Globalization's Impacts on the World

This assignment delves into the concept of globalization, examining its various facets. Students are tasked with researching and understanding the driving forces behind globalization, its influence on economic systems, and its broader social and cultural implications. The provided resources encompass diverse perspectives on globalization, from theoretical frameworks to empirical studies, offering a comprehensive overview of this complex phenomenon.

GLOBAL POLICY
AND
STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................3
RECOMMENDATION...................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
From the view point of Real story of Globalization, “It is the process of world shrinkage
where distances are getting shortened and things started moving closer. Further, it refers to
increasing ease with which somebody can interact with someone in any part of the world in order
to have mutual benefit (Definitions of Globalization. 2006).” However, as per Joseph Stiglitz,
“Globalization is the closer integration of countries and different peoples of the world which
generally leading towards the reduction of cost in transportation as well as communication. Apart
from this, it is also leading towards the breakdown of barriers across the borders.” Eric Beerkens
stated that, “Globalization refers to the process where people in the world are incorporated and
treated as a single one society; more even a global society.”
Given above are the definitions given by three different authors as per their perspective.
Meaning of all the definitions is genuinely the same; but few have defined in simple manner and
some have broadened the shackles in order to have deep meaning of the same (Hirst, P.,
Thompson and Bromley, 2015). Globalization is nothing; but a worldwide movement towards
the economic, financial, trade and different communication integration so that business venture
can make more contacts with the outside world. By accepting the same, they will increase their
revenue, profitability and corporate image. Moreover, globalization is a national perspective
where different borders are interconnected or interlinked with one another. It further results in
free transfer of the capital, goods and services across the national borders.
This assignment is all about understanding the different global policy and strategy
prevailing whole around the globe along with the development which going to take place in
coming decades. Further, the scope of this report is to evaluate the benefits which they will get
from the different drivers of the globalization. Majorly there are 8 drivers but the major reach
which organization can see is by taking technological, cost and market drivers into consideration.
Furthermore, globalization is also treated as an international integration which generally
arises from the interchange of the world views, products, ideas and mutual sharing along with
different aspects of the culture. Moreover, it is a recent phenomenon which took place in the late
90's and got boosted up in 20th and 21st centuries. As stated above as well that the actual meaning
which is derived by the authors are same but each of them have their own viewpoint to contrast
with the situation (Chaminade and De Fuentes, 2012). Further, with the implication of the
globalization, industries have got boosted up whole over the world and focuses on making an
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excellent relationship with different countries so that they can expand their products throughout.
Apart from it, globalization has different benefits but at the same time it complied with different
drawbacks as well. If we talk about the advantages, then some major benefits are discussed as
follows:
It reduces the international poorness and also make huge contribution in spreading
technology. Further, it increases the profitability and revenue of the cooperation and focuses on
developing strong trade relations between different countries around the globe (Wei and Lin,
2012). Moreover, different policies and laws of different countries are concerned by industries so
that they can conduct best of their operations.
Globalization constitutes some disadvantages as well and these have been discussed
efficiently as well. Some of them are:
At times, globalization can ruin the environment because of moving up of things from
one arena to the other. Globalization results to increase in imports than exports which is
generally growing trade deficit and balance of payments problem within a particular country..
After identifying the clear definitions of globalization, now it is time to focus on different
drivers which influence the globalization up to a great extent. These drivers affect the
performance of organization as well. In order to make an effective brand image, business
organizations have to consider some drivers effectively so that they can perform best of the
operations which will lead them in achieving their goals and objectives. Some of the major
drivers have been named and explained are Technological, Political, Market, Cost, Competitive,
Environment, Government, Other drivers.
Political drivers consists of liberalized trading rules and markets which generally lead
towards the lowered tariffs and eventually allows FDI almost all over the globe. Further, General
Agreement of Tariffs and Trade (GATT) 1947 and WTO 1995 and increasing privatization in the
Eastern Europe is the latest development in this segment. Further, political factor involve various
policies which are framed by the government in order to make import and export procedure
simple and effective.
Competitive drivers also plays a role in the global market as the global inter firm
competition is increasing day by day and organization are forced to play internationally in order
to increase their goals and objectives. Under this, organizations who are working in the same
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industry focuses on producing best of the products for the customers so that they get a
competitive edge over their rival competitors.
Environment drivers includes increase in individual wealth and mobility, rapid
information transferring, technological revolution, etc. these all factors generally increasing the
demand for various global products and services (Montobbio and Sterzi, 2013). Further, new
developed group of global players are seeking advantage of different trading regions and
developed technologies. Moreover, global organizations are born global and they serve whole
country with effective manufacturing process rather than focusing on setting a new plant in
different countries. This process saves organization cost and focus on achieving their goals and
objectives in significant manner.
At last there are government drivers who plays a crucial role in strengthening the
business as well as other relationship between the business organizations. Local body have to
frame policies and rules which are easy to accept and lead to efficient import and export of goods
and services. Government trade policies involve tariff rate reduction, incentive for the foreign
investment, etc. This also involve factors like effective trade policies, regulatory climate and also
provide technology standards to the bushiness organization.
Technological drivers: Everyday new technology gets innovated and these innovations
set the foundation of the modern globalization. Internet, e-business and e-commerce have
boosted the flow of different services throughout the world and it has opened different ways to
get globalized.
Cost drivers: Sourcing of efficiency and cost which is generally getting varied from
countries-to-countries (Meyfroidt and Hertel, 2013). By considering this fact, global firms can
take advantage of that and expand their organization to increase more of the revenue and
profitability.
Market drivers: As the domestic marketing is becoming more congested and saturated,
the opportunities for having growth is been restricted and by analysing this circumstance,
organization are expanding their business units to different countries so that they become more
stable. This will also result into increase in goodwill and brand image (De Meyer, 2012).
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MAIN BODY
In this, section the three major drivers of globalization will be taken into consideration
and these are Technological, Cost and Market. Further, these have been majorly focused because
all other are in common and they even constitute a part of external business environment so this
are universally accepted by all the business organization (Fujita and Thisse, 2013). Apart from
this, technological cost and market plays an essential role in the development of busness
organization because by considering these three in proper way, firm will be able to increase their
revenue, profitability as well as goodwill.
Globalization is emphasized on moving beyond the domestic and national market to other
markets of the globe so that there become strong links and relation between two different
countries. As stated earlier in the report, different drivers have been stated and few of them have
been explained in brief (Tiwari and Herstatt, 2012). Now, these mentioned drivers will be
explained in brief so that one can have a better and efficient understanding of the same:
Technological drivers:
Technological drivers usually impact the business performance because this is the driver
which gets changed constantly and organizations have to consider them effectively in order to
have a competitive advantage as compared to their rivalry firms. Technology here is defined as
socialized way of producing goods and services (Sugano, 2015). Further, various up-gradtion
made by business ventures in order to increase the sale and production along with profits.
Further, technology is something which is related to change only because with the use of
technology, nation changes drastically. Further, various innovations take place due to
technological advancement only which generally plays an important role in the life of human
beings.
Further, if any business establishment have their operations in different countries, then
they have to use the same technology in those nations as well in order to have equal production
and quality (Chan and Daim, 2012). For instance, McDonald's have their business operations
throughout the globe; but they sell different products as per the needs and demands of the
country. Although products are different but they use same type of technology to produce those
goods and services so that customers get same quality. Some still depend on labours and some
majorly focuses on machines for the production (Pangarkar and Wu, 2012). Further, by getting
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emphasized more on machines, cost for recruiting employees generally reduce and their exists
recession in the country. By considering this fact, all the organizations have make a balance in
using both technology as well as machines.
Moreover, skilled person is more demanded because that person possesses more of the
knowledge and can function task and duties efficiently and effectively. Due to globalization,
countries can recruit skilled workforce from outside source as well in order to have high
efficiency in the production process (Meyfroidt and Hertel, 2013). For instance, in India, people
are more skilled and multi talented so there is great need of such employee's in under developed
countries. With the open channel of globalization, workforce is exported to different countries as
well. Further, every organization has to modify their technologies with the passage of time.
Apart from it, better working conditions for employees is also possible by using advanced
techniques which will offer them the best facilities to work with. Managers of the venture have
to take care each and everything so that organization's efficiency gets improved day by day
(Benería, Berik and Floro, 2015).
Cost drivers:
Cost driver is an essential element of the globalization and it acts as a motivator for
different global companies. The main of the business venture is to save cost so that they can
increase the amount of profits year by year. Major cost of the corporate is incurred in raw
material, production, labour and land (De Meyer, 2012). Further, in order to have a stable
performance, organization has to consider these core elements in order to achieve their goals and
objectives. With the globalization, organization focuses on reducing the cost of raw material by
purchasing products from different countries (Drivers of Globalization: Integration of Theories
and Models. 2006). This also ensures that the production takes place effectively by taking best of
the raw materials in the production process.
Apart from it global organization like Tesco, Asda, Sainsbury, McDonald's, etc. taking
their foot into different developed and under developed countries so that their revenue and profits
get increased subsequently. For instance, the cost of land in India is relatively lower as compared
with the land cost in UK and rest of the Europe. Therefore, organizations taking their foot into
countries like India, Sri Lanka to expand their business operations along with increase their
brand image globally (Milberg and Winkler, 2013). Further, if we talk mainly about India then
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ventures like Tesco, Zara, KFC, McDonald's have grown their market significantly in India and
they are earning good amount of profit year by year. By studying this cost factor, it is identified
that these cost drivers save cost for the business enterprise and also gives them chance to get a
competitive edge over their rival competitors (Chaminade and De Fuentes, 2012). However,
before taking these important decisions environmental analysis of particular country should be
done as if the product or service is not accepted by the people there in then it will be a huge
burden for the organization itself.
Labour also plays a crucial role as it is one of the important physical assets which
organization possess and they have to use them efficiently in order to increase their production
and operations. Globalization has made easy for individuals to migrate from one place to another
in order to have effective pay structure and growth in their career (Wei and Lin, 2012). Further,
countries like UK, US, China, etc. focusing on hiring labour from India in different
constructional and other works because cost of labour in India is quite low and they are generally
hired for such purpose only. Further, they are generally paid hire as compared to Indian currency
just to attract them. This is only possible due to open policies of the globalization and one person
can travel anywhere in the globe. Cost of labour in India is quite lower and the rate of one British
pound is much higher (Fujita and Thisse, 2013). From a given fact, one British pound is
approximate 100 Indian Rupees. Marginally one can imagine the difference between the two
currencies. With this, other countries are hiring best of the labour to save their cost and also to
increase their business operations efficiently and effectively.
Further, global organization is focusing on promoting the products to different countries
in order to attract more of the customers towards that. More individuals will tend to buy that if
they hear or learn about that merchandise. Moreover, global brands like Coca Cola, Pepsi have
expanded their products throughout the globe but they use unique positioning and brand
differentiation in order to meet the taste of the local individuals of that nation (Hitt, Ireland and
Hoskisson, 2012). Different promotional advertisement is also conducted according to the
countries condition and with the implication of that, organization will be able to increase their
revenue and profits.
Market drivers:
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Individuals in today's generation are quite updated and they are also being more similar
in terms of the income, lifestyle, education and aspirations. Organizations are also targeting
markets where they get the ready buyers because they comprise high purchasing power
(Montobbio and Sterzi, 2013). Market plays an efficient role as well in the globalization because
whole of the market is depended upon customer’s preference and organization also focusing on
satisfying their needs and demands. As stated above, people whole over the globe getting
educated and particular country adopts similar culture and tradition. Therefore, it has because
easy for the business venture to produce goods and services efficiently without making many
changes in the development process (Meyfroidt and Hertel, 2013). Companies like Coca Cola,
Hindustan Uniliver and Zara are producing same products and distributing them globally.
Further, with transportation and other export charges, cost for that specific product becomes
more valuable. People tend to purchase as well because product having immense goodwill
throughout the globe and it certainly increases their living standards as well. Apart from it, many
organizations also focuses on market divide strategy where they group particular countries into
one segment and produce goods for the same. With convenient policies, it has become much
easier to transfer goods from one country to another which certainly increasing the revenue and
profits for the firms.
Moreover, apparel brands like Levis, Zara, Gucci, Prada, Dolce and Gabbana, Armani,
etc. produce clothes which are accepted by each and every individual throughout the globe. They
do not have to make any changes in the clothes design except the size because it differs from one
person to another (Wei and Lin, 2012). Further, the quality and texture of the fabric is so good
which is universally accepted by each and every individual. For instance if we talk about jeans
product then the texture and fabric is worldwide accepted by the people. So it generally reduces
the cost for these business organizations and they are able to increase their revenue and goodwill
throughout the world. Apart from this, these companies also make a base of their loyal customers
which comes constantly for the shopping. This is only possible because of globalization.
Furthermore, online retailers like eBay, Amazon etc. focusing on attracting more of the
customers and making their brand image throughout the world. These online companies give
freedom to people to shop anytime and from any place. This generally increases their market
share with respect to increasing in revenue as well (Pangarkar and Wu, 2012). Further, these
ventures cover a particular arena and make suppliers in order to sale their products. These
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suppliers vary from country to country and their operations as well. For instance, Amazon
suppliers are different in UK as compared to India because they both selling their countries
demanding product. But at the end, advantage is gained by Amazon because they are acting as a
mediator which further helping them to increase their market share and goodwill (Audretsch,
Lehmann and Wright, 2014).
RECOMMENDATION
Organizations are recommended to use the above mentioned drivers efficiently and
effectively. This will help them to increase their corporate image along with lead towards the
development of loyal customers. With the globalization, companies will be able to expand their
market throughout the globe which is only possible with proper scanning of the particular
environment. This will suddenly help the business venture to gain more revenue and goodwill.
Further, by considering the major drivers of globalization, they can also expand their business
throughout the globe which will lead into increase in revenue and profits. Further, organization
also need to adopt the changes which are prevailing in the market in order to get a competitive
advantage over their major competitors who are working in the same industry.
CONCLUSION
From the above report, it is clearly inferred that globalization is an important element
which emphasize on building efficient relation between different countries. Further, this report
also showcases the drivers of the globalization and has majorly focused on three which plays a
crucial role in the success of the business venture. Apart from it, a thorough discussion has been
also done with reference to some valid examples which will give reader a clear idea about all the
drivers which are studied in the report. Further, the rules and policies in earlier times were
restricted as well and due to this organization faced difficulty in expanding their business abroad.
But the 20 & 21st century leads to the development of globalization policy and it has opened the
gates for making strong relationship in different countries.
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REFERENCES
Journals and Books
Audretsch, D.B., Lehmann, E.E. and Wright, M., 2014. Technology transfer in a global
economy. The Journal of Technology Transfer. 39(3). pp.301-312.
Benería, L., Berik, G. and Floro, M., 2015. Gender, development and globalization: economics
as if all people mattered. Routledge.
Chaminade, C. and De Fuentes, C., 2012. Competences as drivers and enablers of globalization
of innovation: the Swedish ICT industry and emerging economies. Innovation and
Development. 2(2). pp.209-229.
Chan, L. and Daim, T., 2012. Exploring the impact of technology foresight studies on
innovation: Case of BRIC countries. Futures. 44(6). pp. 618-630.
De Meyer, A., 2012. Reflections on the globalization of management education. Journal of
Management Development. 31(4). pp.336-345.
Fujita, M. and Thisse, J.F., 2013. Economics of agglomeration: cities, industrial location, and
globalization. Cambridge university press.
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question. John Wiley & Sons.
Hitt, M., Ireland, R.D. and Hoskisson, R., 2012. Strategic management cases: competitiveness
and globalization. Cengage Learning.
Meyfroidt, P. and Hertel, T. W., 2013. Globalization of land use: distant drivers of land change
and geographic displacement of land use. Current Opinion in Environmental
Sustainability. 5(5). pp. 438-444.
Meyfroidt, P. and Hertel, T.W., 2013. Globalization of land use: distant drivers of land change
and geographic displacement of land use. Current Opinion in Environmental
Sustainability. 5(5). pp.438-444.
Milberg, W. and Winkler, D., 2013. Outsourcing economics: global value chains in capitalist
development. Cambridge University Press.
Montobbio, F. and Sterzi, V., 2013. The globalization of technology in emerging markets: a
gravity model on the determinants of international patent collaborations. World
Development. 44. pp. 281-299.
Pangarkar, N. and Wu, J., 2012. Industry globalization and the performance of emerging market
firms: Evidence from China. International business review. 21(2). pp. 196-209.
Sugano, K., 2015. Journal of Gastroenterology in the era of globalization. Journal of
gastroenterology. 50(1). pp.1-3.
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Tiwari, R. and Herstatt, C., 2012. Assessing India's lead market potential for cost-effective
innovations. Journal of Indian Business Research. 4(2). pp.97-115.
Wei, Y. D. and Lin, G.C., 2012. Production and R&D networks of foreign ventures in China:
implications for technological dynamism and regional development. Applied Geography.
32(1). pp. 06-118.
Online
Definitions of Globalization. 2006. [PDF]. Available through:
<http://www.wh.agh.edu.pl/other/materialy/678_2015_04_21_22_04_13_Definitions
%20of%20Globalization_A%20Comprehensive%20Overview%20and%20a
%20Proposed%20Definition.pdf>. [Accessed on 18th February 2016].
Drivers of Globalization: Integration of Theories and Models. 2006. [Online]. Available
through: <http://www.grin.com/en/e-book/57026/drivers-of-globalization-integration-of-
theories-and-models>. [Accessed on 18th February 2016].
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