Globalization: Economic, Social, and Cultural Impacts on Business

This report delves into the multifaceted impact of globalization on international business. It examines the economic drivers, including foreign direct investment, economies of scale, and technological innovation, and their influence on international trade. The analysis extends to the global business environment, exploring how factors like knowledge sharing, competition, and international investment shape business development. The report also investigates the socio-economic, cultural, and technological developments associated with globalization, highlighting their effects on international business decisions. Furthermore, it considers the roles of entities such as the World Trade Organization (WTO), trade barriers, and government regulations in shaping the global business landscape. The study concludes by emphasizing the benefits of globalization, such as increased competition and wealth distribution, and the importance of adapting to a rapidly changing international market.

Running head: GLOBALIZATION IN BUSINESS
GLOBALIZATION IN BUSINESS
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The aim of this paper is to discuss the impact of globalization in the global economy and
found out the most influential factors that contribute to the growth of international trade. The
impact of globalization has been a topic of argument as some of the critics find this to be the
reason of the economic growth through the international trade benefitting all parts of the world.
On the contrary, some of them find that changing economy of a few countries guided the path of
globalization for which the distribution of wealth and economy were made possible. In this paper
the impact of changing global economy and its impact upon the international business will be
found out from the economic, social and cultural pints of view. In this regard, the analysis of
Globalization, drivers of globalization, international trade, the blocs of nation like UE, entities
like World Trade Organistion, advantages and disadvantage of globalization and the need of
international trade, consumer tastes, trade barriers, government regulation and monetary
currency of the different countries of the world will be done.
The growth in the international trade is influenced by all the factors affecting the global
economy and similarly the global business environment influences the growth and development
of international business.
The huge change and growth of the global economy has been recorded after the Second
World War when most of the European countries along with the Asian ones got involved.in the
late 19th and early 20th century paved the way for this huge global shift. The connectivity of the
economy and culture increased after the two world wars and the sharing of knowledge and skills
were initiated. In order to understand how the growth of international trade has been
influenced by the factors affecting the global economy, it is important to analyze the main
factors relating to economy of the world. These factors include foreign direct investment,
economies of scale, technological innovation, and interdependence among the countries, equity

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distribution and different GDP, monetary currency and buying capacity of the nations. Firstly the
foreign direct investment tends to increase the global trade by helping to boost the technology
transfer, growth of the global companies and industrial restructuring. The countries which lack
economy to support the local brands to flourish, can allow FDI to promote the local and national
companies to contribute in the national trade.
Economies of scale has been enabled by the forces of globalization so that the larger
companies can realize the scope for enhancing their capabilities and perform greatly in the
foreign markets. This factor of economies of scale can reduce the cost and process and supports
the economic growth in the nation. This however leads the market to get concentrated fast
including the scope for both the bigger and smaller enterprises and compete domestically. The
globalization has reduced the inequality in an effective way. The rich countries have bigger
brands which are visiting the comparatively underdeveloped countries and strengthening the
economy there. The gap in the market structure and market power between the developed and the
developing nations are chief factors attracting the bigger international brands. By measuring
market concentration in different parts of the world, these brands enter the markets and bring
prosperity. Tis due to the fact that the entering of bigger brands can carte scope for strong supply
chain as well as employment scopes. The countries with positive relation among themselves are
unifying he economies through the better investment as well as trade (Rani, Ismail and Mohamed
2018). The scope of investment, employment and technological growth are being seen in those
underdeveloped countries making them developing and independent. The gap between the
capabilities of the developed and developing countries depend greatly upon the monetary
currency which reflects the economic situation of the countries where the international trade will

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be initiated. The brads therefore target the markets with average monetary currency having low
level of competition.
Now in discussing how the global business environment influences the growth and
development of international business, the factors like sharing of knowledge, exchange of
technology, competition, international investment, solution of managing the growing skills of the
workforce and opportunities to support the needs of the human kind (Gretzinger et al., 2019).
Global business environment is being greatly influenced by globalization which has increased
the interconnectedness of the markets around the world. This has increased the communicating
and the awareness of the business opportunities. Now more investors are being able to access the
new investment scopes as well as study the new markets from greater distance than before. The
products and services which used to be available in one country only are being produced in the
other nations where the demands of these goods and services are recorded. The scope of import
and export have increased than before and the companies exporting their goods in the markets
are now entering those without hesitation. This is resulting in improving the economic
opportunities for the workers in these economies and leading to the improvement of the
household incomes. The entities like WTO regulates the economy of the word through
international business influencing the governments to reduce economic gaps (Cohen 2017).
Therefore investors these opportunities are present in a wider range of the investment
options and find new ways of profit. The investment in the global markets is made possible for
the investing through stock purchasing internationally for which the international business is
promoted (Brondoni 2018). The companies operating in any part of the world can access the
international stock markets and offer their clients with all the opportunities to purchase the shares
in the organizations working around the world. Maintaining competitiveness is an aspect of the

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economic shift in the world where most of the national as well as international companies tend to
take part in the growing competition level. The local companies which were competing with the
brands situated in the same geographical region are not limiting their operation within the
territory therefore getting exposed in the international market competing with the global brands.
In this regard, the companies are trying to grow their competitiveness through arranging the best
of the resources. They are source materials from different parts of the world and even
outsourcing the cheap labor from other countries. The international garments industry tend to
employ the cheap yet skilled labors from Asian developing nations that reduced their production
costs (Waddell 2017). The competitive companies have turned to the global markets as the
sources are not only new to the consumers but the production locations also along with their
partners for their new ventures. The global shift of economy is making the transition to the
international markets in an easy way.
As mentioned before, the globalization has brought changes in the different level in
business where the government, customers, media, suppliers and distributors and mainly the
customers are promoting the growth of business. Hence the change in the regulations and tariffs
in the import and exports, laws regarding technological and environmental operation are being
changed. The cross border operations are being promoted so that the process of building capital
infrastructure is smoothened (Hans 2019). The companies that re exploring the international
market are seeking for the countries with lower taxes, therefore the governments are increasing
focus in limiting the taxes and providing more opportunities for both the local as well as the
international or foreign companies entering the market.
In order to understand how the external forces of business are connected with the
business and being associated with the socio-economic, cultural and technological developments

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to affect international business, a detailed discussion is necessary. The social economic factors of
globalization is closely connected with one another. It has been a key driver of unprecedented
economic growth hence the poverty level has been reduced. The achievements are the products
of multiple forces where the government is taking initiatives to increase their potential for
collecting revenues and redistribute the resources through the social transfers to improve
standard of living. The higher GDP rate can improve the buying capacity of the customers in the
country that is changing their standard of living (Hanson et al. 2016). The link between reduction
of inequality and global trade improvement is directly connecting the initiative to eradicate
poverty in the global basis. The socio economic pattern of the developed countries are
influencing the developing countries to follow the path of international trade so that the broad
trends are accepted and the people lean towards the high quality products and services. The
international brands have their own set of brand image developed through high standard of
quality which incurs higher price. Therefore, these brands aim to enter those markets were the
customers will respect the quality of the product rather than quality (Asongu, Koomson and
Tchamyou 2017). This is the reason why most of the international brands were accumulated
within the developed countries only. After globalization however, the standard of living has
grown with more opportunities available increasing the scope for the brands to target the
customers in the developing markets. The scope of getting skilled yet cheap labor comes under
the socio economic growth where the government gives the citizens all opportunities to gr their
skills ad knowledge to get places in the national and international organization by supporting the
economy of the country.
The culture of the nations are closely imbibed in the growth of international trade
supporting the global business. It is a proven fact that the difference off the national culture

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affects the organizational growth of the companies (Yeung 2017). Here the cultural gap between
the eastern and western countries conflict with one another leading to have a critical situation to
manage. This complicate the workplace scenario, confuse the supply chain and convey wrong
message to the customers. These are the reasons why the companies have started to focus in
developing cultural competencies so that these confusion are mitigated and do not affect the
overall business.
The technological growth in the countries attract the international trade. The government
facilitates the companies by providing all types of technological advantages. The more the
countries are adaptive of technology, the more they would attract the international brands
(Homann and Koslowski 2016). The automation process, communication methods and
advertisements of the brands are solely dependent upon the abilities of the market to adapt with
the changes and challenges.
These also include the political environment and ecological considerations which have been
affecting international business decisions for long. The corruption level of the government of the
market, their availability in the conflict resolution, bringing changes in the legislation so that the
international companies can come and operate, providing facilities of like proper infrastructure,
law and order and lower tariffs can attract the international business. Here the growth of the
blocs of nation like UE can be mentioned where the countries in the European Union supported
the business blocks from certain markets leading their own markets towards self-sufficiency.
This type of trade barriers affect the global business in a great deal as the companies are
connected directly to one another. Here the factor like sustainability dominates the modern
business outlook where the environmental factors may regulate the success of the companies.
The customers are getting aware about the CSR factor of the companies where they are

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supporting the environment friendly products and services. The companies that are ascribing
with the environmental regulations limiting carbon footprint and waste management are getting
more exposure.
Therefore through detailed analysis it can be found that the main drivers of globalization
include economy, socio-cultural, political and technological environment. Globalization has
aimed to benefit the individual economies around the world by strengthening the market,
increased competition and spread wealth more equally than ever. The scope for the companies
got fresh impetus to enter the foreign market and capture the customers there, increase
investment in the product innovation and differentiation to meet the needs of the foreign
customer base and compete with the other local companies already doing business there. The
exposure of the trade got proper place to operate and all the possibilities that would have been
concentrated in few markets in the neighboring countries limiting the skills, got support to think
and become global leaders.

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Routledge.

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