Impact of Globalization in Business

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Globalization is known to define the phenomena where the world is growing to be
increasingly interdependent on the economies, cultures and populations of the
world. This is usually done with the help of international trading of goods and
services, technology, people and finally, information (Krugman 2017).
What is Globalization?
International Business: A wide range of business activities that is conducted
across geographical borders.
At the international level, the world economy and the differences that lie
between countries present many opportunities, along with challenges to the
business world (Verbeke Coeurderoy and Matt 2018). Business managers need to
take into consideration the globalized environment that they are doing their
business in, to formulate effective organizational strategies.
It is a commonly held belief among economists that globalization is the
explanation behind some of the key economic trends, as follows:
 Lower wages for workers in Western economies
 Increased flow of migrants to city from poor countries
 Low interest rates combines with low inflation accompanied by
strong growth
 Increasing foreign investment
Organizations are no longer able to stay protected by their local markets and
have to face the global forces of demand and supply along with competition in the
international market (Bird 2016). Along with economic aspects, these organizations
also have to keep in mind the global issues present in their local environment along
with an added layer of considering political developments.
Impact of Globalization in
Business
References:
Krugman, P., 2017. Crises: The price of globalisation?. In Economics of Globalisation (pp. 31-50).
Routledge.
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Science Quarterly, 60(2), pp.189-227.
Ahammad, M.F., Tarba, S.Y., Liu, Y. and Glaister, K.W., 2016. Knowledge transfer and cross-
border acquisition performance: The impact of cultural distance and employee retention.
International business review, 25(1), pp.66-75.
Zakaria, N. and Yusof, S.A.M., 2015. Can we count on you at a distance? The impact of culture on
formation of swift trust within global virtual teams. In Leading global teams (pp. 253-268).
Springer, New York, NY.
Enke, B., 2018. Kinship Systems, Cooperation, and the Evolution of Culture.
Mesoudi, A., 2016. Cultural evolution: Integrating psychology, evolution and culture. Current
Opinion in Psychology, 7, pp.17-22.
Beugelsdijk, S., Kostova, T. and Roth, K., 2017. An overview of Hofstede-inspired country-level
culture research in international business since 2006. Journal of International Business Studies,
48(1), pp.30-47.
Favaretto, R.M., Dihl, L., Barreto, R. and Musse, S.R., 2016, September. Using group behaviors
to detect hofstede cultural dimensions. In 2016 IEEE International Conference on Image
Processing (ICIP) (pp. 2936-2940). IEEE.
Verbeke, A., Coeurderoy, R. and Matt, T., 2018. The future of international business research on
corporate globalization that never was....
Bird, F., 2016. The Globalization of Business Ethics.
Name of student:
Name of University:
Globalization in Business
Global Impact of Culture
• Globalization is drawing people from diverse cultural backgrounds into
close relationships through mediums such as tourism, presence of
multinational organizations along with geographical unities such as the
European Union (EU).
• Dissemination of pop culture from different countries
• Increasing flow of migrations (Zakaria and Yusof 2015)
• Rise of Internet communities
• Global institutions
What is Culture?
Characteristics of a certain group of people in accordance to their:
 Language
 Religion
 Cuisine
 Social habits
 Music and arts
Culture is the shared patters of behaviors that is learned by socialization among the
specific group of people (Chua, Roth and Lemoine 2015).
Cultural Distance:
The degree of differences between the cultural values among different countries,
organizations and stakeholders (Ahammad et al. 2016).
Distance is created when the group of individuals believe that their cultural values
and methods of communication is different than that of others.
Evolution of Culture
Culture among humans encompasses certain ideas and behaviors that can be transferred between groups or individuals. Culture is also subjected to change
over time (Enke 2018).
Culture evolution is the theory that deals with the entire concept of social change (Mesoudi 2016). It can, to some extent, be traced back to the theories of
Darwin. He had argued that for human beings, customs and habits that are inherited which contribute to the human identity of an individual or group is
grounded in the theory of human evolution and the capability of humans for acquiring knowledge.
Impact of Culture in Business
Culture is able to affect the style of management that is present in the workplace of the company. Culture manifests the understanding that there will be a
cross-cultural mixture taking place in business relationships. However, there are various degrees of priority that is understood among the various styles of
management (Beugelsdijk, Kostova and Roth 2017).
Hofstede’s Cultural Dimensions
According to this theory, there are 4 different dimensions that can be used to compare the cultural values present in different companies
(Favaretto et al. 2016).
POWER DISTANCE
COLLECTIVISM vs. INDIVIDUALISM
UNCERTAINTY AVOIDANCE
FEMININITY vs. MASCULINITY
SHORT-TERM vs. LONG TERM
ORIENTATION
RESTRAINT vs. INDULGENCE
LOW HIGH
The degree of inequality among employees
that exists, and is accepted, in the workplace.
The strength between people and their
community that they are in.
The degree to which people in the workplace
are able to deal with anxiety of the uncertain.
The distribution of the roles that is present in
the workplace between men and women
employees.
The orientation in which the company
executives set their company goals.
The extent to which the society around the
workplace is able to fulfil an employees’
desires.
Embraces hierarchy
Individualist
Uncomfortable with uncertainty
Power is important
Futuristic orientation
Satisfaction is good
Egalitarian
Collectivist
Comfortable with uncertainty
Nurture is important
Short-term orientation
Normative repression