Globalization of Business and Internationalization of Firms - Coursework Example

BЕNЕFIСIАL ЕFFЕСTS OF GLOBALIZATION OF BUSINESS UРОN THЕ WОRLD (Student Name) (Course No.) (Lecturer) (University) (Date) Globalization of Business With the advent of the new century, the world business environment, management, and operations have taken a completely different picture. Business competitions have gone beyond the national borders to international industries. Evident are firms with diverse national home bases extend their entrepreneurial interests to tap into strategic resources in diverse locations (Hamilton & Webster 2015). The volume of merchandises and services transacted across the international borders has risen rapidly with the dawn of the 21st century. According to Hill (2009), nearly $1.6 billion foreign exchange transactions occur across borders on a daily basis. From the World Trade Statistics, $2.20 trillion services are often provided across the international borders. Similarly, over $9.1 trillion worth of goods is often transacted across the borders on a daily basis (World Trade Organization 2015). Evidently, the world is swiftly becoming a solitary community, a global village. The impact of globalization is felt in different dimensions (politics, socio-cultural, economic, anthropology, and sociology). However, a harmonized definition has never been among the different disciplines. Economics concentrate on the exchange of goods, services and foreign direct investment across the world countries. Political science, on the other, focuses on the role of such international organizations as United Nations and the World Trade Organization in putting world states together. For anthropology and sociology, globalization signals the interconnectivity of diverse cultures across the world. Globalization, therefore, is a controversial topic attracting contributions from different authors and disciplines. For the purpose of this paper, globalization of business is defined as the shrinkage of space and time for business activities (Starger 2009). Globalization denotes the aspect of trade liberalization. The state-forced restrictions on business transactions and exchanges across the international borders have been actively eliminated making the world business environment become integrated to form complex systems of production and distribution called global market. Different countries have unique resource endowment, production capabilities, cultural backgrounds, legal systems, and natural landscapes. All these elements usually influence the types of goods and services demanded in different locations (Govil & Rashmi 2013). The global market is the integration of historically distinct and discrete national markets in a unitary global place (Govil & Rashmi 2013). Global markets often attract businesses and companies from different states, with various goods and services to offer to global consumers. Thus, the global market gaps are often met in a combined effort. Through, global markets countries often import goods and services they are unable to produce while exporting goods and services within their production their capabilities to earn revenue. In this context, globalization is seen a stabilizing agent in the world of business. Countries exchange their strengths for what they feel can mitigate their weakness to achieve equilibrium within the economy. Internationalization of Firms Companies headquartered in a single country but conducting business operations in different countries are common features in the current international business environment. McDonald's is a discrete example of such multinational companies. The company runs business restaurant business in 100 world countries including China, Australia, Tunisia and Argentina (Watson 2006). However, its head office is in Oak Hills, United States. Undeniably, this is a result of globalization. Businesses perforate the international borders to tap into the strategic resources in other countries. Unlike domestic organizations, transnational companies engage in foreign direct investment, controls valued added activities in various countries and internalize cross-border business ventures. Multinational companies also help create strong global supply chains (Nigam 2009). They acquire different resources from the global pool facilitating the global market momentum and mobilization. Becoming a multinational company, thus, require a domestic corporation to re-adjust in various dimensions and view the world as a business society with familiar stakeholders. As a result, establishing a world presence for such a business is not a hard task to roll. Of great importance is the development a global business strategy that can transcend both internal and external boundaries Most world traded companies often have specific tenets that spur their prosperity throughout the global markets. Creation of a consistent and strong branding culture is one of these strategies. They create unique brands that are always familiar to target customers but foreign to the potential business rivals. With the expansion of the internet, branding structure has rapidly changed to brand culture. Most companies identify themselves with a single construct across the globe. Multinational companies often proliferate various digital platforms and market themselves as if there were no borders. Through this strategy, reaching out to international markets has become very easy. The rise in international consumption is evident. People can make purchases for goods and services the desire online. In this regard, globalization is seen as a substantial tool driving inventions and innovations in the business world. Consumers and business vendors of often seek to achieve the aspect of efficiency in meeting their desire. For instance, common with transnational business ventures is the desire to control and manage their customer and employees around the world. As a result, a lot of discoveries have been made. Customer Relation Management (CRM) and Employee Management Systems are directly attributed to the effort to control and manage large populations of business stakeholders across the international borders. Thanks to the globalization of business for spurring knowledge in technology. New business ideas flow from one country to another promoting the entrepreneurial culture. The idea of pyramid selling or multi-level marketing, for instance, has rapidly diffused across the international borders since its realization in California. Many people and companies around the world use multi-level marketing to source revenues and improve their sales value. Multi-level marketing is a situation where the process of sales and distribution of goods and services is completed through a network of interconnected people (agents) (Gupta &Westney, 2003:134). A multi-national company in the Philippines can effectively sell its products or services to consumers in Angola, Australia or the United States through chains distribution agencies. The essence is that size does not determine the degree of globalization of a company (Condon 2016). The size only reflects the market coverage and not the transnational aspect. According to Condon, firms with small economies tend to have wide transnational index rankings giving them a better competitive edge in the world markets. Therefore, globalization of business of business has not only enhanced the flow of business ideas across the international borders but also liberalization of capital markets. Industry Competition Before the advent of globalization, U.S companies dominated the world export. After the phase of globalization, other countries (like Germany, France, Japan, China, and South Korea) realized their potential in the world export and actively challenged the position of U.S (Smart 2012, Horowitz 2004:13). The trend has continued in different world industries with different countries coming up unique business strategies to avert the heightened competition. Currently, competition in the various world industries has greatly hiked. Only those countries whose companies have strong competitive edge manage strong to survive the danger of being edged out of the market (Porter 2011:8). In the fertilizer industry, for instance, few companies prevail including Norsk Hydro. Competition downsizes rates of return on investments. However, the consumers’ point view competition is an important element in purchase decision-making. With intensive competition in the global industries, the world consumers find the freedom to make appropriate choices for products and services. The current trends in the world consumption grid are the aspects of quality and safety. Certainly, with the increase in competition in different industries have the chances to choose goods and services that are of high-end quality and are safe to their health. Businesses, therefore, have tremendously changed towards achieving these variables that appear to be the key market drivers. After all, it is sales volume, rates of return and capital capacity that keeps companies operational in various market niches. Organizations must, therefore, strive and re-adjust its element to remain active in the markets. The implication is that globalization has greatly spurred the formulation of business strategies in a rush to meet the consumer demands. Quality improvement and safety assurance result signaling a better future for the world of business. Further, through active international business competitions, companies learn and innovate new business tactics. Evidently, these transpire in the world of technology. E-commerce, improvement in data mining, development of quality control software and many other technological advancementsis directly affiliated to the globalization of business. The spirit of convenience in doing business and meeting consumer demands around the world. An elaborate e-commerce business operating around the world borders is The Amazon (Hamilton & Webster 2015). The company always conduct its business through the internet (amazon.com), delivering products at customer’s convenience. Ordering and purchase contracts are made online regardless of the distance between the company and the potential buyer. Essentially, this brings the aspect of transportations. Transport in the business World In the current century, the world has become a tiny place like never before. Time and distance are no longer matters of concern. Transport cost has greatly reduced. The invention of Airplanes and other comprehensive transport media has rapidly changed the image of the world (Firedman, 2008). Different entrepreneurs, as a result, are able to traverse the world boundaries in search of strategic avenues for business ventures. It is no doubt that in this century, sending and receiving business packages from different countries no longer a hard task to roll. With the globalization of business, companies use such media as Facebook, cargo transport, and posters to ensure consumers to ensure consumers receive the items they purchase. The situation is more evident in the motor industry. An individual in Africa, for example, may order a vehicle from the United States. After the completion of the transactions agreements, the vehicle is ferried to Africa from U.S through a series of transport media. In this regard, therefore, globalization of business greatly contribute to the restructuring of the world transport and communication channels. All these are important and relevant to the current world system. International Institutions and trade blocks Globalization of business describes a continuous process in which regional economies have become incorporated into a worldwide-spanning network of trade and communication. As a result of co-joining national frugality into the international business space through trade, trade block and international institutions arise. Trade blocks, according to Subramanian and Kessler (2013), are groups of countries that have come together to form an economic union, sometimes referred to as Customs Unions or Economic. Harmonization of monetary policies, taxes, and the movement towards a single currency results from such agreement among the world nations and trade blocks. All these are significant to the world populations in different ways. Today, there are numerous trade blocs in global business space facilitating international business dealing. Common among the European countries is the European Union (EU) combining over 26 countries (Telò 2013). The union holds a prime position in the world business scene portraying the picture of a globally affiliated organization. Over 500 million consumers across the globe look this organization for quality goods and services. Certainly, this is because EU represents the global image by providing the World’s biggest single market operating under transparent rules and regulations. Other the world renowned trade blocs include but not limited to the North Atlantic Free Trade Association, Transatlantic Trade and Investment Partnership and the East Africa Economic Union. These trade blocs, therefore, portray globalization of business as a unifying force holding the like-minded countries and citizens in a common agreement and close association. Being an evidence of business globalization, the spring of trade blocs among different and distinct states plays and important role in the world system. Look at the socio-political and economic aspects of integration of the national economies. Unlike the prior periods ending in 1945 in which the world was torn was economic, social and political conflicts, the century is a peaceful time. It is rare for nations to rise against other after understanding the business effect of their actions. Countries prone to wars are often excluded from economic integration because of unpredictable consequences of involving. At the same time, business sanctions are always pronounced against nations trying to destroy peace prevailing in the business environment according to the rules and regulations of a Union. In this regard, therefore, globalization of business plays an important role in maintaining peace among the world nations. With the dramatic rise in the world’s human population, achieving sustainability in such areas employment and development has a hard task to roll. Human demands by far rose exceed the available economic resources in different countries. With the globalization of business and creation trade blocs as well as trade agreements amongst different world nations, a lot have been and more still in progress. Such economic constructs as employment, development, trade creation, Free Trade Areas, Customs Unions, Preferential Trade Areas, protection and the common market have risen to save people from socio-political and economic problems. There is a free flow of capital, foreign direct investments, foreign exchange, and labor solving the problem of unemployment in different countries. Jobs are also formed as a result of the increased trade among the international communities. Producers also benefit greatly from the creation of opportunities to apply scale economies which reduce production costs lowering prices for market consumers. The result embodies in the improvement in the sales volume between fiscal periods. The Global business integration, thus, benefits more than a single group of people in the international community. The increasein international business activities through globalization reduces the cost of doing business across the globe. Well, it appears like a notion, a theory. However, it is true that trade blocs and trade agreements provide a level ground for performing business activities. They create preferential trade areas (PTAs) and Free Trade Areas (FTAs) which are significant in various aspects of business and consumers. PTAs, particularly, eliminate or reduce tariff barriers on specific goods and services imported from other states within the bloc. According to Balassa (2013), this process is often the first step towards the establishment of a trading bloc. FTAs, on the other hands, exhibit among two or more countries through reduction or total elimination of all trade barriers among the members creating a borderless business region. The result is the enhancement of business momentum among these nations leading to economic development and growth. The existence of common markets among nations integrated by trade blocs and trade agreements creates a ground for business exchange. Countries borrow business ideas, political concepts, and social constructs from each other creating a sense commonality among distinct and separate nations. Evident are the legal frameworks from which international business policies are drafted. Rules and regulations controlling the conductance business across borders originate from the ideological contribution of different countries. Essentially, this move is meant to ensure complete integration and relevance of all countries or business participants in the global business scene. Different trade blocs and unions have their business laws based on the initial agreements made at the time of inception. These regulation provide an important source of law for the affiliated countries. English Law, for instance, borrows closely from the regulations of the European Union although their applications often vary based on the events on that need to be captured. Firms inside a trading bloc and international trade agreements are often protected from low-priced imports from external states. The protection of the European Union shoe industry from cut-rate imports from Vietnam and China (Katz & Ennis 2007) is an evident example in this case. Globalization of business, thus, brings a lot of advantages than disadvantages in the current business world. Criticism & conclusion Regardless of the many benefits, it stages in the current century’s world state, globalization of business is acutely criticized for various reason. First, with the introduction of trade blocs to spur business activities, the world trade is likely to be distorted (Nigam 2009). At the same time, the beneficial impacts of specialization together with the exploitation of comparative advantage is limited (Porter2011,Harrison 2006). Smart(2012), on the other hands, argues that globalization of business leads to inefficiencies and trade diversion. Inefficient producers within the in the global markets or nations have to be protected from the efficient manufacturers or industries outside. Globalization of business is not a new topic. The concept was already in existence as early as the onset of the third millennium during the rise of trade links between the Indus Valley Civilization and Sumer (Frank 1998). The impacts of business globalization are evident in different corners of the word system. Of great importance are the social, economic and political benefits it accrues to the world society. Transportation, communication, employment, legal reconstruction, social integration, and economic development among others benefits. References Balassa, B., 2013. The Theory of Economic Integration (Routledge Revivals). Routledge. Farrell, R. R. 2007. The Future of Globalization. Retrieved December 14, 2016 from https://realtruth.org/articles/070223-001-globalization.html Firedman, T. L. 2008. The Dell Theory of Conflict Prevention. In T. L. Friedman, The World is Flat. Boston: Bedford: Emerging A Reader. Ed. 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