Globalization in a Nutshell - Essay Example

Contrary to much popular thinking, globalization is not killing the state; it is underlining its fundamental importance to political and economic life in the 21st century.’ Name: Tutor: Course: Date: Introduction Globalization is the integration of countries worldwide mainly through the interchange of ideas, trade and culture. It has become a defining feature in the contemporary society where people explore and interact with other individuals from different cultural background and regions. In the 21st Century, globalization can be attributed to the need of business organizations to venture and explore new markets in different regions. The need of individuals to experience different cultures across the world has also greatly led to globalization. Consequently, many individuals, organizations and countries have benefited from globalization. This is because through international trade and cultural exchange, there has been significant economic growth and development in most countries, especially the developing countries. However, despite the many proponents of globalization, there are also those who are quite critical and against globalization. Most of the critics of globalization argue that it has led to the dilution of culture of different communities and weakening of national sovereignty. They also claim that globalization allows most business organizations in the developed countries to export domestic jobs to the developing countries where they are cheaper. Nevertheless, many economists would state that the benefits of globalization outweigh its disadvantages. Benefits of globalization There are several benefits associated with globalization. These include increased bilateral trade ties between different countries. In addition, there has been the emergence of better and effective communications among countries through the use of the internet and social websites. In most cases, the terms and conditions of trade between countries is based on mutual agreement. Consequently, as a result of the increased trade agreements between countries, companies can produce and sell their goods and services in foreign markets (Chatterjee, 2008). Furthermore, countries with cheaper and adequate skilled labour attract investors who establish industries in such countries. This will increase the employment opportunities in such countries, subsequently improving the standards of living and promoting economic growth and development. Furthermore, countries with a competitive advantage in the production of certain goods can export surplus production to other countries. This enables different countries to focus on the production of goods and services it has competitive advantage in, and import other goods and services from other countries. Therefore, the bilateral trade agreement increases foreign earnings, promotes the trade and even political ties between the respective countries. In addition, when a country specializes on producing goods and services it has a competitive advantage, the country can appropriately plan and allocate its limited resources (Hamid & Wright, 2003). Typically, most multinationals from western countries have greatly benefited from globalization. The aim of these multinational companies is to maximize the profits; therefore, they will choose to invest in countries with favourable economic and political environment. Therefore, countries with relatively cheaper cost of doing business attract such multinationals. The legal framework is also very important to business organizations. To attract multinational companies and other foreign investors, countries will try to minimize bureaucracy associated with business operations. Therefore, most developing countries who are the host of the multinational companies and foreign investors perceive globalization has an opportunity, which promotes employment and the economic development. Through the foreign investments different industries are usually set up, which provides employment opportunities to the local population. In addition, the establishment of these industries subsequently also leads to the expansion or establishment of other business around such industries. Consequently, this promotes internal trade and economic development in the host countries. The wage rate in most developing countries is usually quite low. This includes the wages paid to employees by local companies. Therefore, foreign investors usually take advantage of this and offer wages to its employees at rates almost equal to those offered by the local companies, but which are significantly lower that what they would have paid to employees in their parent countries. Most trade unions in developing countries continue to advocate for the better wages and working conditions of employees. However, the multinationals and foreign investors do provide job opportunities to many people in the developing countries who would have been otherwise unemployed with no reasonable and reliable income (Solow, 2004). As a result of venturing into other markets, global business usually receive a lot of criticism from the parent country and accused of exporting domestic jobs to other countries. However, most globalised companies choose to down play such criticism, by continuing to venture into more foreign markets, while focusing on providing quality services to their home based customers. The establishment of global businesses in host countries is usually anchored on the local jurisdiction. This implies that the host countries benefit from the required changes in the shareholding mix of the global companies setting up its branches in these countries (Sandilands, 2000). In addition, the top management of the local branches of these global businesses is to be appointed from the local population. Therefore, global businesses create job opportunities and competitive business environment, which also pushes the local businesses to grow and develop, by embracing newer and effective technologies (Strachan, 2002). As a result of increased competitive business environment in most developed countries, business organisations usually target new and diverse markets in different regions of the world. This is mainly because the expansion of business operations to new regions and markets are associated with an exciting opportunity for business growth, as well as some unique challenges for business organisations. However, the success or failure of global business operations greatly depends on the management’s understanding of culture and work place diversity and how these attributes affects the operations of the business. Therefore, the organisation’s ability to relate and assimilate the regional culture of the place to which it is expanding to is of great importance. Essentially, the ability of culture assimilation for any business organisation greatly impacts its global operations and could determine whether the expansion to a given region will be a success or failure (William, 2011). In most cases, the manner in which business partners and associates relate and conduct their business affairs is greatly influenced by regional culture. For example, businessmen from China prefer not to enter into business engagements with strangers; therefore, they tend to desire to spend some time with their potential business associates and partners before making any business deal. Harris & Moure is an international law firm operating in Beijing, however, Mathew Alderson, a lawyer for the international law firm, feels that they are not necessarily wanted in China. According to him cultural differences between the Americans and Chinese is the main reason for the Chinese indifference towards the American firm. Furthermore, Michael Thorneman, who is a partner and the head of China operations at Bain & Co., asserts that the perception that China is a land of opportunity, where any foreigner can succeed is not really true. Therefore, the ability of a business organisation to adapt and assimilate regional cultures is essential for the success of its global operations (Christopher, 2012). Disadvantages of globalization Despite of the huge returns that global businesses and multinational companies derive from host countries, most of these multinationals do not perform the social corporate responsibilities expected from them. Typically, many of the multinationals target markets with cheap labour, weak employment laws, and low trade tariffs. However, the regulatory institutions in the host countries in most cases are not able to effectively deal with the companies that violate the established ethical standards. Nevertheless, the availability of cheap and desperate labour in most of the developing countries does not give the right to the multinational companies to greatly violate business ethical standards. In the developed countries, the penalties related to the violation of ethical business practices are usually very severe and could led to the closure of such businesses by the regulatory authorities. However, most multinational companies violate the business ethical practices in the developing countries without facing any consequences for their actions. Therefore, most global businesses are perceived to be exploiting the cheap and desperate work force in the developing countries. However, the host countries are mostly set in between the hard choices of the closure of such businesses and the local jobs that will be lost as a result of the closure of such businesses (Dunning, 2004). Therefore, if appropriate regulations and international laws are not formulated and enforced, globalization could be detrimental to some communities. Globalization has also led to the cultural dilution and the weakening of the national sovereignty in most countries. As a result of bilateral trade ties between countries, the re-evaluation of the foreign policy of most countries has become necessary. Consequently, individuals can now apply for citizenship in another country of residence, in addition to current citizenship of the parent country. This definitely weakens the sense of national sovereignty since individuals acquire citizenship of more than one country. In addition, the interaction of people from the different parts of the world eventually dilutes the culture of the different societies. Conclusion As discussed, despite the few ‘evils’ associated with globalization; it has many benefits and it should be embraced. In the 21st century, the advancement of technology and the use of the social websites for communication have virtually turned the countries into one global village. Therefore, contrary to much popular thinking, globalization is not killing the state; but it is underlining its fundamental importance to political and economic life in the 21st century. 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