Globalization and Economic Indicators

This assignment involves analyzing the relationship between globalization and economic indicators such as retail sales. It also includes a review of literature on globalization and its effects on various industries and companies, including Nike's revenue by segment in 2014. The assignment requires a detailed analysis of the impact of globalization on local identities and economies.

Business Environment

Table of Contents
Chapter 1..........................................................................................................................................1
Chapter 2..........................................................................................................................................3
Concept......................................................................................................................................3
Theories.......................................................................................................................................4
Framework..................................................................................................................................5
Models.........................................................................................................................................5
Chapter 3..........................................................................................................................................6
Chapter 4..........................................................................................................................................8
Recommendation.........................................................................................................................8
Chapter 5..........................................................................................................................................9
Conclusion...................................................................................................................................9
REFERENCES..............................................................................................................................10

Chapter 1
Business is an activity which includes trade of the commodities with exchange of money.
Although in ancient time trade was done from one continent to another but due to lack of
communication, technology and transport facility it was restricted to those merchants only who
were financially well. But as the new century came scenario changed and the business operations
also got a freedom. This freedom was termed as globalization. Basically, it is the procedure of
interaction and integration among the individuals, organisations and the government of different
countries (Hirst, Thompson and Bromley, 2015). Globalization includes internation trade &
investments in order to connect economies of various nations together. It is not only restricted to
trade there can be also cultural exchange through it.
In the business environment where communication has become easier and now
geographical boundaries are not an obstacle for the business. With the advancement in the
technologies and importance of international relations the significance of globalization has
increased. As almost every company wants to grow their business empire so expansion into the
newer market can give them competitive advantage over their rivals. Globalization brings new
opportunities for the firms to expand business operations into the overseas market (Beck, 2015).
Government of any country knew that if they will be accepting foreign investment it will be
easier for them to improve their infrastructure. They know that it would widely impact the
economy of the country and the other factors. Citizens of the nation will get employment, will
help them in generating more revenues and the consumers will get quality products & services in
low prices.
When a consumer goes to a local market they finds lots of products made in lesser
developed nations. Due to the trade agreements with such countries have removed lots of
restrictions to trade and has made it easier for the nations to produce products to sell in markets
of the developed countries. Retail sector is an area which has got the maximum benefit from the
globalisation. The products and goods which falls in this category are used by the individuals,
families for personal and household purpose (Hitt, Ireland and Hoskisson, 2012). Malaysian
retail industry has continues to maintain their pace because of the economic & social
developments taking place in the country. Due to the debut of the internation retail player it has
expanded up to 10% in the year between 2013-18. Globalization has benefited Asian countries
retail markets in large way. For example; small countries which are part of the Asian countries
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are manufacturing and sending the clothes to European and American markets. This is helping
the small scale retail enterprises to grow into the internation market and at the same time big
MNC's like Nike is trying to step into the newer markets where they don not have any existence.
Nike is an American MNC and are part of the retail sector. The brand design and
manufacture footwear, apparels & accessories and today it has become the world's largest
supplier of sports shoes and apparel. It also produce sporting goods and equipments. With a
history of 53 years today they have existence in almost countries. They have generated revenue
of almost $30 billion in year 2015 (Baylis, Owens and Smith, 2017). Till date they have been
successful in giving employment to approx. 62,600 people. It is also the most valuable brand
among sports businesses. For the marketing of their products they sign contracts with high
profile athletes. The company is identified through their tag-line “Just Do It”.
They offer products in seven categories i.e., running, basketball, football, men's training,
women's training, sportswear and action sports. They also make goods for other sports. Nike's
targets professional athletes for their products and at the same time they emphases also on the
women customers (Steger, 2010). Currently they are putting more focus on the Women's
Training segment which is growing rapidly compare to men. In future they will be focusing on
the young athletes. The main competitors of Nike is Adidas, Puma, Reebok and Fila. Nike's
Mission Statement briefs that they want to bring inspiration and innovation to every athlete in the
world. In their vision statement they are putting following elements:-
 Assist Nike Inc. and their customers;
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Illustration 1: Comparison of Retail Sales with other Economic Indicators, 2015

 Sustainable Economy;
 All the things like people, profit and environment are in balance.
Chapter 2
Concept
According to Lambin and Meyfroidt (2011), it has been analysed there is a concept
behind globalization which are motivating companies Adidas to expand their services into the
newer country market. When we think of economy in global context that means that a single
market all over the world were companies are producing goods in the same category to cater the
needs of particular segment of customers. It is the growth in the world trade as a proportion of
output and can be called as foreign direct investment (FDI). According to a data it is analysed
that FDI in developing nations has increased from approx. $2.2 billion in 1970 to $154 billion in
1997. Due to this markets of various countries are experiencing new growth rates thus increase in
the GDP. It is hard to measure al the data which are related to globalization. There has been
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Illustration 2: NIKE: Revenues By Segment, 2014

increase in the consumption of the products which are available from the same firms almost in
any part of the world. There is no variation or very little as the technology or the way of
manufacturing any goods is almost same and it does not depend whether which country is chosen
for the production. Analysing all this we could say that globalisation has made things quite
simpler and this way all the ideas are shared at a common platform.
To increase their brand value Adidas have to adopt the concept of attracting more
customers and this can only happen if they expand into the newer markets. They know that their
opponent Nike is leading the Asian market so they also need to look at the opportunities in Asian
Continent (McMillan and Rodrik, 2011). They can develop a concept of importance of health
and sports in the youth of Asia and can sponsor various sporting vents their. This way they will
be able to develop a positive image among the customers. Malaysian market is a great market so
they can string their operation in this country which would give them idea that what strategy
would be beneficial in another country.
Theories
Homogenization Theory: It states that in globalization exchange and trade of products,
service, money, technology and migration of the individuals take place. This way a unique
culture is developed in world. With this thing happen for a longer period of time then as a result
it becomes a universal culture (Goris, 2013). This way a homogeneous world is developed this
people start adoption Western Euro-American of the social organisation and life style. This
theory is also refereed to as convergence and says that there are chances that local culture can be
shaped by the other more powerful culture. This theorem can be reflected in Global Culture
model and McDonaldization theory. For example; people of various countries prefer to wear
sports shoes of Adidas so this shows the sign of global culture.
Hybridization Theory: As stated by Scott (2015), globalization briefs about the space in
which cultures of different countries mix together when taking innovative and valuable
heterogeneous significance through analysing global trends. Basically this model shows the
integration of the local and global culture. According to Felbermayr, Prat and Schmerer (2011),
it highlights the impact of globalisation as mix breed and mixing of the individual in different
cultures would destroy the pure race.
Heterogeneous Theory or Model:- This model argues that globalization does not fully
change the taste of people for a longer of time. There is a less impact of the external culture on
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the local and they become unaffected as things are more heterogeneous in nature. It focus on
diversity, multi-directional global flows and the existence of the world procedures that are
independent and sovereign of other nation states. These elements does not shed darkness on the
local culture instead they change only some of the their characteristics of that particular culture
or country (Gubler, 2011). The local factors or culture will remain strong in-spite the pressure of
the globalization factors.
Framework
Globalization includes increase in the flows and networks all around the world. This way
people have to depend upon each other like if Adidas are facing low market sale in Malaysia so
the other markets of the nation will also be impacted by that. Through the spatial characteristics
we can understand the reach of the globalisation. If someone wants to understand the
globalization they should not understand its characteristics rather they should focus on the range
of values attached to it. The scope of political, social and economic operations of a country is
stretched at bigger platform. Through globalisation their develops a interconnections among the
countries and pattern of interactions and flows between the communities. Through this there is
increase in the speed at which global interaction takes place (Cetorelli and Goldberg, 2012).
With this new technologies and way of communication has been improved. There are various
impacts of globalisation from decisional impact to institutional, distributive and structural
impact. In decisional impact it is analysed that how the decision made by various people,
corporations, companies and government impacts. In institutional impact it is studied that how
agenda of company like Adidas changed and their structure also. How it has effected the
distribution of power and wealth among countries is part of the distributive impact. In the end it
is briefed that how behaviours related to social, political, economic and etc. has changed.
Models
According to Stromquist and Monkman (2014) there are three models of globalization
i.e., internationalization, localization and customization. Each three has its own significance at
their places. Localization is defined as the adaption of the goods, services, technology and etc. to
meet the needs of the particular market. Basically, it is a procedure in which adoption which is
manufactured in global markets goods takes places for a particular region or country. It also
includes translations and other conversion so that the local people can use so it is simplified
according to their needs. These are taken into the local practices and culture. It is adopted
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because it is use to use and through it maximum output can be gained. For example; Adidas is
willing to bring a certain kind of shoes for Malaysia so for that they conduct market survey and
analyse the people living there. After that they get a framework that what kind of shoes they
needs to launch for the Malaysian Market. It can be clearly analysed that the company is settling
according to the needs of local people. On the other hand Internationalization can be defined as
the development of a products or services for various countries so that it can suit various culture
at single time (Jaumotte, Lall and Papageorgiou, 2013). This way they removes the cultural and
political barriers among people thus changing their taste for a single product. For example;
Adidas has launched Air Jordan Shoes for the international market and this will be marketed in
almost all the countries. With this they are able to fulfil the demands of almost all the consumer
in single time. This will give Adidas an advantage that they don't need to put much effort on a
different market as they have made things common.
Chapter 3
Globalization brings interconnectivity among nations in context to economic, political
and cultural relations. There are various characteristics of Globalization which has been
identified below:-
Development in the Transportation and Telecommunications:- It is analysed that in
past centuries in people faced difficulty in communicating with others but with the globalization
capacity and efficiency of people in communication has improved a lot. Individuals has option of
instant message, they can do video calling and connect to the world in few minutes.
Movement of People and Capital: Due to increase in the awareness, opportunities and
transportation has made people migrate from one nation to another in search of new location and
house. It is observed that movement of citizens takes place in order to look for better
opportunities and with this money is also transferred through electronic means (Costinot and
Rodriguez-Clare, 2013). All the investor will try to look for the countries where they can gain
maximum profit in less period of time.
Dissemination of Knowledge: Globalization helps in diffusion of new invention made in
any country because when someone invent something world gets to know that through various
communication platforms. For example; previously in Malaysia citizens used to practice manual
farming but when they came to know that farmers in America is using modern machinery for this
purpose. So looking at this they also started using such automotive farming machines.
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MNC and NGO's:- In the previous point girt is mentioned that through globalization
there has been increase in the global issues which means that there is also increase in the
organisation who aims to deal and fix them. There has been international non profit organisation
who are putting their efforts to bring a positive change in the society without attention to the
borders in which they are working (Narula and Dunning, 2010). On the other side people are
coming together from different countries and is going to work for a common organising thus
forming multinational companies. Out of all the reason behind the expansion of the business
overseas is that their some jobs which can be done by specific people only.
There are both positive and negative aspects of every side and same with the case with
globalization. Following are the positive face of the globalisation:-
 If more MNC will be investing into the developing countries then automatically standard
of living of that country will rise up as people will become more financially strong.
 If there is competition in the global market then it will ensure that prices of the products
are under control and there is variety of unique products.
 Those developing countries who cannot afford or does not have the technology to
develop certain thing can gain lots of benefits as they can buy that technology from some
another one who has it.
 The government of the various nations will able to set a coordination with the private
partners so that development related top the infrastructure cannot be stopped.
 People can adopt various new cultures in the form of music, food, clothing, movies and
etc. this will increase their creativeness.
Negative aspect of the Globalization is as follows:-
 Although globalization provides lot of jobs to the citizens but they also take the job from
another country also and this way individuals becomes unemployment. For example; a
MNC has came into an Asian countries there they hire and recruit people from that area
but in the country where they are based fire someone because they have got some
candidates who are ready to work with them in low salary.
 There is exchange of the culture between the citizens of various countries but there might
be situation when people of particular culture may feel that their traditions are getting lost
as other people are imposing their traditions.
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 When the movement of the people will take place then there might be chances that any
deadliest disease might spread from in another country also. This way the people of other
nation will be affected or will become prone to communicable diseases.
 As there is less regulation in the movement so this place there are chances of illegal
things, terrorism and other safety of the people (Martinez‐Fernandez and et.al., 2012).
The economy of all the countries are connected to each other or if any one country has
good economic relation with each other so this way when a particular nation will face
economic crisis the impact will be seen on the market of the other one.
 The developing countries are imposing their ideology like the western countries wants
that the less developed or underdeveloped countries should adopt westernisation which
will vanish the real identity of the nation.
Chapter 4
Recommendation
The above mentioned negative points of globalization can be made better with exercise of
the certain following points:-
 For ensuring that citizens of the country should feel safe about their job security in their
own nation government of the nations should make sure that they exercise control on the
process. They can issue a guideline that the first preference will be inly given to the local
people or they can set a percent restricting the recruiting of foreign employees in large
number.
 To make sure that the local culture should not face any crisis the local people should be
attached to each other and should organise community programs to ensure that people of
certain region follows the culture.
 The airport authority should check the medical of every passenger who is travelling from
one place to another. They can appoint a medical team who is on the spot checking the
medical condition.
 No nation should depended upon any single country for the resources or any commodities
they should have a option of other countries thus establishing relation with lots of
nations.
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 Nations who are on the stage of development should work on the moral values and
should celebrate national festivals so that they can know who they are and what was there
past.
Chapter 5
Conclusion
As stated in the report, Globalisation is a event which swept the world. It ensured that no
country dominates international arena and allowed greater transparency in transactions. Today,
more than 45% of nations are open and free market. Basically, the concept of globalisation assist
in making global economy which was important for ensuring exchange of goods and services
between economies. At present, this concept is aiding companies like Adidas in becoming major
giants in their sector. It reduced the monopoly and allowed greater private presence in market.
With this it can be said that globalisation fulfilled all the things which were stated by researchers
at the time this concept was coined. In this report, various aspects were covered which allowed
researcher in understanding at what level globalisation impacted the business environment and
assist them in registering higher growth rate.
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REFERENCES
Books and Journal
Baylis, J., Owens, P and Smith, S. eds., 2017. The globalization of world politics: An
introduction to international relations. Oxford University Press.
Beck, U., 2015. What is globalization?. John Wiley & Sons.
Cetorelli, N and Goldberg, L. S., 2012. Banking globalization and monetary transmission. The
Journal of Finance. 67(5). pp.1811-1843.
Costinot, A and Rodriguez-Clare, A., 2013. Trade theory with numbers: Quantifying the
consequences of globalization (No. w18896). National Bureau of Economic Research.
Felbermayr, G., Prat, J and Schmerer, H. J., 2011. Globalization and labor market outcomes:
Wage bargaining, search frictions, and firm heterogeneity. Journal of Economic
theory. 146(1). pp.39-73.
Goris, M., 2013. Adidas, the All Blacks, and Māori culture: Globalization and the reformation of
local identities (Doctoral dissertation, University of Oregon).
Gubler, D. J., 2011. Dengue, urbanization and globalization: the unholy trinity of the 21st
century. Tropical medicine and health, 39(4SUPPLEMENT), pp.S3-S11.
Hirst, P., Thompson, G and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Hitt, M. A., Ireland, R. D and Hoskisson, R. E., 2012. Strategic management cases:
competitiveness and globalization. Cengage Learning.
Jaumotte, F., Lall, S and Papageorgiou, C., 2013. Rising income inequality: technology, or trade
and financial globalization?. IMF Economic Review. 61(2). pp.271-309.
Lambin, E. F and Meyfroidt, P., 2011. Global land use change, economic globalization, and the
looming land scarcity. Proceedings of the National Academy of Sciences. 108(9).
pp.3465-3472.
Martinez‐Fernandez, C and et.a., 2012. Shrinking cities: Urban challenges of
globalization. International Journal of Urban and Regional Research. 36(2). pp.213-
225.
McMillan, M. S and Rodrik, D., 2011. Globalization, structural change and productivity
growth (No. w17143). National Bureau of Economic Research.
Narula, R and Dunning, J. H., 2010. Multinational enterprises, development and globalization:
some clarifications and a research agenda. Oxford Development Studies. 38(3). pp.263-
287.
Scott, J and et.al., 2015. Globalization. In Expert Oracle Application Express (pp. 249-280).
Apress.
Steger, M. B., 2010. Globalization. John Wiley & Sons, Ltd.
Stromquist, N. P and Monkman, K., 2014. Defining globalization and assessing its implications
for knowledge and education, revisited. Globalization and education: Integration and
contestation across cultures, 1.
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