Globalisation, Competitive Advantage: Detailed Analysis and Discussion

This report provides a comprehensive analysis of globalisation and its profound effects on business operations and competitive advantage. It begins by defining globalisation and examining its impact on the interconnectedness of national markets, trade barriers, and the rise of multinational organizations. The report delves into the key changes in the business environment due to globalisation, including increased competition, foreign direct investment, and the influence on labor policies and cultural exchange. Furthermore, it explores Porter's theory of competitive advantage, analyzing the factors that contribute to a nation's or organization's ability to succeed in the global market, with examples from companies like Amazon and General Motors. The report also discusses the social and environmental challenges associated with globalisation, such as child labor and environmental degradation, concluding with an assessment of the opportunities and threats presented by globalisation in international business.

Running head: ANALYIS OF GLOBALISATION AND ITS EFFECTS
ANALYIS OF GLOBALISATION AND ITS EFFECTS
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Author Note

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Answer to Question 1
Introduction
Globalisation mainly refers to the ways by which the organizations have shifted
towards an independent and integrated economy. The national markets which are distinct in
nature and were separate from each other are joining their forces together in the globalised
economic conditions. The trade barriers between different countries have reduced which has
led to the increase of free trade based activities among the organizations which operate in
different geographical areas. The firms also promote the trend of offering the similar products
in all areas of the world. The organizations source the services and goods from various
locations in the world which has led to decrease of national differences as well (Bende-
Nabende, 2017).
The modern organizations are thereby highly affected by the globalisation based
activities that have occurred in the external environment. The technological changes have
also taken place due to the involvement of different countries and organizations which belong
to these countries.
Discussion about globalisation
The changes that have taken place in the business environment due to globalisation
have also changed that ways by which the companies operate. The levels of interaction
among the people and their integration is an important factor that leads to the technological
development of the companies. The technological changes have been able to lower the
transportation based costs and the products are also dispersed in an effective manner in the
different geographical locations. The information processing costs are low and the firms are
able to manage the production based systems and the processing costs as well. The global

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networks of communication that has been developed with the help of increased globalisation
levels has also created an electronic marketplace (Haynes et al., 2017). The multinational
organizations are those which have operations in two or more than two countries. The rise of
globalisation has thereby increased the number of multinational organizations as well.
Globalisation has been able to form a global economy which has increased the trade based
activities as well. The income of the people and their jobs are also affected by the increased
levels of globalisation. Globalisation has thereby affected the policies that are related to
labour and the political environment. The global marketplace has affected the ways by which
the managers are able to work within the environment (Hoogvelt, 2018). The systems of
international trade have also been affected by the integration of various nations for the
purpose of forming business relationships. The interconnection between the organizations,
people and the governments of various countries has led to the interrelation between different
domestic companies.
Figure 4 - (Haynes et al., 2017)

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The globalisation based activities of the different organizations and countries have
thereby been able to affect the ways by which the businesses operate. The five major changes
that have occurred in the business environment due to the increase of globalisation are as
follows,
The competition levels among the multinational or international
organizations have increased due to globalisation. Elaboration - The
companies have started expanding their business operations in different
countries which has led to the increase of competition for the domestic
organizations. The domestic organizations of various organizations have
thereby faced tough competition from the international organizations based on
prices, quality and the cost of goods as well. The variety of the products and
services have increased for customers which has increased the pressure on
organizations to improve their prices and other factors as well (Krugman,
2017). The competition thereby acts as an opportunity for organizations which
enables them to develop higher quality goods which can attract more
customers. The services and the products therefore need to work in an efficient
and effective manner so that the business operations can be conducted on a
global scale. The global business operations are beneficiary not only for the
organizations, it plays an important role in improving the condition of the host
country as well. The host country is benefitted as the domestic market will
become more strong and competitive in nature which will an important factor
for the successful operations of the country (Obstfeld, 2015). The
establishment of the international or foreign countries will affect the
economies and the growth rate of GDP as well. The process of globalisation
has increased the levels of foreign investments in various developing

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countries. This has further been able to increase the profitability of the
organizations. The labour based costs of the global companies have reduced
due to the increase of global operations. The multinational companies are able
to source labour at lower costs from the other countries (Potrafke, 2015). For
example, the companies which are able to contribute to the GDP of a country
are, General Motors or GM which is a multinational organization is a
multinational organization in the United States. The company has expanded its
business operations in greater than 120 countries of the world which has
further led to the increase of its profitability and the improvement of GDP as
well.
The investment levels of the home countries and the host countries have
been affected by globalisation. Elaboration - The foreign direct investment
base activities have thereby proved to be a major reason behind the
improvement of the GDP of the countries. The FDI mainly refers to the long
term investment that is owned by the investors which is able to show the
capital flow among the countries. FDI can thereby be defined as the physical
investment that is made by the organizations in a different country for building
of factories and other facilities as well (Rupert & Smith, 2016). The foreign
direct investment has positive effects on the host countries in many different
ways which include, employment effect, technological effect and the income
effects. For example, the home countries are also benefitted with by the FDIs.
The people are able to perform their duties and the conduct business
operations which enables the technology to transfer from the developed
countries to the developing countries.

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The cultures of different countries and regions are affected and
interconnected with the help of globalisation. Elaboration - The people of
different countries are able to share their views and cultures which increases
the scope of business operations. For example, the cultural issues can
however occur in the global organizations which can lead to many problems in
the work culture (Scholte, 2017).
Globalisation has also caused some major social issues like, child labour
and the environmental degradation. Elaboration - The multinational
organizations have used child labour in an inappropriate manner for gaining
high profits which is a major issue that is faced by the developing countries
due to globalisation. For example, the unethical process of conducting
business operations have led to the increase of issues for the multinational
companies.
The operations of the multinational organizations have caused immense
environmental damages. Elaboration - The companies have started leaving
high levels of carbon footprint which has led to the degradation of the
environment to high levels. For example, the levels of carbon dioxide
emissions have increased due to increased operations of multinational
companies (What Is Globalization? | Globalization101. 2018).

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Figure 1 – Source - (Scholte, 2017)
Conclusion
The discussion can be concluded by stating that globalisation can be taken as
opportunities and threats for international business operations. The international
organizations are able to expand their operations in different countries of the world. The
living standards and GDP of the countries are improved in the process. However,
globalisation also leads to many cultural issues for the multinational organizations which is
based on the personal styles, attitudes and communications. The social problems are also
caused due to globalisation that has taken place in different areas, especially the developing
countries. The business organizations also conduct unethical activities for the purpose of
gaining profits in the business operations that are conducted by them.

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References
Bende-Nabende, A. (2017). Globalisation, FDI, regional integration and sustainable
development: theory, evidence and policy. Routledge.
Haynes, J., Hough, P., Malik, S., & Pettiford, L. (2017). World Politics: International
Relations and Globalisation in the 21st Century. Sage.
Hoogvelt, A. (2018). Globalisation and imperialism: Wars and humanitarian intervention.
In Revitalising communities in a globalising world (pp. 31-56). Routledge.
Krugman, P. (2017). Crises: The price of globalisation?. In Economics of Globalisation (pp.
31-50). Routledge.
Obstfeld, M. (2015). Trilemmas and trade-offs: living with financial globalisation.
Potrafke, N. (2015). The evidence on globalisation. The World Economy, 38(3), 509-552.
Rupert, M., & Smith, H. (Eds.). (2016). Historical materialism and globalisation: Essays on
continuity and change. Routledge.
Scholte, J. A. (2017). Globalisation, governance and corporate citizenship. In Business,
Capitalism and Corporate Citizenship(pp. 53-63). Routledge.
What Is Globalization? | Globalization101. (2018). Retrieved from
http://www.globalization101.org/what-is-globalization/

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Answer to Question 2
Introduction
The competitive of a particular service or products is based on the quality that has
been acquired by the firms which helps it to be superiors as compared to the other choices
that are available to customers. The strategy based on gaining competitive advantage proves
to be effective for organizations belonging to any industry or sector. The competitive
environment of modern organizations is an important reason behind the need to create an
advantage among the other firms in the market. The companies thereby need to maintain the
competitive advantage in order to create a profitable position in the industry in which it
operates. The strategies, goals and the operations need to be clear so that the company is able
to maintain the competitive advantage (Brewster, 2017).
Porter’s competitive advantage theory is thereby helpful in defining the ways which
the companies are able to generate competitive advantage in the market with the help of their
services and products. The modern organizations have used the concept of competitive
advantage to improve their positions in the market and the maintain the operations for a long
term as well.
Analysis of Porter’s theory of competitive advantage
The theory of the competitive advantage of nations that has been proposed by Michael
Porter is based on the analysis of competitiveness along with the several implications. The
Porter’s theory is therefore able to contribute towards the understanding of the competitive
advantage that has been gained by nations with the help of production and international trade.
The core of this theory is mainly focussed on the clusters of the industries and the individual
industries as well. The theory therefore begins from the industries and the firms which are the

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most important part of competition in the international markets. The industries and firms play
an important role in the progress and competitive advantage of the nations. The
competitiveness of a country is mainly based four different determinants which include, the
factor conditions, the demand conditions, supporting and related industries, firm strategy,
rivalry and structure (Cavusgil et al., 2014). The existence of the competitive rivalry is
influenced by the competitive advantage that is gained by the nations. The Porter’s theory
helps in understanding the competition that exists in the industry. The factor conditions
consist of different elements which are, human resources, knowledge resources, physical
resources, infrastructure resources and capital resources. The elements that are a part of the
demand conditions are, home demand composition, pattern of growth and demand size and
internationalization of the domestic demand. The associated industries in the country play an
significant role in the ways by which the nations are able to gain competitive advantage
(Harzing & Giroud, 2014).
Figure 5 - (Cavusgil et al., 2014)

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Examples of the products or countries
The examples of nations and organizations which have tried to create competitive
advantage in the industry are as follows,
The first example of an organization which has been able to maintain its
competitive advantage in the industry is Amazon which is a multinational
online retail organization. Elaboration - The firm has been able to maintain
its competitive advantage in the retail industry with the help of different
products and services that are provided to the customers. The organization
started as an online bookstore which further increased its operations to provide
different types of products to the customers. The competitive advantage that
has been gained by the company is based on the unique process of operations
and the efficient leadership. The revenues of Amazon have been an important
part of the GDP of the United States (Kotabe & Kothari, 2016). The
competitive advantage of the country has thereby increased due to the huge
revenues and sales of the online retail organization. Amazon has thereby
played an important role in the ways by which the country has been able to
become competent as compared to the other countries.
The competitiveness of a nation mainly depends on the ability of the
industries to upgrade and innovate the products and services. Elaboration
- This enables the nations to gain advantage over the other countries. The
increased importance of product safety has become an international concern.
The Swedish organizations like, Volvo, Atlas, AGA and Copco has responded
to this international need. The home country of these companies has gained

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from the ways by which they have been able to form a competitive position
(Use These 3 Harvard Business School Strategies to Beat Your Competition.
2018). The local buyers of Sweden can help the nation to gain competitive
advantage in the market. The global market trends can also affect the
sustainable advantage that is gained by the nation. Sweden thereby needs to
focus on the special needs of people for the purpose of gaining competitive
advantage among other nations (Laszlo & Zhexembayeva, 2017).
The Japanese organizations have been able to gain competitive advantage
in the market with the changed strategy of the management to enter the
new market areas. Elaboration - The companies have been entering new
markets with inexpensive cars. However, after the upgradation of their
services the company has started manufacturing high-end products in the
country itself. The production facilities that have been developed by the
company are mainly based on the competitive innovation capabilities of Japan.
The organizations in the country have implemented the just-in-time production
facility (Lazzarini, 2015).
The consumer electronic companies in USA face high costs based on
labour and the production based processes. Elaboration - The organizations
had thereby planned to source the activities to Taiwan for the purpose of
reducing labour costs. The competitive advantage of USA has increased as the
other countries are dependent on their organizations for the creation of jobs.
The increase of the sources of advantage is based on the labour cost based
parity. The Japanese organizations on the other hand have faced competition
from the domestic rivals that has led to the lack of revenues. The assembly