Globalisation in a Business Context - Assignment Example

Student’s Name: Institution of Learning: Instructor’s Name: Course Name: International Business Q. 1. In a business context what is globalisation? Discuss the key drivers associated with globalisation? Globalisation is a phrase that is used to define and describe numerous worldwide phenomena. In some quarters, this term has generated positive connotations among supporters of a greater economic integration beyond national borders. However, in other quarters, globalisation has been aggressively critiqued by those who see it as a danger to social cohesion or integration and as the progression of unregulated capitalism, which undermines the national state (Wild and Wild). Certainly, globalization is a multifaceted phenomenon, which incorporates an inordinate range of tendencies and movements within the economic, cultural, and social spheres. Globalization has a multidimensional nature and hence does not offer itself to a unique, exclusive definition. However, according to the International Monetary Fund (IMF), there are four crucial features of globalization that effectually describe this idea in a business context. These aspects include trade and transactions (such as imports and exports); capital and investment movements (such as Foreign Direct Investment (FDI)); migration and movement of people; and dissemination of knowledge. Simply defined, globalization may be described as cumulative and intensified flows amongst countries of products, people, capital, ideas, and information, which generate cross border integration of a variety of economic, cultural and social undertakings (Wild and Wild). Globalisation occurs in both cultures and markets as a natural phenomenon that enables synergy through specialization. Accordingly, this enables domestic economies to acquire a greater variety of products, human capital, services, investment, and knowledge by leveraging external markets. Indeed, the progression of this natural phenomenon offers interesting perceptions regarding the value gained through international trade, emphasizing its vital role in global economic development (Cavusgil, Knight and Riesenberger). Indeed, the dynamics of the process of globalization are moulded, to a large degree, by the fact that its participants exist in an unequal circumstances. Accordingly, the governments of developed nations, alongside transnational corporations, wield the strongest influence, whereas governments of developing countries and civil society corporations have much lesser influence. Furthermore, these players, mainly developed countries hold and exercise the right to implement unilateral or bilateral actions and to take part in regional practices, concomitantly with their contribution in global discussions and debates (Cavusgil, Knight and Riesenberger). There are three major driving forces that propel increased globalization. These include technological innovations; the formation of global trade organizations such as the World Bank, IMF and WTO; and political alignments and agreements. Advances and innovations in technology has become one of the key drivers of globalisation in the past decade. Specifically, advancement in information and communication technology has provided various individual economic players (such as businesses consumers, and investors ) with valuable innovative tools for recognizing and pursuing economic prospects, including more rapid and more knowledgeable analyses of economic tendencies all over the world, easier assets transfers , and collaboration with partners across geographical boundaries. Further, advances in transport technology have made it faster and cheaper to travel to different parts of the world as well as supporting more environmentally friendly methods of travel. Indeed, through increased technological advancement, markets and supply for products and services have progressed from local and regional levels to international levels. Further, the formation of international trade organizations such as the IMF, WTO and the World Bank has fuelled the growth of globalization. These organizations have sought to enhance international economic integration by advocating for uniformity or harmonization in trade practices all over the world. Accordingly, such organizations have instituted norms, rules, standards, and practices that are defined and applied according to regional alliances or the world collectively, instead of within the confines of individual nation-states. The result of these regulations by these organizations is streamlined trade characterised by liberalized investment, hence globalization (Milner 834). Political agreements and alignments have fuelled the growth in globalization by diminishing the importance of political boundaries and addressing issues on a regional or international platform. Notably, through these political alliances, governments have negotiated significant declines in barriers to trade and have instituted international agreements to support trade in products, services, as well as investment. Moreover, these alignments have helped to create stability in many regions of the world thereby creating an environment that is conducive for cross border and international business. In addition, many governments have embraced free-market economic structures, which have increased their individual productive potential and created a myriad of new opportunities for international trade and investment (Cavusgil, Knight and Riesenberger). Q.2. Compare a mixed economy with a neo-liberal market economy and explain how the role and functions of government differs between them? A mixed economy is defined as an economic system that combines characteristics of different types of economic system. Accordingly, in a mixed economy certain sectors of the economy are often under private ownership and free market dynamics, while other areas are characterised by government ownership and government planning. A mixed economy may also combine certain aspects of socialism and capitalism, or a fusion of market economics and planned economy features. On the other hand, a neoliberal market economy draws from the neoliberalism theory, which is defined as a system of political economic practices act to liberate individual entrepreneurial choices and abilities within an institutional framework defined by steady private property rights, free markets and free trade (Harvey 9). A neoliberal market is characterised by the primacy of economic advancement; the significance of free trade to encourage growth; an unrestricted free market; the decline of government regulation; individual choice; and the promotion of a transformatory model of social growth (Samuelson). In comparison, a mixed economy favours the cooperation between public and private sectors of the economy while the neoliberal market economy ideology favours unconstrained autonomy of private companies to pursue profits, the removal or decrease of government influence, regulation or control of economic activity; and the privatization of public enterprises and services. Notably, Neoliberal market policy prescriptions accord priority to the inhibition and regulation of inflation rather than economic growth and employment. Conversely, mixed economy policy prescriptions place emphasis on economic growth and streamlining employment opportunities while allowing the government to control or prevent inflation (Samuelson). In addition, a mixed economy has numerous advantages such as rapid economic growth; reduced inequality of income; balanced regional growth; increased freedom for individuals to own private property; and the primacy of public interest. Advantages of a neoliberal market are limited to increased democracy and political freedoms; universal free trade benefits and poverty reduction; and increased globalization that has led to expansion of business opportunities and employment pools beyond geographical borders (Makwana). In terms of disadvantages, the mixed economy leads to increased corruption, inequality of income and increased fear of nationalization while a neoliberal market results in increased global income inequality, severe global economic disasters ( such as the recession in 2008, current financial crisis in Cyprus and the European Union) and declined social cohesion (Joya). With regard to the role of the government, a mixed economy advocates for government involvement in the market dynamics, while a neoliberal market economy seeks to eliminate or reduce the involvement of the government in market dynamics. Notably, in a mixed economy, the government is tasked with three main functions that include the provision of public goods; distribution of personal income through tax and expenditure regulation policies; and the institution of stabilization measures to shield the market against economic fluctuations such as inflation, depression, boom, and unemployment (Samuelson 377). Conversely, the neoliberal market economy policies strive to compel the government to abandon its regulatory role in the economy, in order to promote unrestricted profit- making among privately owned conglomerates. In a neoliberal market economy, the government is viewed as a facilitator of business exploitation and hence its role must be declined (Makwana). Q.3. Discuss culture shock? What strategies can be put into place to ensure that culture shock is minimised? Culture Shock has a substantial role in inhibiting the success of any international business undertaking. According to Ferraro (2006) culture shock describes the feelings of anxiety, uncertainty, or confusion experienced by individuals when visiting, doing business or living in a new or different society (Ferraro). Specifically, Culture shock is occasioned by the anxiety that arises from the individual loss of familiar signs and symbols of social intercourse such as language, behaviour, religion and customs. Culture shock as a process of adapting to a foreign or new culture is occurs in four main stages. The first stage is known as the honeymoon stage characterised by elation and optimism. At this stage, the individual will ignore minor difficulties and is enthusiastic to learning new things about the new culture. Further, the individual considers cultural differences as fascinating and merely identifies and focuses on the positive traits of this different culture. Essentially, at this stage the individual is attracted, curious and tolerant and is willing to accept the situation. This phase lasts from just a few days to approximately six weeks (Wild and Wild). The second stage is the Crisis phase which is actual culture shock phase, whereby the individual begins to see the new environments in a less idealistic and more rational way and thus begins to see the negative facets of the host country. Consequently the perceived differences between own and foreign culture cause feelings of anxiety, that manifest in irritability, confusion, and frustration. Particularly, the variances in language, values, beliefs or norms are a huge barrier to the individual. Consequently, the individual becomes disappointed with or rejects the new culture due to the incongruity between expectations and reality. Owing to this incongruity, the individual will seek to adapt to the new settings by pursuing contact with fellow nationals. Indeed, during this phase, there is an increased risk of failure in most assignments due to the augmented involvement with the new culture and the understanding of the disturbing variations in interpersonal behaviour and work behaviour (Wild and Wild). The third stage is recovery or adjustment phase where either the individual goes back home (expatriate failure) or he/she acquires an understanding and adapts to the local culture. In the latter option, adaptation to the host country involves gaining superior knowledge regarding the local language and culture. Accordingly, the individual focuses of increasing interaction to develop shared understandings, provide a better sense of predictability and control and reduce ‘we-they’ stereotypes and perception of cultural similarities. The last stage is the mastery phase which is characterised by integration. At this point, the individual understand and accepts the dynamics of the new culture and develops a dual cultural identity or biculturalism outlook. The feelings of anxiety are eliminated as the individual absorbs the habits and customs of the host culture (Menipaz and Menipaz 95). In order to overcome culture shock, international businesses are encouraged to implement a number of strategies that help breakdown the cross cultural barriers. These strategies include increased awareness and appreciation of the cross cultural differences within the new environment in order to create relevant professional relationships. Another strategy is conducting extensive research on the new culture prior to going to the new country, which helps the individual to recognise the difference in culture and prepare themselves psychologically. As an organization, the best strategy to minimise culture shock is by seeking professional advice in appropriate expatriate recruitment, conducting intercultural training, career guidance and cross-cultural team building and creating intercultural synergy among employees, as well as providing support for expatriates through constant communication. Other strategies may include providing intercultural repatriation programs for the whole family; creation of mentoring programs for expatriates, company orientation for returning expatriates; and offering spousal career consulting assistance (Aswathappa 664). Works Cited Aswathappa, K. International Business 4E. New Delhi: Tata McGraw-Hill Education, 2010.Print Cavusgil, S. Tamer , Gary A. Knight and John R. Riesenberger. International Business: The New Realities. Atlanta, GA: Prentice Hall PTR, 2013.Print Ferraro, G. P. The cultural dimension of international business (5th ed.). New Jersey: Pearson Prentice Halll, 2006.Print Harvey, David. A Brief History of Neoliberalism. Oxford: Oxford University Press, 2005.Print Joya, A. "The Egyptian revolution: Crisis of neoliberalism and the potential for democratic politics." Review of African Political Economy,38(129) (2011): 367-386. Makwana, Rajesh. "Neoliberalism and Economic Globalization." 23 Nov 2006. Share The World's Resources: Globalization. 04 May 2013 . Menipaz, Ehud and Amit Menipaz. International Business: Theory and Practice. Thousand Oaks, California: SAGE, 2011.Print Milner, Helen V. . "Globalization, Development,and International Institutions: Normative and Positive Perspectives." Perspectives on Politics Vol. 3/No. 4 (2005): 833-854. Samuelson, Paul A. . Economics. New Delhi: Tata McGraw-Hill Education, 2010.Print Wild, John J. and Kenneth L. Wild. International Business: The Challenges of Globalization. New Jersey: Pearson Education, Limited, 2012.Print Read More