A Comprehensive Report: Globalization's Profound Effects on Business

This report delves into the multifaceted effects of globalization on the business world. It explores how globalization, driven by technological advancements, has fostered international trade, reduced production costs, and expanded consumer choices. The report highlights the intensification of market competition, the transfer of technology, and the development of diverse markets. It also discusses both the positive and negative impacts of globalization, including employment opportunities, economic growth, and the challenges of managing globalization. The analysis considers the impact on various nations' gross domestic product and the evolving strategies businesses employ to navigate the global landscape, including offensive and defensive management techniques. The report also addresses the drawbacks of globalization, such as employment issues, tax avoidance by multinational corporations, and the potential for increased financial inequality. Finally, the report emphasizes the need for businesses to adapt to technological changes and remain competitive in the international market.

Running head: EFFECTS OF GLOBALIZATION ON BUSINESS 1
Effects of Globalization on Business Paper
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GLOBALIZATION: EFFECT ON BUSINESS 2
Effects of Globalization on Business
Abstract
Globalization in the today’s world of business has been increasing at a fast pace. Many
businesses have realized the benefits associated with international trade and have committed
themselves into it. Globalization is mainly driven by the advancement in technology which has
improved the way of doing things (Giddens, 2018). With technology, businesses have been able
to minimize their production costs by adopting efficient production methods from developed
nations. Customers have also been able to increase their choice by accessing various
commodities offered in the global market. Consumers enjoy high quality cheap commodities as a
result of globalization since the stiff competition involved in the global market calls for all
members to be smart enough in what they offer in order to survive and win market share.
Globalization has also enabled many people especially those from the less developed nations to
secure employment as they move to different nations in search for jobs. In a nutshell,
globalization has changed the business world for better and much better results are anticipated in
future.
Introduction
Today’s world of business has become more globalized. Many businesses in various
countries have embraced globalization and have now entered into international trade (Levitt,
2013). Globalization is a representation of integration of information technology, cultural
practices, investments and international trade globally. The various global changes in the world
have necessitated the need for business organizations to restructure their strategies in order to
move out of their national boundaries to take part in the international trade and survive the stiff

GLOBALIZATION: EFFECT ON BUSINESS 3
competition involved in it. The changes include changes in environmental, legal, cultural,
political and economic practices as well as the development of information communication
technology and transport among others (Appadurai, 2016). Globalization is not a new thing as it
has been experienced by business organizations many years ago as the traditional traders used to
travel for long distances across borders in search of rare commodities such as gold and salt which
they then sold at their local areas to make profits.
Globalization has various effects on business which are either negative or positive but the
positive effects outweigh the negative effects by a great margin. This therefore means that
globalization positively impacts business and should be embraced by various nations in the
world for better economic growth (Dreher, 2010). For the last three decades globalization has
been rising at a fast pace and its various benefits have been witnessed in improvement of various
nations economic growth such as the United States, China and India. Therefore globalization
forms an interesting topic for discussion to explore its effects on environment, cultural practices,
economic growth and poverty among others. The effect of globalization on business has been
discussed based on the changes imposed by various businesses participating in trade across
borders on their nation’s gross domestic product.
Literature Review
Globalization has enabled the transfer of improved technology across businesses
worldwide (Mueller, 2014). Over the past years there has been a rise in the technology level for
many businesses participating in international trade. The technology of communication and
computing has risen over the past years enabling the flow of crucial business ideas and
information between nations. More developed countries in terms of technology advancement

GLOBALIZATION: EFFECT ON BUSINESS 4
such as the United States pass modern methods of productivity to less developed nations in the
global international market. This enables businesses in various developing nations to minimize
their costs of production and improve their profitability. This in long term contributes much
towards improving the nation’s economic growth which is reflected by the increased gross
domestic product. The transfer of technology in the global market also enables consumers to
access information about the various available goods and services in the global and thus the
consumers have a wide range of commodities from which they can make their choices. Through
the transfer of the improved technology, smaller businesses in various nations can also take part
in the global trade and compete favorably irrespective of the seller or buyer physical location.
Traders located in different nations can trade on digital platforms. Also for the case of
international companies, meetings can be held with various managers across all branches
digitally. This actually minimizes wastage of time and money which could otherwise be spent on
travelling activities to meet at a common identified venue. Technology has assisted much
towards improving various business operations and it still continues to advance. A business
which keeps on adjusting to technological global market changes is better placed in terms of
international competition.
Globalization intensifies competition among businesses involved in international trade
(World Commission on the Social Dimension of Globalization, 2014). Many businesses embrace
the strategies of globalization in order to enjoy competitive advantage involved in the foreign
markets and also avoid the competition associated with the domestic industries. The stiff
competition as a result of globalization shapes the operations of businesses. These operations
include production and also distribution. Businesses have to adopt efficient methods of
production adjusted according to global technology advancements in order to minimize the costs

GLOBALIZATION: EFFECT ON BUSINESS 5
of production and improve the quality of their products. The minimized costs of production mean
that businesses offer their quality products at relatively low prices and hence increase their sales
which in turn improve their profitability. Businesses also have to use efficient means of
distributing their goods and services to the final consumer. Efficient means of distribution
eliminates the activities many middlemen and brokers which increase the prices of goods and
services to the final consumer. In a nutshell, the efficiency in production and distribution of
goods and services as a result of globalization enables businesses to increase their sales and
improve their profitability which in turn improves the entire nation’s productivity by contributing
towards improving the nation’s gross domestic product. Many businesses in the global trade
prefer to offer products which their nations have comparative advantage in producing in order to
minimize the level of competition in the international market. For example, many nations like
Mexico in the United States of America are well known for production of oil and natural gas.
Therefore many businesses from the United States prefer to participate in the global trade of oil
and natural gas and hence end up competing favorably.
Globalization has enabled the development and access of diversified market by
businesses participating in the international trade (Rodrik, 2012). Globalization brings together
people and businesses from different nations either physically or digitally. With the vast number
of customers in the global trade, businesses can sell their products to many people from different
and hence diverse their market. The huge market over which businesses sell their products
enables them to increase their sales and hence improve their productivity. Also consumers can
choose a variety of products from the many businesses in the global market. This will enable
consumers to choose their best quality at the cheapest price possible in the global market.
Globalization also provides employment to jobless people from different countries participating

GLOBALIZATION: EFFECT ON BUSINESS 6
in international trade. The people from the less developed nations benefit most from global trade
as they move to different countries in search for jobs. Through globalization the concept of
outsourcing arises whereby the nations with comparative advantage in performing certain jobs
are assigned the jobs. A good example is India which benefits much from being assigned
technological jobs such as software development and support.
Model and Data
How Globalization impacts Business
Globalization promotes positive political changes that result in the unification and socialization
between different countries. In addition, globalization results in formulation of beneficial trade
agreements and humanitarian organizations like the UN and NAFTA. Globalization unites different
countries under a single market; thereby creating numerous businesses opportunities for companies
(Katerina & Aneta, 2014). Globalization leads to the reduction of trade barriers and foreign investments
allowing the penetration of international companies in the domestic market. Unification of nations allows
for the development of communication and computing technologies that will enhance the transmission
and reception of information across international borders. The linking of networking infrastructure and
globalization has permitted small business to compete on the international platform due to high speed data
transfer and provision of similar opportunities to businesses regardless of size. The international business
climate has recognized the growth opportunities, economic benefits, and technological advancement
presented by globalization (Katerina & Aneta, 2014).
Globalization is being viewed as a contributing factor in the permeation of people from different
regions of the world with similar standards of lifestyle, healthcare opportunities, purchasing power, and
educational qualification. This unification of socio-economic opportunities is presented by exchange of
cultures, increased tourism, and enhanced living standards. Global distribution channels have made it

GLOBALIZATION: EFFECT ON BUSINESS 7
possible for business and individuals to project their market expectations beyond the borders of their
nation (Štros, Coner, & Bukovinski, 2014). Globalization has contributed significantly in the reduction of
international market expenses by encouraging economies of scales. Trade liberalization has led to
elimination of market price fixing and coercion by domestic companies. International companies have
made it possible for American customers to buy goods at the same price as an individual in Britain
minimum shipment costs. Lastly, globalization has leveled the playing field with regard to competitive
advantage by providing businesses (regardless of niche and operating cost) with unlimited market
opportunities to target, reach, and secure customers (Štros, Coner, & Bukovinski, 2014).
Interpretation and Discussion of Results
Managing Globalization
Various nations across the world are developing new strategies and techniques to aid in the management
of globalization. Offensive management techniques are the most popular because the countries are able to
facilitate globalization on their own terms; thereby forcing other nations to conform to their set standards
and demands (Abdelal & Meunier, 2010). Defensive management techniques are not as popular but
ensure that negative implications and pressure associated with globalization do not disrupt or handicap
the business landscape of a country. These globalization management techniques and strategies are
normally enacted in the form of policies devised by governments. The most notable policy-based
strategies adopted by countries are commissioning of regulatory powers to shape globalization (e.g.
agencies and courts) and the redistribution of costs and benefits associated with globalization (Abdelal &
Meunier, 2010).
Drawbacks of Globalization
There are several arguments that are normally raised against globalization from a socio-economic
standpoint. Globalization is viewed to benefit the wealthy and harm the financial wellbeing of poorer

GLOBALIZATION: EFFECT ON BUSINESS 8
members of society. The idea that globalization promotes free trade is challenged by the fact that a
significant number of countries demand the payment of Value Added Taxes (VATs) that are as high 22%
(Collins, 2017). Globalization is considered to create employment issues because jobs are outsourced to
lower cost countries. For instance, a significant number of telecommunication related jobs in the USA
have been outsourced by Indian companies. As a result of this, numerous workers are faced with pay-cuts
because their employers can export jobs to low cost nation. This situation in the US labor market has
created fear in the lower and middle class workers who possess limited professional skills and academic
qualifications. Globalization also allows multi-national organization to take advantage of tax havens in
other countries thus permitting them to under report income or completely avoid taxes. In addition, multi-
national businesses are normally implicated of social unfairness, unfavorable work conditions, inadequate
benefit packages, and slave labor wages (Collins, 2017).
Moreover, globalization has resulted in the creation of extremely powerful multinational
corporations that have considerable influence on global political. As such, there is fear that corporations
will rule the world because they control the commercial activities of various nations. Globalization has
promoted the rapid copying and theft of proprietary technology because of fast and unrestricted
transmission of information. Anti-globalists argue that globalization has actually worsened financial
inequalities across and within several nations between 1960 and 1998 (Collins, 2017). Moreover,
globalization has been blamed for the permeation of communicable disease across the world. For
instance, HIV/AIDS has been transmitted by travelers to remote communities found in different parts of
the world. Globalization is viewed to result in the negation of safety standards resulting in the
exploitation of labor: especially with regard to child and prison workers. The socio-economic
ramifications of globalization have resulted in the downfall of safety net programs and social welfare
schemes like Medicaid and Social Security (Collins, 2017).
Conclusion

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It is true that there both positive and negative consequences associated with globalization.
As such, there is need to manage the negative attributes of globalization; in spite of the
overpowering positive implication of globalization. Globalization is therefore considered to have
a beneficial impact on business because it promotes sharing of technology, betterment of
international trade, and stabilization of local markets. Globalization encourages the sharing of
different types of technologies between countries making the delivery of services and products
considerably better. International trade is made easier because countries establish feasible
economic and political relationships through globalization. As a result of increased international
trade countries are able to gain foreign currency and increase exports to other countries.
Globalization stabilizes domestic markets by correcting the prices of services and products
demand by seller. Globalization allows for the most realistic prices to dominate across the world
limiting the exploitation of consumers at the hands of sellers and manufacturers.

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