Globalization in the Management Context - Coursework Example

Globalization in the Management Context Name Institution Globalization in the Management Context Globalization is the phenomenon characterized by increased interconnectedness of economies, cultures, and societies around the world. Amidst globalization, economies of different countries and regions have been integrated. Transportation and communication infrastructure has been enhanced that allows people from different countries to communicate quickly and move from one place to another quickly (Guenther, 2013). Globalization has allowed for increased interaction between people with different national, ethnic, and racial backgrounds. Consequently, people with different social and cultural backgrounds increasingly share social and cultural values. One of the significant impacts of the global changes is that it has facilitated the transfer of products and services from one country or region to another (Hill, 2014). In other words, the various aspects of globalization mentioned above are supportive to global business and thus, they are supportive to firms operating in the global market. The presence of globalization is felt in all societies across the world today. Globalization is associated with certain pros and cons and their impacts on organizations depend on the type of organization and its location. Globalization affects the performance both small to medium enterprises (SMEs) and multinational enterprises (MNEs), but it is more advantageous to the MNEs than SMEs operating in both developed and developing countries. This essay is divided into three main parts. The first part explores the general meaning of globalization, its relationship with management and its connection to organizational context. The second part examines the conditions that should be there for advantages of globalization to be realized and the third part explores the conditions for there to be disadvantages of globalization. Globalization can be defined as the integration and interaction process, which occurs between people, governments of different nations and companies. It is a process driven mainly by investment and international trade aided by effective and efficient communication and advancement in information technology. The opponents of globalization believe that it has made it easier for the well-established companies around the world to act with less accountability (Wijen, et al., 2012). Companies with unethical behaviors can spread these behaviors to different parts of the world. There is the belief that many cultures in the world are being overlapped by the tidal wave of “Americanization.” Advocates, on the other hand, believe that globalization has been able to create jobs, to make companies more competitive, to promote global economic growth and resulted in lowering of prices for consumers. The advocates believe that it boosts development in the developing countries because of infusion of technology and foreign capital. Additionally, globalization allows the spread of prosperity, which has enabled respect for human rights and democracy to flourish. Regarding management, globalization refers to the large number of activities of business enterprises that are carried out in different locations in the world across the national boundaries (Wijen, et al., 2012). Thus, it involves procurement of raw materials, manufacturing, and selling the finished products by the same firm to different countries in different parts of the world. For this essay, globalization will entail the tendency of different technologies, businesses, and philosophies spreading throughout the world. This involves a total interconnection of the marketplace, which is not hampered by national boundaries and time zones. One of the main conditions that determine whether an organization will benefit from the advantages of globalization is whether it is SME or MNE (Meyer, Mudambi & Narula, 2011). MNEs are in a better position to benefit from globalization than SMEs. MNEs are organizations that operate in more than one country and have a significant share in the international market (OECD, 2011). On the other hand, SMEs are organizations that mainly operate in the domestic markets. Although SMEs may also operate in more than one country, they do not have significant market presence in the global market. The advantages of globalization, as stated earlier, include improvement in the avenues for transporting products from one country and region to another and improved economic integration that facilitate business between countries and regions. As such, globalization has made it easy for MNEs to sell products and services in different markets across the globe where they perceive growth prospects, which is usually a difficult endeavor for the SMEs (OECD, 2011). Regarding management, globalization favors MNEs more than SMEs since MNEs can source management experts from different nations more easily. Second, the country in which a firm is located influences whether a firm will benefit from globalization or not. Developed countries and regions have most of the globalization factors that facilitate the ability of firms to operate smoothly, such as effective communication infrastructure and transportation infrastructure. However, most developed countries, especially in Africa, lack adequate and effective transportation and communication facilities (OECD, 2011). Despite the differences, globalization facilitates the transfer of products and services from developed to developing countries and vise-Versa (Meyer et al., 2011). Multinational firms in developing countries as a result of globalization sell technological products such as computers and mobile phones manufactured within developed nations. On the other hand, developing countries, especially in Africa, sell agricultural products to developed nation. Although both SMEs and MNEs benefit from increased exchange of goods and services between developed and developing countries, multinational firms benefit more since they are usually involved in the exchange processes (OECD, 2011). A good example of a successful organization that benefits from globalization is Amazon, an organization that displays its products in online stores created in websites from where consumers shop (Guenther, 2013). Among the websites in which the products of the company are displayed are Box Office Mojo, BookSurge, Zappos, and Shop Bop. Despite that globalization is associated with various benefits that are realized by firms operating in the international market, it is also associated with several disadvantages. The main condition that influences the extent of the impact of the disadvantages to firms is whether it is MNE or SME. The fact that globalization allows for global organizations to venture in local markets in different countries acts as a disadvantage to SMEs. Most MNEs have much more resources needed to operate and compete in the markets they operate than the SMEs. As a result, the SMEs face stiff competition from the MNEs (Industrial and commercial training, 2007). In extreme cases, the SMEs are unable to survive in their sectors and are compelled to quit their operations. As noted in Industrial and commercial training (2007), the MNEs even use strategies that prevent the SMEs from entering their markets or from gaining significant market share. Despite this, disadvantages of globalization can have a similar effect to both SMEs and MNEs. For instance, is interconnectedness between economies of different regions and countries. As a result, of the interconnectedness, economic crises in one country is likely to spread quickly to other countries and even across the globe. A good example is the recent global economic crisis that picked in 2008. The crisis first hit the US economy and later spread to Europe and other regions. Consequently, most multinational firms operating mainly in the US and Europe incurred losses or their performances deteriorated (Industrial and commercial training, 2007). The crisis affected both SMEs and MNEs operating in those regions. The impact of the disadvantages of globalization on firms also depends on whether a firm operates in developed or developing the countries. One of the significant negative impacts of globalization is that the developed nations can engage in trade activities and agreements that stifle economies of the developing countries. In such cases, organizations operating in the developing countries suffer from the poor economic performance of the domestic economies. The economic conditions in the developed countries are usually supportive to local firms (Industrial and commercial training, 2007). However, the prospects for market expansion are better in developing countries than in developed countries. Unlike in the developing countries, the markets in the developed nations are saturated. This makes it difficult for local firms to achieve significant market growth in the developed nations. However, MNEs can solve the problem through expanding their presence in foreign nations where there are better growth prospects, unlike the SMEs (Meyer et al., 2011). Tesco PLC is an example of an international organization that has recently suffered as a result of the disadvantages of globalization. The company sells retails products mainly across Europe and has also opened stores in America and Asia. After venturing into the Chinese market, the company adopted a standard business model that involved offering royal cards to the customers in China (Hill, 2014). Although the strategy had helped the firm to achieve significant growth in the UK market, the Chinese people did not embrace it due to differences in their culture, preferences, and tastes with those of consumers in the European nations and US. Ultimately, the company has been compelled to move out of the Chinese market. In conclusion, globalization is felt in all nations, irrespective of the level of development. The effects of globalization are felt by both the SMEs and MNEs. Globalization has both similar and varying positive and negative impacts on MNEs and SMEs. However, the phenomenon seems to be more advantageous to MNEs than SMEs. It has more disadvantages to SMEs than MNEs. The impact of globalization on organizations implies that globalization is good for MNEs in terms of management. As noted in the case of Tesco, the global organizations also face disadvantages of globalization. One of the recommendations for SMEs is to establish ways of expanding their operations in the global market to enhance their ability to compete with the global firms. To achieve this, the SMEs should target foreign markets with good growth projects. Given that resource constraints usually hinder the expansion among SMEs, the organizations should adopt expansion strategies that do not require the use of many financial resources, such as partnering. References Guenther, T. W. (2013). Accounting for globalization: The Journal of Management Control on its way to a global reach. Journal of Management Control, 24(2), 89-91. Hill, C. W. L. (2014). International business: competing in the global marketplace. New Yorrk, NY: McGraw-Hill Education. Industrial and commercial training (2007). Industrial and Commercial Training, 39(2) doi:10.1108/ict.2007.03739baa.001 Meyer, K. E., Mudambi, R., & Narula, R. (2011). Multinational Enterprises and Local Contexts: The Opportunities and Challenges of Multiple Embeddedness. Journal of Management Studies, 48(2), 235-252. doi: 10.1111/j.1467-6486.2010.00968.x OECD (2011).Globalizations, Comparative Advantage and the Changing Dynamics of Trade. New York, NY: OECD Publishing. Wijen, F., Zoeteman, K., Pieters, J., & Van Seters, P. (Eds.). (2012). A handbook of globalization and environmental policy: National government interventions in a global arena. Northampton: Edward Elgar Publishing. . Read More