entertainment in florida: Globalization and its Impact on Business and People

: Globalization - Marc van der Chijs

What is globalization? What are the advantages and effects of globalization? Why is there a strong anti globalization sentiment? Find some sensible answers.

Globalization is a gradual process that lessens the significance of national barriers. While goods have been crossing national borders since ancient times, and military campaigns involved people doing the same, these are not what we understand by globalization. The term today means the increasing movement of services, technology, finance, information, culture and workers throughout the world, aided by dramatic developments in new technologies, spread of information and speed of transport.

Globalization of Business

Businesses began to reach out on a global scale to:

Sell their offerings at a higher profit in the less saturated markets of other countries
Buy from other countries things that have a market in their own countries
Source raw materials that are either not available or are too expensive in their countries

In earlier days, when travel was slow, these business transactions mainly took the form of exports and imports. There were also military operations leading to creation of overseas colonies for exploiting the economic potential of the colonized countries, a srategy that has become rather unfashionable these days.

As technology developed, transport and travel became much more easy and speedy. And the more dramatic developments in communications technology made maintaining global contacts a simple matter. Businesses could now start operations anywhere in the world and control them from their home base.

Overseas operations benefited businesses in the form of significantly lower costs. The increasing skill levels of workers in developing countries meant that they could get the same work done at lower wages. Along with the lower costs of raw materials and other inputs, this enabled production operations at competitive costs overseas and delivery of finished products all over the world.

Next on the scene was off-shoring that initially involved keeping core operations in the home country while outsourcing non-core operations to overseas countries with lower labor costs. As skill levels of overseas workers increased and communication technology improved, even core operations could be outsourced in the same way.

Globalization of business in the modern sense was born thus.

Globalization Issues

In economic terms globalization is a strategy that leads to high productivity and consequent higher availability of goods and services to people of the world. It leads to specialization on a worldwide scale, with each region doing what it is suited to do best (to put it in simple terms).

Globalization also means catering to a worldwide market. In an ideal condition, any country can market not only its products but also its labor and services to the whole world. This leads to higher incomes in many hitherto poor regions, resulting in higher purchasing power in global markets.

Modern technology has made it possible to achieve globalization that can approach this ideal. Resultant global competition can lead to higher efficiencies and levels of quality. Globalization also has the theoretical potential to reduce global poverty.

Where then is the catch?

The catch lies in the adverse impact of globalization on people and the environment.

When production and jobs move from high cost developed countries to lower cost regions, jobs are lost in the developed countries. In addition to causing real hardship to affected people, loss of jobs also becomes a big political issue in these countries.

The apparent beneficiaries of globalization, the developing countries, are also affected in different ways. Farmers in these countries find that they cannot compete with imports from cheaper sources of their produce and businesses find they cannot compete with the powerful corporations from developed nations. As a result, these groups lose their incomes, and suffer more because there is typically no social security to fall back in these countries.

Another impact on the developing countries occurs in the form of environmental damage. These countries typically have less rigorous regulations (and implementation of existing regulations) for environmental issues. Companies from developed countries exploit this situation leading to severe pollution and environmental degradation in these countries.

With increasing global awareness of the adverse effects of globalization, strong anti globalization sentiments and campaigns have emerged.

Future of Globalization

Globalization is a development that is unlikely to be halted. The underlying economic pressures are too strong to be wished away. And new technologies that practically nullify the restrictive impact of national boundaries on information flow and culture, in addition to goods and people, lead to shrinking the world into a "global village."

Business management practices will be seriously affected when operations are on a global scale. Organization structures will have to adapt for the diversity of markets, cultures and workplace practices. While advanced information technology can help centralized control the diverse markets, cultures and practices will need decentralization.

Globalization is the emerging phenomenon of people, information, technology, finance and even culture crossing national boundaries and moving into a global arena. While trade had become global from olden times, it is the emergence of new communication and transport technologies that have begun to shrink the world into a single "village." Profit seeking businesses found in globalization a way to expand markets and reduce costs. At the same time, it also had several adverse impacts on people, nations and the environment.

Copyright T. Gopinathan . Contact the author to obtain permission for republication. Photograph of Gopinathan, Gopinathan T.