Analyis of Globalisation and its Effects Assignment

Running head: ANALYIS OF GLOBALISATION AND ITS EFFECTS
ANALYIS OF GLOBALISATION AND ITS EFFECTS
Name of the Student
Name of the University
Author Note

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Answer to Question 1
Introduction
Globalisation mainly refers to the ways by which the organizations have shifted
towards an independent and integrated economy. The national markets which are distinct in
nature and were separate from each other are joining their forces together in the globalised
economic conditions. The trade barriers between different countries have reduced which has
led to the increase of free trade based activities among the organizations which operate in
different geographical areas. The firms also promote the trend of offering the similar products
in all areas of the world. The organizations source the services and goods from various
locations in the world which has led to decrease of national differences as well (Bende-
Nabende, 2017).
The modern organizations are thereby highly affected by the globalisation based
activities that have occurred in the external environment. The technological changes have
also taken place due to the involvement of different countries and organizations which belong
to these countries.
Discussion about globalisation
The changes that have taken place in the business environment due to globalisation
have also changed that ways by which the companies operate. The levels of interaction
among the people and their integration is an important factor that leads to the technological
development of the companies. The technological changes have been able to lower the
transportation based costs and the products are also dispersed in an effective manner in the
different geographical locations. The information processing costs are low and the firms are
able to manage the production based systems and the processing costs as well. The global

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networks of communication that has been developed with the help of increased globalisation
levels has also created an electronic marketplace (Haynes et al., 2017). The multinational
organizations are those which have operations in two or more than two countries. The rise of
globalisation has thereby increased the number of multinational organizations as well.
Globalisation has been able to form a global economy which has increased the trade based
activities as well. The income of the people and their jobs are also affected by the increased
levels of globalisation. Globalisation has thereby affected the policies that are related to
labour and the political environment. The global marketplace has affected the ways by which
the managers are able to work within the environment (Hoogvelt, 2018). The systems of
international trade have also been affected by the integration of various nations for the
purpose of forming business relationships. The interconnection between the organizations,
people and the governments of various countries has led to the interrelation between different
domestic companies.
Figure 4 - (Haynes et al., 2017)

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The globalisation based activities of the different organizations and countries have
thereby been able to affect the ways by which the businesses operate. The five major changes
that have occurred in the business environment due to the increase of globalisation are as
follows,
The competition levels among the multinational or international
organizations have increased due to globalisation. Elaboration - The
companies have started expanding their business operations in different
countries which has led to the increase of competition for the domestic
organizations. The domestic organizations of various organizations have
thereby faced tough competition from the international organizations based on
prices, quality and the cost of goods as well. The variety of the products and
services have increased for customers which has increased the pressure on
organizations to improve their prices and other factors as well (Krugman,
2017). The competition thereby acts as an opportunity for organizations which
enables them to develop higher quality goods which can attract more
customers. The services and the products therefore need to work in an efficient
and effective manner so that the business operations can be conducted on a
global scale. The global business operations are beneficiary not only for the
organizations, it plays an important role in improving the condition of the host
country as well. The host country is benefitted as the domestic market will
become more strong and competitive in nature which will an important factor
for the successful operations of the country (Obstfeld, 2015). The
establishment of the international or foreign countries will affect the
economies and the growth rate of GDP as well. The process of globalisation
has increased the levels of foreign investments in various developing

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countries. This has further been able to increase the profitability of the
organizations. The labour based costs of the global companies have reduced
due to the increase of global operations. The multinational companies are able
to source labour at lower costs from the other countries (Potrafke, 2015). For
example, the companies which are able to contribute to the GDP of a country
are, General Motors or GM which is a multinational organization is a
multinational organization in the United States. The company has expanded its
business operations in greater than 120 countries of the world which has
further led to the increase of its profitability and the improvement of GDP as
well.
The investment levels of the home countries and the host countries have
been affected by globalisation. Elaboration - The foreign direct investment
base activities have thereby proved to be a major reason behind the
improvement of the GDP of the countries. The FDI mainly refers to the long
term investment that is owned by the investors which is able to show the
capital flow among the countries. FDI can thereby be defined as the physical
investment that is made by the organizations in a different country for building
of factories and other facilities as well (Rupert & Smith, 2016). The foreign
direct investment has positive effects on the host countries in many different
ways which include, employment effect, technological effect and the income
effects. For example, the home countries are also benefitted with by the FDIs.
The people are able to perform their duties and the conduct business
operations which enables the technology to transfer from the developed
countries to the developing countries.

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The cultures of different countries and regions are affected and
interconnected with the help of globalisation. Elaboration - The people of
different countries are able to share their views and cultures which increases
the scope of business operations. For example, the cultural issues can
however occur in the global organizations which can lead to many problems in
the work culture (Scholte, 2017).
Globalisation has also caused some major social issues like, child labour
and the environmental degradation. Elaboration - The multinational
organizations have used child labour in an inappropriate manner for gaining
high profits which is a major issue that is faced by the developing countries
due to globalisation. For example, the unethical process of conducting
business operations have led to the increase of issues for the multinational
companies.
The operations of the multinational organizations have caused immense
environmental damages. Elaboration - The companies have started leaving
high levels of carbon footprint which has led to the degradation of the
environment to high levels. For example, the levels of carbon dioxide
emissions have increased due to increased operations of multinational
companies (What Is Globalization? | Globalization101. 2018).