Management and Organisations in a Global Environment

This report explores the concept of globalisation and its impact on management and organisations in a global environment. It discusses the trade not aid approach and Anthony Giddens' idea of globalisation. The report also highlights the relevance of the flat world 3.0 concept and the preference given to cost leadership approaches over differentiation approach by organisations. The subject is Management and Organisation, and the course code is not mentioned. The content is relevant to students pursuing management courses in any college or university.

MANAGEMENT AND ORGANISATION
Management and Organisations in a Global Environment
Student Name
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Author Note
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Contents
Management Summary..............................................................................................................3
Introduction................................................................................................................................4
Body...........................................................................................................................................5
Conclusion................................................................................................................................11
References................................................................................................................................12
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Management Summary
It not only has increased their productive ability but has opened the doors of new
opportunities for international trade and investment. Globalization is not much popular in
practical as foreseen by its experts. Research suggests a great difference amid the actual
percentage of globalization and what has been anticipated. The key reason behind this
difference is the regionalization approach of individuals and businesses. Most organizations
intent to expand in developing markets, which guarantees growth. The preference given to
cost leadership approaches over differentiation approach by organizations is another factor
hindering globalization. In this report an elaborate focus is made to understand different
facets of globalisation through concepts of flat world 3.0, ideas of Anthony Giddens and
understanding the relevance of trade not aid concept in modern context.
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Introduction
Globalisation has empowered various enterprises, business concepts and processes to make
them extend outside domestic boundaries in search for greater scope of possibilities within
global marketplaces. Inspite of clearness maintained within the conceptualisation of
globalisation the manner it is executed is yet not convincing which is the root cause of
problem. The common public maintains the idea that the world market has turned flat due to
fewer borders and narrowing of restrictive policies but in actuality the truth of globalisation is
an over assumed fact that is driven by inappropriate forecast and assumption (Bei 2017). In
real scenario trade across border is not extending as promptly as it is anticipated due to
barriers such as excise duties and restrictive trade norms that govern free trade. As such
globalisation is moving slower than anticipation due to these barriers. Efforts are in place for
negotiations amongst nations to reduce impediments to free trade so as to boost considerable
outcomes with more scope of business that will widen new market places in emerging nations
and will increase employment of local people (Perelman 2015). Moreover globalisation is
growing with onset of technological advances as world has witnessed rapid development in
communication and technological means and this has dynamically transformed business
scenario in present world. According to Stros, Coner and Bukovinski (2014) technology has
revolutionised to lend support to globalisation where more businesses and government of
different countries are seeking ways to attract new business projects to meet demand of their
domestic consumption. However globalisation has few criticisms where some people argue
that it has paid well to the development of already prosperous nations in Western part of
world where large multinational firms are originally located that too at cost of domestic
business and cultures. According to van Meerhaeghe (2012) while supporter of globalisation
argues that globalisation has added to development of underprivileged and developing
nations by exposing them to more trade opportunities thus enhancing employment and
standard of living for people of such nations. Hence despite of ups and down and large debate
surrounding the concept of globalisation it is widely acceptable and many reforms have been
made through World Trade Organisation, International Monetary Fund’s and the World bank
to consistently improvise the real picture and extend more scope equitably for all nations
through efforts of capital management, flow of labour etc that is underpinning rise of
globalisation.
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Body
World 3.0:
As stated by Nuno (2015) in 1600 AD the World 1.0 was in full growth which had
permissible national boundaries and with better trade advances the world 1.0 evolved to
world 3.0 with effects of globalisation where boundaries of nations united for trade
development. However there is several criticism of world 3.0 which relies on concept of
uniting world economic systems with federal regulations for achieving larger well being
through adherence to regulations imposed by governments. With onset of globalisation more
enterprises have adopted this concept for larger economic expansion and benefits to meet
change in preference of mass consumers. According to Federico and Tena-junguito (2017)
Globalisation is characterised by flat world which supports the conceptualisation of single
large market in world. This no boundary world would provide easier access to trade
associations between different nations which would increase rapid development of global
economy to overcome blows of recession that hit world in 2008. Also as stated by Ghemawat
and Vantrappen (2015) globalisation lends empowerment to several nations supporting them
to respond to economic meltdown. During recession globalisation played a significant role to
provide stability across global economies through outsourcing business process to minimise
costs which helped many nations achieve economic scale. However with all good also comes
critics and one of the largely debated views is of Ghemawat’s where he states that the world
is yet not flat. Various other researchers have also revealed that globalisation is only
territorial and full globalisation is still not obtained.
According to Dobado-gonzález, García-hiernaux and Guerrero (2015) as common
phenomena enterprises in most nations rely on local and regional markets for economic
prosperity as globalisation brings in larger risk environment due to business in various
nations and because of their unpredictable nature. As such enterprises depend on regional
approach to gain scale of business expansion where they extend operations outside local
boundary to neighbouring nations as the status quo and market dynamics are mostly same to
that of home nation. Ghemawat in order to evidence his claims that world is yet not flat
completely showed that rate of globalisation is still lower than being forecasted by various
experts. For instance he took case of cross border telecommunication business where due to
onset of globalisation about 10% rise in business was predicted but in actuality the rise was
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just 1%v thus insisting that globalisation has not attained much acceptance as experts have
anticipated. Another example is exports where it is found that it delivers to only around 20%
of overall global GDP in sharp divergence to over 30% that was forecasted by business
analysts. The primary logic behind this divergence in facts and figures is multiplied counting
of specific product in certain global marketplaces. Nonetheless FDI throughout world
delivers about 10% of overall investments that are made. Also from viewpoint of consumers
it is likely that people are more interested in localising than globalising. Example it is found
that in actuality on 2% of students chose to register for foreign education programs as
compared to 30% that was predicted. Thus from these instances it is evident that Ghemawat’s
claims that world is yet not flat is true which is indeed a pressing concern for multinational
enterprises (Ghemawat 2011).
According to Gujrati (2016) so as to improvise the current condition of globalisation it is
largely significant that enterprises move their focus towards differentiation of products than
on costs as many of them have embraced globalisation for attaining economic prosperity and
reducing cost of production. Hence time has come when enterprises need to focus on product
distinctness over cost leadership as enterprises are more interested for regionalisation thus
giving rise to localisation. This would help in extending GDP as World 3.0 is founded on
liberalisation of immigration conceptualisation. In order to enhance rate of GDP in world 3.0
Ghemawat has proposed that the prime focus of enterprises should be on regions that are
undervalued due to possibility of generating only 2-3% GDP from liberalisation of trade.
Hence Ghemawat proposes that once such GDP ratios in those regions are attained then
service liberalisation can further drive to add GDP growth to 4-5%. Moreover the rate of
GDP can also be extended through movement of products, capital, information and labour.
Movement of people from one to other nation is also proposed in world 3.0 with an intention
to drive trade associations thus assuring growth of nearly 10% in GDP (Cetkovic and
Zarkovic 2012). Ghemawat states that in current scenario enterprises focus more on
developing nations to extend business rather than focusing on all other form of economies
which is the main reason for slow globalisation.
Anthony Giddens idea of Globalization
As stated by Giddens globalisation is accumulation of worldwide community coalition
related to border countries which is brought about in a manner that drives regional business
through proceeding at faraway places and vice versa. According to Giddens globalisation is
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divided into four extent that are capitalist economy, nation-state system, military system and
industrialised systems (Giddens 2018). Capitalist emerge as power hubs of worldwide
economies where major type of production is capitalist economic trade. Different government
revolving around economic proceeding comprehend domestic and international policies of
such capitalist states. According to Dasgupta (2013) though the institutional enterprises of
such states shields the economy from political conditions to a greater extent thus empowering
the enterprises that builds regional liaison in other places despite of being established at a
specific state to drive their global business. In present business scenario many transnational
enterprises have strong financial capabilities however there are some dimensions where
power of such enterprises fails to challenge the power of states that revolves around various
facets of territoriality and governing ways of irregularity. Further Giddens stresses that
enterprise act as agents to dominate inside global economy as states impact on worldwide
political structure is strongly governed through its capital and association with military power
and prosperity.
According to Majidi (2017) the second aspect of globalisation is nation-state system which
has contributed significantly in reflexivity nature of modern world. It also stresses that
sovereignty’s continuance should be pretended as unspecified that is being perceived
naturally. Gibbens further said that sovereignty can be associated with replacing frontier
conceptualisation with that of border conceptualisation in initial development phases that
revolves around nation-state systems. This aspect of globalisation also persists that
democracy in an area maintained by the state gets consent from recognition of other border
states.
As stated by Bodislav, Bran and Iovitu (2015) the third aspect of globalisation is military
system which describes that power and capacity of military of all states within the world due
to the supremacy generated from ownership of modem ancillary that can be lead to bigger
losses is far from excessive of even the largest of pre-modern communities. Several third
world nations with instable economy own powerful military power. Gibbens further states
that military power was manifested from ancient times when during Cold war a bipolar
system of military collaboration with massive scale was formed by US and USSR which
became the most militarily powerful states. Further it was essential for countries that engaged
in this collaboration to retain a limitation on their scope of externally forming separate
military strategies.
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According to FLUCK (2016) the fourth aspect of globalisation surrounds industrialisation
where expansion of worldwide division of labour is most apparent dimension for industrial
growth. This also involves level of distinctiveness between more industrialised sections of
world with that of less industrialised. The modern industry is majorly formed on division of
labour which is based not only on job activities but also on territorial classification in form of
industry category, capabilities and production of materials. After World War II worldwide
reliance on division of labour extended rapidly and with distribution of advanced
technologies on global level this division due to globalisation largely influenced
industrialisation. However the implication of industrialisation is not limited to sectors of
manufacture only but is largely extended now to other sectors which impacts regular lifestyle
of people. Moreover these even impacts on the manner people communicate within this
informative environment. As such the idea of people living in single world has emerged from
industrialization and evolution of technologies that has revolutionised communication
aspects.
End of Poverty Movement and Trade not Aid approach
According to Bacallao-pino (2016) the formative idea of trade not aid approach is that if
developing countries are capable of extending their trade associations with developed nations
then this would lead to development of more secure wealth. Further it would mean that such
developing nations would rely less on external aids for implementation of their infrastructural
projects. Moreover with extension of trade relations standard of living of people in
underprivileged nations would also improvise eventually which would be probable through
export of product/services to prospering nations that are reluctant to buy these materials thus
resulting into growth of export within the economy. Hence trade not aid concept synchronises
with lowering of poverty where primary relevance is given to establishment of export
business to enhance growth. But unfortunately excise duties in developed nations on material
exported from developing nations is contrastingly more than those being produced in
developing nations. As a consequence exporters whom sell goods in developed nations have
to give more taxes which compel them to establish higher market price of products. Further
subsidies are offered from developed nations to only localised industries thus making them to
retain low prices which subsequently drive them out of competition from exporter’s
materials. For instance, to access market in USA nations such as China, Indonesia spend high
tariffs that are imposed by US on material like clothing, automobiles etc that accounts to 50%
of revenue gathered from overall duties inspite of the reality that these materials make only
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2% of imports (FLUCK, 2016). Hence it is clear that though lesser materials are exported to
US from developing nations but they are charged with more taxes which establish a demerit
for developing nations.
Trade not aid concept further stresses that giving international aid to developing nations is not
very constructive idea because it creates a tendency of over-reliance amongst these nations.
And in some instances it has been observed that the aid given is misused by recipient nations.
As such the most feasible manner to improvise economic condition in developing nations is
to focus on enhanced trade affairs which can be embraced through liberalisation of policies
and tariff obstacles so that these encourage free trade. The supporters of free trade are
reluctant to set legal structures surrounding open market thus lowering government
involvement as these will also develop drivers that will leverage innovation, efficiency and
enhanced economies of scale. The main purpose of free trade policies is to lower power of
trade unions and their mediation which will bring end to corruptive activities, reduce
corporation and income taxes thus encouraging more investment in export sectors with
support of free trade. This will remove poverty and will help to achieve sustained
development in poor nations all over the world. According to Dasgupta (2013) the main
reason of poverty in underdeveloped nations is unemployment. It is evident that developing
nations have attained growth through increase in trade which has lowered their
unemployment rate too, thus boosting standard of living for their people and economic
development for the nation. For instance, inspite of getting around 1.4 trillion dollars as
foreign aid since last fifty years poverty in Africa has not ended still. But recent opportunities
of trade has paved way for improved education and heath in Africa and now the farmers in
Africa use their profits that are gained through export business to make investment for
construction of schools and health facilities thus improvising the standard of living for their
community.
Hence inspite of critic’s free trade is widely accepted as efficacious manner to improvise
economic conditions in developing nations, removing social issues and obstacles. As such
trade is an enduring solution by which developing nations can secure their development as
against aid which is a temporal solution. This is due to the fact that these aids are generally
used for development of infrastructure which does not bestow improvement of developing
nation’s economic conditions. Further these aids are minimal as against funding that is
actually needed for underdeveloping nations so seeking for trade associations will free
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underdeveloping and developing nations by stimulating their economic upliftment instead of
relying on aids.
Globalization in current context
According to Gujrati (2016) initial stage of globalisation had continued from mid 1800-
1920’s where labour was largely available. In era of 1800’s nearly 300,000 people migrated
from Europe annually which eventually rose to 1 million. Prior to year 1914, even passport
was not need for foreign travel except war time. Similar to today’s scenario the labour of
prospering nations in those times also feared competition in their jobs in context to wages.
Then during initial stage of globalisation there emerged free movement of trade and capital
which resulted to construction of units in far reaching locations from home territories where
these larger enterprises were originated. As such many wealthy enterprises imported
materials from remote locations to meet their production demand which were mostly sent
through sea routes. Although WW-I, Russian revolution and Great recession suddenly halted
the first stage of globalisation. This was due to the fact that there was difference in
philosophies between communism and capitalism. And post 1990’s the world economy
witnessed rebirth and second stage of globalisation came into formation that was propelled
with advanced in technology and communication.
Other than WTO super powerful bodies such as World Bank supports funding of initiatives
that surrounds national economic growth and has made relevant efforts to support the culture
of globalisation. Further IMF has also regulated exchange rates and enforced policies for
global monetary structures to empower globalisation as these would drive development
across the world thus improvising standard of living for people everywhere by extending
wealth creation, flexibility of labour market in both developed and developing nations.
According to Federico and Tena-junguito (2017) free trade due to globalisation has also
enhanced production capacities of countries and boosted their per capita income. Like for
instance, large retail firms have controlled inflation and gave a boost to production by
compressing unorganised supply chains. Also it is forecasted that removal of barrier in free
trade will further lead to rise in worldwide earnings thus leveraging developing marketplaces.
By creating flexible labour markets in developed countries globalisation has also generated
several positive leverages through rapid re-structure of labour among industries that have
high demand needs other than giving power to employees. Also globalisation has generated
outsourcing of labour that has added to economic improvement in developing countries such
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as India which is now the most attractive market for investments due to skilled IT
workforces. Many businesses are outsourced to India because of lower cost of labour who are
highly skilled and due to globalisation the outsourcing sectors in India are witnessing high
profits.
Although certain form of jobs get outpaced because of globalisation but at the same time
various new jobs are also generated in some nations due to concept of globalisation. Also
harmony among diverse group of people with distinct cultures has been created as they are
made to work together due to globalisation so irrespective of distinct beliefs, customs and
communication globalisation has united people across culture. As such it has enabled both
people and nations to leverage effectiveness for shared benefits and growth. For instance
some of the best wines are imported from France, best diamonds from South Africa and best
in class automobiles are imported from Japan all due to globalisation and free trade
opportunities. However some experts have argued that globalisation has resulted to pollution
by deregulation of environment status and regulations. For instance, developing nations such
as Brazil, Malaysia and Thailand have eased their restrictions on environmental policies to
attract foreign trade which is alarming the concern for rise in pollution intensive industries.
Conclusion
Hence it can be said that inspite of increasing acceptance for globalisation throughout the
world its results are still not up to the mark in meeting the anticipated level of growth that jad
been predicted by trade experts and global analysts. So still a wide way is to be covered to
fully attain globalisation by empowering both developing and underdeveloping economies to
adapt to conceptualisation of globalisation so that really backward economies too get uplift.
So inspite of claims of globalised world and single market by several people the reality is
unfolded and unattained as the world is yet to become flat or truly boundary less.
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