drawing from the aforementioned features of the subject of contemplation, it is assumed that this subject is multifaceted and therefore cannot have one characteristic definition that is applicable to its entire dynamic and multidimensional feature. Due to these well informed, widely researched and documented literature, globalization can be made reference to as an elevated and an exaggerated flow of information, goods, services, capital, individuals along with ideas amid the boundaries of countries, whose end result is market join up, corporation or amalgamation of numerous social, traditional and trade and industry activities that are associated with member states to international relation agencies and groupings (Aman 1999; Bartlett & Ghoshal 2002). In relation to the already mentioned sentiments, globalization is visualized as a source and cause of both opportunities and costs (Daniels et al. 2007). This is the fundamental argument that brings forth the uncertainties that surround the term globalization and brings a lot of confusion cum debates whenever critical decisions are to be made on whether to demonize or sacrifice it in that matter as a business activity should be effected or alternatively be used as a scapegoat by governments in separating themselves from chief problems that face the universal economy today (Martinez 2001; Griffin & Pustay 2008). As such, a thread of thought is drawn from the general argument that, “globalization is an enlarged, bigger and amplified interdependence of universal economies and states in the economic, social and cultural spheres of life across borders and results in an economy, a social order, a way of life and a conviction that has a distinguishing face with attributes and fundamentals or elements similar to those of the whole world or the globe (Mirjana 2012). It is therefore applicable to the business environment that economic globalization comes as a result of market or business regulations and policies that are occasionally arrived at by individual states in an exchange program that allows for operation of intercontinental or rather global market forces (Czinkota & Ronkainen 2005). The multifaceted nature of globalization based on the above discussion indicates that different states in the business association relate and the relationship involves importation and exportation of ideas, labor, cultures, capital, goods and services in order to attain a sort of market that has policies that are identical to those in another state that is involved in the same relationship (Daniels et al. 2007; Luthans & Doh 2008). Similar sample relations are identifiable in United Nations (UN), UNEP, ECOWAS, and many others in the current universal context. The driving force that controls what happens in these relationships is quite dependent on the forces that drove the states into forming these exchange programmes (Czinkota & Ronkainen 2005; Fletcher 2001; Wild 2007). Forces may include exchange of skilled personnel, exchange of goods and services giving a connotation of a business, sharing of limited resources or investments (Luthans & Doh 2008; Wild 2007). For these exchange programmes to be effective and in a way that takes into consideration the interest of each of the member states that take part in it, there is need to create a source of control (Griffin & Pustay 2008). Thus policies that govern the relationship must be formulated. In the process of formulating the regulations that would govern the process of globalization, already developed states or markets tend to have a lot of influence and this influence may lead to the formulation of rules under globalization that only favor their interests over those of economically upcoming or developing states because they have the capacity to influence based on their capital and financial presence in the universal market (Luthans & Doh 2008). Therefore, globalization may be associated with benefits or disadvantages depending on the state of affairs in the exchange. Developed countries are likely to influence the process of formulating rules and take advantage of their strength to close markets for upcoming economies. This results in more benefits going to the developed states and disadvantages to developing states or 3rd World States. Inherently, this particular essay would look at the pros and cons that are associated with globalization based on its type in the body; whether capital, goods, services or labor exchange and finally give a conclusion that is drawn from the discussion thereafter. The cons are alternatively called costs and are as discussed below together with the challenges of globalization and later followed by the benefits or pros of globalization (Griffin & Pustay 2008). Costs or Cons of Globalization The costs of globalization refer to the drawbacks which are linked with it. Liberated Trade or integrated economies forms the foundation of destruction to markets which are overly in the process of budding or upcoming. In most cases, budding nations apply great effort to battle healthily amid governments which are by now industrialized. In a matter of fact, infant business points of view boast of an indication that many of the markets which are just beginning should be sheltered from liberalised trade so that they have space to grow (Giddens 1991). In order to put emphasis on this sentiment, a good number of the countries in the West create tax protections which damage the forthcoming markets thus standing-in like a barricade towards entrance into their business marketplace (Ohmae 2005). Secondly, close by are ecological expenses which are often invited at any time globalization takes place. In close association with globalization, is an improved use of non-replaceable material goods. In the same way, due to high manufacture rates, unenthusiastic and negative outcomes such as contamination; toxic wastes, greenhouse gases, smoke, fog together with global warming would likely be faced (Kettl 2000). A good number of businesses as well can decide to delegate their production practices to states which boast of little efficient policies or non stringent set of government laws acting as a shortcoming to the host nation state. However, this weakness in its sum total cannot be blamed on globalization single-handedly as having set the substandard environmental regulation. The host governments act individually to impose and revise these regulations therefore equally liable for the shortcomings. Labor Drain is another disadvantage owing its foundation to globalization (Wild 2007). Workers can move more freely due to open border exchange processes leading to high employee turnover rates in companies and countries that are still developing (Ohmae 2005). It becomes to a certain extent a big challenge to grasp onto skilled human resources or labor force by budding countries because they become attracted to superior pays or earnings in other countries that they presume to be greener pastures (Goldblatt et al. 2004). Globalization has in the same way led to increased cultural/ traditional and economic supremacy or in other words referred to as dominion thus resulting in less multiplicity culture wise. Globalization, even if open to question, has resulted in muddle up or universal culture mix up therefore some marketplace cultures end up being additionally ordinary than the others based on pre-eminence or superiority of the nations caught up in the agreements of trade during the stage of policy making (Giddens 1991). The most widespread, regular and superior cultures from advanced states manipulate the policies of trade thus less culture assortment in their counterpart member developing states. The spending cultures and market behavior of the superior state is thus expressed more in the markets that are upcoming (Ohmae 2005). More of advanced state goods, way of offering services and market trends are common in the international market than less advanced cultures from upcoming economies. Finally, global businesses, for example Amazon, Google or Coca Cola can establish subordinate, secondary or additional branches in countries that play host to them in order to evade paying trade taxes coupled with overseas investments that, to some extent, are comparatively higher relative to those that are charged for local based companies. Similar subsidiaries established within the boundaries of countries which have exceptionally lower business tax rates, as an example Bermuda then canal or send their profits via them to their mother countries (Ohmae 2005). This is detrimental in that they do most of their economic activities in the host country but as a form of return pay minuscule tax (Wild 2007). For the states to survive under such circumstances they have to increase value added tax (VAT) in addition to revenue taxes thus act as an advantage to the intercontinental business corporations while at the same time an inconvenience to local based producers (populations too) in the host nations who may not afford to escape paying taxes via such questioning ways. This is to mean, the less revenue taxes advocated for besides global business give confidence to the rise in other methods of tax pays in the neighbourhood therefore disadvantaging natives (Walzer 1999). In consideration to above declared costs the following confrontations and challenges are likely to be encountered in the event that globalization or global business is encouraged/ given a positive connotation by a state thus adding to the disadvantages or cons of globalization (Shenkar 2004). Challenges of Globalization to National Governments The tests fronted besides globalization to governments are grouped in four most important classes. Mostly, they emanate from regulations that preside over business deals (Cerny 1999). First and foremost, states ought to make every effort that warrant the reimbursements and advantages of global business are shared equally so that all countries in the trade benefit. This should not be considered as a mission which can take effect instantaneously without human intervention since there exist regulations that should be formulated to control malice plus self welfare which may result from industrially advanced nations taking lead over budding ones (Helleiner 2000). Procedure used for structuring trade regulations would involuntarily be characterised with personality state security therefore a big dispute. Similarly, nations have difficulties to deal and cope with the fear that globalization has an outcome of instability of markets and its effect is even more in the developing nations (Wild 2007). Because of the perception that some states are a lot more advanced and inventive in the line of technology, inhabitants in local markets may have a preference for products from developed governments, as they put it, and therefore hurt their own domestic economy. Intended for illustration purposes, China motorists prefer buying General Motors (GM) Company vehicles (which is an American international car business) products as compared to their own Shanghai Automotive Industry Corporation (SAIC) products. This is because they believe or have trust in the products of GM thus making unstable their economy (Walzer 1999). A different immense difficulty is for nations to resolve the amplified international competition which may result in a race that involves national level of earnings, service and employer customs, marketplace surroundings and manual labor civil liberties (Ohmae 2005). Workers would maintain undertaking contrasts in provisions of remunerations and labour civil rights in relation to other workers in nations that they consider better advanced and established. It then causes migration of trained human resources to governments and nations they regard as “greener pastures” and formation of constitutional or civil right groupings and operational unions within the Labour industry that incessantly claim for take-home pay appraisals and increment. This kind of acts would continuously put governments on ‘toss’ acting more to their disadvantage because there would always be wrangles to solve. However, this favors the employees and not the employers (Sen 2001). Finally, globalization and the technical hitches that surround are not to be used for defence by nations to escape searching for modern methods to combine forces generally and serve in a positive way the natives in nations so as to embrace its reimbursements in totality (Wild 2007). Therefore, governments should endlessly (ad infinitum) struggle to protect its political leanings and partisanship by means of improving regulations to facilitate control in local business and thus defend local marketplaces and not blame all uncertainties to the allusions of global business (Kettl 2000). Pros of Globalization Globalization allows for free or trade that is liberalised (Ohmae 2005). Liberalised trade tolerate business men’s and nations’ swap over goods in addition to material resources. Countries would as a result specialize in manufacturing products in which they will enjoy a comparative advantage. Alternatively, merchandise is produced at a reasonably lower opening cost. When nations do this, numerous compensations are realised in business operations (Peng 2001). The compensations include lower prices for clients, several merchandise and supplies to select from, large business marketplace for overseas selling available for the manufacturers running local businesses, economies of scale facilitated by the capacity to concentrate in producing specific products, and finally a high-minded level of competition that improves on the quality of products (Goldblatt et al. 2004). A hypothesis that links to the relative gain puts in plain words that being particular or specializing in products in which governments have a comparatively lower opportunity cost, there would be a boost in the economic security for all nations and this is facilitated by free trade (Ohmae 2005). Correspondingly, economies of scale gives an indication that the countries are particular in the production of goods benefit from lesser average prices, especially in manufacturing business that work with high fixed costs such as capital for establishment (Cerny 1999). The benefits associated with economies of scale will in the long run result in reduced prices charged for goods and services purchased by customers. In addition, due to a better competition by local manufacturers from international based organization, monopoly will be done away with and consequently discourage the charging of high prices for goods by sole businesses acting in dominion in the markets. Inherently, free trade acts as an instrument of business growth because its implementation has made world trade rise by approximately 7% on average since the year 1945 (Kettl 2000). Secondly, global business results in free labour movements across borders. A rise in labour movement acts as a beneficiary to both labour workforce and state that receives them (Porter 2000). Most countries that experience incidences of high unemployment rates as a result of few markets or businesses to absorb personnel would have greater chances of seeking employments in other partner governments in trade with vacancies. As a result, the labour migrations that take place to and from different states help lower geographical disparities (Cerny 1999). This phenomenon is specifically observable in European Unions, which experience most of the labourers in countries to the Eastern parts of Europe moving to the West of the same region. Further, most governments that have experience in cases of technical labor shortages can hire skilled and qualified personnel from other countries that have excess and willing employees to fill certain important vacancies several departments in their markets or organizations depending on availability (Mirjana 2012; Ohmae 2005). Greater Competition then again reduces domination that conventionally is protected by lack of competition or insufficient competition (Porter 2000). Consequently, customers have a variety of goods in addition to skilled servicing that they choose from. This aspect of business influences the choice of purchase in that it will depend on how much or what price the company sells its products (Aman 1999). At whatever time that similar options are accessible, many businesses men tend to offer on average lower pricing in contrast to their business competitors in order to entice customers. The last advantage of global business is increase in the level of investment in developing states. An improved level of investment and deregulation (removal of policies that act as barriers) of the investment segments in most advancing countries lead to an attraction of long term and short term investors. In the long run, the presence of investors in their countries would improve their economies (Ohmae 2005). Such higher levels of capital flow in terms of foreign investments contribute in the building and stabilization of market characteristics, features and aspects of the markets that are in dynamic transitions or changing for the better because they inculcate, through trade, multiple international market behaviours (Mistry 1998). Conclusion Therefore in consideration to the above mentioned dints, globalization involves elevated and exaggerated assimilation and co-operation of wide-ranging free market trades, improved labour movement between nations, increased capital flows in investments, growth of global companies as they establish subsidiaries in developing states, increased integration of global trade sequences or cycles with multifaceted dimensions, and increased communication between states are outcome that result from more developed transport systems that generally help lower the levels and barriers that exist between countries. Therefore, the advantages associated with globalization are somewhat more than the cons of globalization. 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