Is globalization a threat or an oppurtunity for business

August 2, 2017 Business

The cardinal aim for any concern administration is to maximize net income, if a fabrication or service industry in any state is progressive in their field of pattern, there possibly a demand for them to put or open other subordinate operation in other state where there is a lifting demand for their goods or services Sloma ( 2004 ) . Furthermore, ( Post et al, 1999:146 ) provinces that “ globalisation consist of piecing goods from constituents produced in several states, purchasing of natural stuffs from abroad providers or selling finished goods or services to clients in other states ” , besides ( BBC, 2011 ) defines globalization as the engagement of the universe going extremely interconnected as a consequence of increased cultural and trade exchange ” . Therefore this essay would explicate the cause/effect, chances and menace of globalization on concerns.

The chief causes of globalisation may ; merchandise liberalization, transit, and communicating ( Bhagwati et al, 1983 ) . In trade liberalization, statute law cut downing trade and foreign direct investing have been relaxed. Some authoritiess offer revenue enhancement inducements to carry abroad companies to put in their state, this possibly linked to what is known as free trade ( BBC, 2011 ) . Transportation is comparatively going cheaper, fast and easy to entree. Peoples travel for vacation, concern, migrate and emigrate from one state to another. Businesss administrations can transport goods and natural stuffs between states more easy – doing goods and services from all over the universe available to consumers. While communicating, the cyberspace, telephone and the telecasting have paved manner for free flow of information and thoughts. Outsourcing is a illustration these, therefore a concerns administration in a state can hold a call Centre in another state replying calls from clients of the chief state.

One of the chief consequence of globalisation is inequality, this refers to the income disparity that exist between states across the universe. It possibly argued that globalization contributes in making more wealth in developed states, therefore it does non assist to shut the spread between the universe ‘s richest states and the universe ‘s poorest King & A ; King ( 2005:199 ) .

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The cyberspace can be viewed as an chance of globalisation for concerns. The cyberspace can besides be seen as a gateway to take part in the game of globalisation ( BBC, 2010 ) . Through the Internet, concern administrations have been able to travel beyond boundary lines, to make their terminal clients with their goods or services, therefore this could be referred to e-commerce. Communicationss can be made rapidly and easy to any anyplace in the universe, but at the same clip concerns are exposed to large competition, Holton ( 1998 ) . There are 1000000s of web sites on the Internet, despite the apparently easy engagement, the world of the Internet can be seen as oligopoly, Sloman ( 2004 ) . Furthermore, with the cyberspace playing a axial rotation in globalisation. It may be good for a concern administration to hold entree to anyone anyplace in the universe, but it besides exposes the concern to competition. In the cyberspace competition, victors are really few, which creates a large spread between the big and little concern. However, there are still chances for little concern in the universe of globalisation. This could be ; the assortment of civilizations, linguistic communications, societal systems and imposts, etc.

Take the differences of linguistic communication for exemplifying illustration. Your web site may non be seen by clients if it is merely in English. Actually, many web pages in the Internet are written in English. However, the concern should cognize there are many linguistic communications in the universe. If a concern web site has a page in a different linguistic communications, their rivals may be reduced.

Another cardinal chance for concern, is the transportation of technological promotion and cognition in globalization. Corsi ( 2000 ) points out that this has led to growing in invention and better techniques of production to concern. The chief consequence of this is the turning income and grasp of the company ‘s ‘ economic accomplishment. Foreign migrators coming to work in transnational companies contribute to the cognition of developing concerns therefore which makes the concern more efficient. Economic policies, direction techniques and Increased cognition about production methods present priceless inputs in little concerns ( SME ) King & A ; King ( 2005 ) .

In globalisation there are chances of inexpensive labor for concern administrations, therefore Jennifer ( 2005 ) argues that “ developing states are encouraged to open their economic systems to international trade, with the purpose that free trade would convey development and prosperity ” . Opening its economic system to international trade does non interpret to economic development and instant prosperity for developing states, but instead it signifies the exposure of the developing economic system to multi-national corporations and foreign direct investors, many of which seek to spread out their operations in developing economic systems because of the inexpensive labor available in these economic systems. Turning parts of these inexpensive labor beginnings consist of adult females and MNCs have been accused of deliberately engaging economically and hapless educated disadvantaged adult females to cut down labor costs. With inexpensive labor “ a vesture company in the UK can sell a shirt for ?60 that cost less than 10 pence in labor to bring forth ” .

While globalization may be seen as an chance for large concerns, it can besides be argued to be a menace to large and little concerns ( SME ) . Carper ( 2010 ) argues that “ energy and transit costs increases when occupations are outsourced, as large concerns revise their concern scheme and bring forth goods overseas. Customer service frequently decreases as companies pay for their goods to be transported from a foreign warehouse to their before being dispatched to the client ” . Call centres, are besides affected by globalisation, as its being flooded with clerks who do non talk fluid English. As energy usage additions, domestic supply costs increase as more concerns compete for natural resources.

Intergovernmental dealingss between two states can hold an influence on transnational corporations. For illustration, If two states are are war, there will be no trade between them. Furthermore, concern operations may be influenced by the political ties of host and place state authoritiess even when there is no war. The United States and Japan have had an of import, but hard, relationship since the terminal of World War 2. The United States helped reconstruct Japan ‘s steel, car industries and ship building, and by the 1970s Japan ‘s productiveness had increased massively. It used its efficiencies to export steel, cars, and semi-conducts to the large U.S. Market. The United States has switching political dealingss with Great Britain, China, Russia and Brazil, and many other states. Economic dealingss are affected, for better or worse, by political alteration, and national political precedences shape concern dealingss. The United States, for illustration, banned U.S. Manufacturing industries from selling military merchandises to states that authorities bureaus believe may be a menace U.S. Security ; it restricts high engineering exports ; and it has banned U.S. Companies from making concern traffics in Cuba ( Post et al, 1999:159 ) .

Increased Competition is another chief concern, as it is menace to domestic concerns. Government of developing states are faced with this job as they look to export more and import less to increase the state ‘s GDP. Globalisation threaten domestic companies as domestic concerns have to vie with foreign concern administration, they are forced to raise their client satisfaction degrees and criterions in order to last in the market. In add-on, In developing states, this is upseting for domestic companies as they are unable to postulate with foreign companies as they are excessively dependent on the authorities for financess and hence lack competitory border. And besides, this is were the authorities moves in to protect little companies by making trade barriers and enforcing duties on imported merchandises. Protectionism does non use to merely developing states but besides developed states besides have the highest trading restrains, Borkakoti ( 1998 ) .

In decision, it appears to the writer, based on what this essay negotiations about to indicate out that globalization can be an chance besides a menace to big and little concern. Furthermore, globalisation has played a large function in the motion of goods and service, doing resources available to consumer, it may be argued that globalization has created planetary enlargement for large concern as it has paved the manner for little domestic concerns to export their goods or service. However globalisation has its disadvantages every bit good, because of its exposure to intergovernmental dealingss ( in the instance of war ) and its clears domestic concerns to foreign competition.


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Carper, T ( 2010 ) The Menace of Globalization. [ Online ] Available at: hypertext transfer protocol: // [ Accessed: 20th March, 2011 ]

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