The Impact of Globalization on Business and Society

The provided report concludes that globalization is a key concept that helps companies grow, expand, and develop their business at a global level. Globalization improves financial sustainability, productivity, and profitability by facilitating the development of technologies, marketing, and creating job opportunities. It also enables governments to reduce poverty levels by arranging different products and job opportunities.

International
Business

Table of Contents
INTRODUCTION...........................................................................................................................2
Globalisation and its driver in context of technological development and changes in trade and
investment....................................................................................................................................3
Benefits of the Globalisation for the business managers with illustrating live examples .........5
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Globalisation is the process of expansion or integration of people, organisations etc. at a
international level. Globalisation is very essential for the organisations to achieve high sales and
revenue along with the huge number of customers. Through the globalisation process,
organisations can increase their markets share and can provide their products and services to the
huge number of culturally diverse peoples(Carranza, 2017). Besides this the report pertain the
knowledge about the role of globalisation and it's driven forces, impacts on small scale industries
and its benefits to business managers.
Globalisation and its driver in context of technological development and changes in trade and
investment
Globalization has changed and evolved since the days of traders from one region carrying
goods to trade with counterparts in other regions. The ordeal proved extremely lucrative or
profitable because the merchant-traders were able to fetch high prices for the goods that the
political, economic, and social elites demanded. Attempting to gain more wealth, merchants
began to find ways of how trade could be increased and made more efficient over the years,
culminating in innovation and progress made in transportation, telecommunication, and
information technology. But the MNC's are facing the burning issues of costs of globalization
and competition, it means setting up of business in different nations requires huge amount of
investment as well as proper and effective planning for facing the tough competition. The failure
or ineffectiveness of these two factors sometimes leads to the situation of bankruptcy. These two
factors are described below.
RISKS: it refers to the probability of the failure and success. When an organisation
enters in new nation for trading, then the organisation have to bear the risks 0of failure and the
effective planning as well as the innovative products and services are essential for the success or
capturing the new market. Otherwise the failure sometimes leads to the situation of bankruptcy.
COMPETITION: The globalization involves the several benefits but also pertain tough
competition with the different organisation of different nations and for this it the effectiveness of

the management planning and strategy are essential for targeting the large number of buyers and
capturing the large market area.
Drivers of the Globalization
 International Trade can be defines as the exchange of capital, goods, and services or
can be defines as import and export of goods and services between different countries
across the world. Its necessity to economy of the nations, polity, and society has
increased after European colonization. It enhances the economic growth also help in
expansion organisations, and transformed social behaviour. This leads to maximization of
wealth, improving people’s living standards, which culminated in changes in
consumption and social behaviour(Clark and Wójcik, 2018). Furthermore, it promotes
and alter the interdependencies of nations, as it self-sufficiency of a nation is absolutely
very critical. Besides this, the FDI also promotes the globalization and also the R&D of
the organisations. the FDI occurs when the organisation invests resources in the business
activities outside its home country. Many of the barriers to international trade took the
form of high tariffs on imports of manufactured goods. The typical aim of such tariffs
was to protect domestic industries from foreign competition. It ensures the free flow of
goods, services as well as the capital acquirement for fulfilling the needs of citizens and
also improve their standard of living. Having learned from this experience, the advanced
industrial nations of the West committed themselves after World War II to removing
barriers to the free flow of goods, services, and capital between nations. This goal was
enshrined in the General Agreement on Tariffs and Trade. Therefore for, the motive of
reducing the trade barriers and extended GATT to cover services as well as
manufactured goods, provided enhanced protection for patents, trademarks, and
copyrights and established the World Trade Organization to regulate the international
trading system. Accordance with the WTO data, the volume of world merchandise trade
has grown faster than the world economy since 1950. From 1970 to 2010, the volume of
world merchandise trade expanded more than 30-fold, outstripping the expansion of
world production, which grew close to 10 times in real terms. (World merchandise trade
includes trade in manufactured goods, agricultural goods, and mining products, but not
services.) Since the mid-1980s, the value of international trade in services has also grown
robustly. Trade in services now accounts for about 20 percent of the value of all

international trade. Increasingly, international trade in services has been driven by
advances in communications, which allow corporations to outsource service activities to
different locations around the globe(International Business, 2013). Thus, as noted earlier,
many corporations in the developed world outsource customer service functions, from
software testing to customer call centers, to developing nations where labor costs are
lower.
(International Business, 2013)
Some trade barriers are mentioned underneath:
 Cultural Barriers: Social and cultural barriers are also faced by the organization
proceeding the international trading. As the organisations are required to take the
language factors while devising adjustments in packaging, signs and logos. For
example, languages of Thailand and China are different, this gives rise to the
cultural barriers. Furthermore, In case of less universal products mainly faces the
ordeals or varieties of conditions that requires them to adjust their practices.
 Political barriers: Political factors are also termed as most affective barriers for
the international trading as the non-stability of the political parties as well as the

political unrest may create a hostile or even dangerous environment for the
foreign business.
 Tariffs and Trade Barriers: this kinds of barriers effects the prices of the goods
traded. Tariff barriers are also known as the import restraints, as due to they limit
the amount of goods which can be imported into a country. Besides this, it is also
known as Duty or Tax levied on goods traded internationally.
 Boycotts: It refers to the situational act in which a specific boycotts or ban on all
goods associated with the a particular organisation or may be of country.
 Outsourcing can be define as the process of external contracting for the production of
accessories or parts or the whole product to countries, due to low labour costs and
environmental protection and where the labour laws are less rigorous or not forcefully
imposed. the outsourcing refers to outsource the production to other nations for their
mutual benefits. Furthermore, the globalization accelerates the outsourcing, as the
business entities of different nations successfully implementing the outsourcing in their
strategic planning(Tumwebaze and Ijjo, 2015). The outsourcing facilitates the contraction
of 'overhead costs' and removes the headache of recruiting the employees . Therefore
outsourcing helps in maintaining or ascertaining the productivity without requiring the
recruitment of additional employees for more production. In present business times, the
business manager uses outsourcing as the technique for speeding their business models to
ensures more flexibility, more competitiveness and to target large number of customer for
maximising the revenues as well as profits. For example, BMW (UK) outsource the
production of the unfinished camshaft in other nations, such as Brazil, where wage and
labour costs are less in comparison with United kingdom. The semi-finished goods
shipped back to organisation's factory in the UK for final stage of production.
 Offshoring is the process of producing of semi-finished parts at a facility located in
lower wage countries. then shipped back to the company’s home factory for finishing.
This process is a common practice for UK multinational entities. Furthermore, the
offshoring mainly refers to geographic activity. As in west zone the goods are relatively
expensive due to the recruitment of employees to manufactures it and their distribution.
In the developing world, by contrast, vast inexpensive labour pools provide an easy
bedrock for a low-cost economy. Offshoring benefited the cost reduction in the

production of the organisation by shifting the factories from the expensive regions to the
cheapest region or economies with the motive to sell the goods back in the west at a hefty
discount(Crothers, 2017). This accelerates the technological improvements, it is benefited
in lowing the costs of consumer goods like clothes and electronics due to huge deductions
in production. For example, Apple incorporation (USA) established by Steve Jobs,
renders the electronic goods for customers like iphone, ipad etc. after some years of its
establishment the management of Apple realizes the manufacturing costs of electronics
goods is relatively expensive in USA, this increases the cost of products which can
reduce the large number of potential buyers therefore, it becomes essential to reduce the
production costs hence the management shift the factories of production in China.
Because the costs of labour and technology is cheap in China, as in comparison USA and
other countries. So it helps in reduction of production costs of electronic goods by 3
times, this maintain the prices of Apple electronics stable and not influences the number
of buyers of Apple.
 International Investment concerned with the acquisition of production or financial
facility from other nations. It is classified mainly in two categories, portfolio and direct
investment. It pertain the main characters of foreign investors who invest money in large
business enterprises. Foreign portfolio investment (FPI) termed as the main source of
acquiring funds to a sovereign state or large private enterprise for a guaranteed rate of
return. Foreign governments proceed the issuance of securities to raise capital to spend on
fiscal programmings and building infrastructures with an aim of sustaining social stability
and ascertaining competitiveness. Furthermore, international or foreign investment
accelerates the globalization by incrementing the economic assimilation. Due to this,
there is also an increment in commercial loans, foreign direct investment (FDI) and
foreign portfolio investment(FPI). As because of the different valuable advantages if the
globalization several of countries promotes the globalization as it also helps in
developing the economy of the nations by creating the employment opportunities,
creation as well as development of the organisations and also develops the sources of
incomes. There are several of barriers for the International investment which are as
follows.

 Political and capital control risks influences the growth of the international
investment.
 Foreign exchange risks also affects the International investment.
 Restrictions on foreign investment and control.
 Taxation and high costs policies drastically influences the international
investments.
Benefits of the Globalisation for the business managers with illustrating live examples
The benefits of globalisation to the business managers or the organisations are mentioned
underneath.
 Globalization enhances the entities specialization to increase the intensity of
research and development, innovation and capital in their output. Along with the
advancement of technology the R&D department to deepening of technological
heterogeneity. The fast growing rates of the MNCs promotes the globalization and create
the dynamic environment of tough competition throughout the world. Hence, this
emerges the need of R&D in each and every developing organisation for this motive,
several of research a institutes and key technology programmes, for boosting technical
manpower development programmes and planning for manufacturing modernization and
developing the information superhighways. Besides this, globalization enhances the
acquisition of finance for the specially R&D of the organisations this all promotes the
advancement of research and development department of the organisations. In context of
R&D or technological innovation, the rapid industrializing countries are enforcing the
policies to acquire the technologies form advanced industrial nations(Rodrik, 2018). For
example, Private R&D investment is also going global. R&D acquisition of international
companies in United States and the spending abroad both are relatively increased by three
times from 1987 to 1997. Foreign-owned company R&D investment increased from $6.5
billion in 1987 to $19.7 billion(International Business, 2013).
 Globalization has made it easy for new entities to starts competing with old
incumbents, globalization ensures free flow of goods and services between different
nations across the world. In several of countries globalization facilitates the deregulation
of industrial economy through de-licensing and de-reservations, opening up the industrial
sector to internal and external competition, lowering of tariffs, removal of quantitative

restrictions etc. there aspects leaves the drastic effects on the small scale sector. Cheaper
and standard quality of goods are imported and treated as affective threats to small scale
industries operations like manufacturing of toys, footwear, clothes etc. the most affective
threat that is import of cheap Chinese products in several of nations ruins the businesses
of small scale industries(Greer and Hauptmeier, 2016). After the pace of growth of
globalisation to such developing countries, ensures the opportunities to small or medium
sector enterprises to sale their products of standard quality with internationally with the
help of online trading. Besides this, the globalization promotes the advancement of
technologies this ensures the advance technologies in small as well as medium sector
enterprise this helps them in maintaining the production level by reducing time and costs
and renders them maximisation of profits by reducing the costs of production. For
example, AIRDRI (UK), manufactures the hair dryer before some years, its trading is
only limited to the boundaries of UK, but due to impact of globalization that ensures the
advancement in technological sector, this renders the concepts of of online trading this
ensures the organisation limitless market for selling their products by proceeding e-
commerce and with the help of internet webinars or websites.
 Globalization leads to increase in number of employees, along with the increment in
exports and imports. It enables the management of different organisations of world to
recruit the skilled people or employee for their organisation from different countries
throughout the world. This emerges the opportunities for the employed or unemployed
people(Tian and Slocum, 2014). Besides this, the globalisation leads to diversification,
modernisation as well as expansion of the businesses in different countries of the world
and this creates the employment opportunities to the people of home country of
organisation as well as for the people of another countries also. As this, reduces the
unemployment rates and the poverty from the economy of the different countries and is
responsible for the improvement of living standard of the people of that region or country
and accelerates the economic growth of countries. For example, HSBC (Hong Kong
Shanghai Banking Corporation) develops its branch in UK, and renders the opportunity
to the people of UK .
 Benefits of development in Transportation, communication and technologies, it is
wholly correct that the globalization enhances the technological, communications as well

as the transportations development in several economies of the different nations across
the world.
 Transportation: With the growth of globalization several of nations promotes the
globalization for the betterment of their relations with other nations. It enhances
the transportation mediums or services between several of nations. Globalization -
promotes the airline, shipping services directly among several of nations this also
helps in betterment in travelling of peoples of different nations and transportation
of goods from one country to another. For example, Thomas and cook(UK),
engages in Travel and tourism business and render the best travelling services to
the people of different nations.
 Technologies: The globalization ensures fast development of technologies from
one nations to several of nations. The globalization promotes the technological
development with rapidity. For example, there are several of advanced
machineries are transported from one country to another country's industries for
the betterment of production activities. For example, BMW (UK), it is
automotive organisation renders expensive luxury cars with high and advanced
technologies, and trading in several of nations of the world.
 Communication: the globalisation ascertain the modes as well as effectiveness of
communications. The MNCs promotes the new inventions and innovations such
mobile, internet, television, E-mail etc. which are very effective medium for the
betterment of the communication from one place to any another place in any
country of entire world. For example, 4Com (UK), renders best
telecommunication services throughout the UK as well as to other people of
different nations working in UK.
CONCLUSION
From the above report, it has been concluded that globalisation is one of The main
concept that help companies to grow, expand and develop their business at global level.
Globalisation help in improvement of financial sustainability, productivity and profitability. With
the help of improvement in technologies better, effective and valuable product are manufacture.
Marketing help the various companies the advantage of globalisation so that it can grab more
market share. Globalisation also help in creating employees opportunities as they get more

chance to perform different task. With the support of globalisation government are able to reduce
the poverty level by arranging different product and job opportunities.

REFERENCES
Books and Journal :
Carranza, M.E., 2017. South American Free Trade Area or Free Trade Area of the Americas?:
Open Regionalism and the Future of Regional Economic Integration in South America:
Open Regionalism and the Future of Regional Economic Integration in South America.
Routledge.
Clark, G.L. and Wójcik, D. eds., 2018. The New Oxford Handbook of Economic Geography.
Oxford University Press.
Tumwebaze, H.K. and Ijjo, A.T., 2015. Regional economic integration and economic growth in
the COMESA region, 1980–2010. African Development Review, 27(1), pp.67-77.
Crothers, L., 2017. Globalization and American popular culture. Rowman & Littlefield.
Rodrik, D., 2018. Populism and the Economics of Globalization. Journal of International
Business Policy, pp.1-22.
Greer, I. and Hauptmeier, M., 2016. Management whipsawing: The staging of labor competition
under globalization. ILR Review, 69(1), pp.29-52.
Tian, X. and Slocum, J.W., 2014. What determines MNC subsidiary performance? Evidence
from China. Journal of World Business, 49(3), pp.421-430.
Online:
International Business, 2013. [online]. Available through
<https://www.belstu.by/Portals/0/Charles-Hill-International-Business.pdf>