Globalization is a term used to describe the integration of regional economies, humanity and culture through political treaties and understandings. As the world turns into one global village, it becomes important for the various governments to work together with the common goal of reaping the positive benefits of globalisation. This means that the respective governments have to pool their resources together in order to develop such infrastructures as communication lines, roads, airports, ports, and hospitals, among others. The other area of cooperation is adoption of single unit of exchange, realignment of customs and tariffs within its borders. Globalization has resulted to the formation of the European Union, African Union, OPEC and ECOWAS just to name a few.
The results of globalization have seen rapid and steadily elevated local businesses into international status.
Positive effects of Globalization
Ever since the beginning of globalization, industrial advancement has taken centre stage due to the emergence of world wide production and emergence of free markets. As a result, both the human resources and natural resources have become increasingly mobile, thus making it easy for business to grow rapidly. Shenzhen (9) identifies that globalization brings about more free markets where individuals are able to source goods and services from various locations. Similar sentiments were echoed by ILO (24). In this case, the body highlighted that that international trades ensures a perfect of market information in the global market. The other area that has benefitted a lot from globalization is the emergence of international financial transfers. As a result, firms and organizations can now easily exchange currencies as well as obtain financial supports from such international financial institutions as The World Bank and the International Monetary Fund, (Mishkin 47).
In addition, Mishkin (48) further points out that the international financial institutions have enhanced the local economy to produce to their maximum by ensuring adherence to the international standards. Empel (65) contends that financial stability finance enhances competition both in the local as well as in the international market. This is made possible by influx in capital which encourages new entrants into the market. Therefore, sound financial directions emanating from international trade has ensured that businesses are conducted in an efficient manner. The other area that has been greatly influenced by globalization is human resource mobility (ILO, 89). Resource outsourcing has remained to be one of the areas that have provided the strategic competiveness for the organizations in international market. Less competitive firms are experiencing high staff turnover especially for the highly qualified managers who are given higher packages.
ILO (89) has also attributed high integration of markets to the increase in the expatriation rates for the professionals within international market. Conversely, Nayak (63) points out that high entrepreneurial turnover would only end up hampering the steady production of commodity products. Such decline in commodity production would results into negative growth of economies in less developed countries. Moreover, globalization has played a very significant role in facilitating the rate at which information technology is evolving.
The need to adopt the latest state-of-the-art technology has ensured that most governments invest highly in research and information development. According to McMahon (128) international businesses are founded on the emergence of steady and reliable technology. Apart from facilitating increased production, technological advancement has also made it possible various companies to enter into mergers and acquisitions with other firms, both locally and internationally. The advances in information technology has made it possible for firms to negotiate takeovers deals without necessarily having to organize for face-to-face meetings. Jeffrey (23) cites the proliferation of new goods has emanated from the development of new productions designs and simplified distribution channels for both raw materials and finished goods due to increase in technology. Globalization has smoothed the progress of multinational organization in some countries. Since the beginning of globalizations firms’ registration and set up procedures have been streamlined by reducing bureaucracy procedure. Munck and Waterman (165) believe that globalization have ensured an international standard and procedures of registration.
Correspondingly, universal applicability of trade laws, taxation and restriction against monopoly has made it easier for firms to operate competitively. Although, many countries within a trading block assume similar business regulations some exceptional cases arise especially when a country adopts protective strategy. Adoption of common currency has remained one of the major stimuli of international business. Since the countries are relieved the burden of changing from one currency to the other, the risk of loosing value is reduced. Lack of currency barriers have emerged to be vital in determining price levels and estimating the demand for the products.
Single currency has played a major role in stimulating economic activities as well as fostering growth (Horn 17). Proponents of solitary currency argue that labor market is more flexible and sensitive to changes in wages in some region like the USA (Gray & Dilyard 417). In international business this implies that firms which offer high wages are able to acquire skills and the manpower they want.
However, some regions have experience resistance for single currency such as the Euro; the region has a low labor response to currency change.
Negative Impacts of Globalization
On the contrary, globalization is also associated with some vices such as brain drain. Most developing countries have often found themselves on the loosing end as their best human resource are bought out by large international firms. In such circumstances infant firms are left in hapless state without proper management exposing them terribly to the fierce external competitions (Baye 49). The migration of the best brains has made it difficult to progress and they have therefore been left in a retarded state without much hope of the future. The other problem that has been impeded the growth of small organization is due to sweatshops.
Most small economies are controlled by large multinational which pay peanuts to the workers. Such meager pay reduces the saving capacities of the small countries causing a long term effect of poverty and backwardness. Bender and Greenwald (13) affirm that globalization is to blame for the appalling state of the developing countries and small institutions that are always there.
In conclusion, globalization has emerged as one of the main catalysts of business growth. The good things which have been presented by the economic integration have developed a good environment for businesses to flourish.
On the other hand, similarity rules regulating businesses in different countries have made it possible easier establishment and growth of businesses. Conversely, the good things that have been generated have globalization have been tainted by brain drain and sweatshops. However, the future of businesses will continue to rely heavily on strides made by globalization.
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