What Are the Major Forces Driving Globalisation - Essay Example

In essence, globalisation can be viewed as the process of integrating the universe into one enormous market (Nande and Dias 2007, p.21). The concept advocates for the elimination of all obstacles to trade in different countries across the globe, including political and geographical. Thus, globalisation is perceivable as being all encompassing: globalisation of markets, technology, production, and investment. From a business perspective, therefore, globalisation can be defined from two points of view. First, a company can embark on an ambitious expansion programme to establish itself in different parts of the world, producing different types of products. Second, a business can elect to compete domestically with foreign competitors. This paper seeks to conceptualise globalisation, bring to bear the forces that drive globalisation and unearth how globalisation impacts the strategy and behaviour of business.

In its simplest form, globalisation seems like an easy concept to understand. However, developing a framework that conceptualises globalisation in its entirety is not easy. For example, in 1998 alone, more than 3,000 definitions of globalisation were developed (Zajda and Rust 2010, p.78). One definition of globalisation is a process that encompasses a revolution in the geographical organisation of business and social interactions; thus, bringing to bear the development of interregional systems and flows of communication, activity, and application of influence. This definition may seem comprehensive but it fails to incorporate the reciprocal nature of the term ‘networks,' ‘flows,' and ‘interactions.' Reason being, globalisation tends to move from the more industrialised nations to the less industrialised ones. Thus, when applied to business, the focus is usually placed on the developed countries since ‘flows' seem to move from the industrialised nations to the less industrialised ones, rather than being multidimensional. In addition, the majority of the developing countries are usually excluded from the networks of interaction, activity, and the use of power (Zajda and Rust 2010, p.79).

Considering the above, globalisation should be contextualised within a much broader context. Ferendinos (2007, p. 4) conceptualised globalisation into five broad categories, which had overlapping elements. His definitions contextualised globalisation in terms of westernisation, liberalisation, internationalisation, and universalization. From the internationalisation perspective, the concept ‘global' depicted cross-border relations between states while ‘globalisation' incorporated the spreading out of international trade and interdependence (2007, pp. 9). Liberalisation, on the other hand, refers to the elimination of state barriers between nations to create an enabling environment (open world economy) for cross-border trade (2007, pp. 10).

In his third conception (universalisation), Scholte (2007, p.11) defines globalisation as being ‘global.' Consequently, he perceives globalisation within the context of spreading worldwide, which means expanding a range of experiences and products to people in different areas of the world. When viewed as westernisation, globalisation means enhancing the global grasp of the social organisations of modernity such as industrialism and capitalism, consequently, destroying any form of self-determination. Scholte (2007, p.13) proceeded to incorporate the fifth conception into his definition: respatialisation. His new approach identified globalisation as the expansion of transplanetary links between civilisations. This approach encouraged the reduction of obstacles to Transworld contacts. In essence, people interact with each other – physically, legally, psychologically, and culturally – in a manner that is more effortless.

Thus, considering the above, successful global businesses are characterised by a number of factors (Nieuwenhuizen et al. 2008, p.377). First, they challenge traditional ideas and are outward looking. Second, they emphasise the importance of dialogue and communication. Third, they always welcome new ideas. Fourth, they recognise and learn from past failure. Lastly, they advance reflection and evaluation. Consequently, one can assert that a number of business drivers are responsible for driving or enabling globalisation as a form of expansion: outward culture, open innovation, information, and technology (Nieuwenhuizen et al. 2008, p.377).

How a business lives and operates (culture), in terms of its beliefs and values, defines the type(s) of activity that an enterprise will engage itself in (Nieuwenhuizen et al. 2008, p. 377). In essence, culture not only governs the activities of business but also controls the human interface. For instance, an inward-looking culture does not allow for globalisation and is closed to outside influences. On the other hand, an outside-looking culture encourages competition with other companies and also concentrates on market leadership. Such a culture considers development and innovation as being integral to business. Leadership, in this case, takes on an entrepreneurial role, seeking fresh markets and products. The tendency to embrace risk-taking and diversity creates room for globalisation.

Technology and globalisation are in tandem (Nieuwenhuizen et al. 2008, p.377). Globalisation precipitates the need for technology, and, by extension, technology encourages businesses to plan production and sales on the global platform. Technology revolutionalises how work is done; thus, changing retailers, suppliers, producers and customers interact at the marketplace. Firms have to boost their productivity and increase their competitive edge if they have to survive being at the global level. Therefore, enterprises must always seek ways to renew their products and services. Technology makes this end plausible (2006, pp. 378). Reason being, as technology advances, faster, newer, and better ways to produce goods and services are developed. As a consequence, consumer demand is met in a manner that is more efficient. Consequently, demand for manpower that is skilled goes up. On the flipside, however, high levels of automation results in the elimination of jobs.

The information industry has emerged as a consequence of the demand and supply of information (Nieuwenhuizen et al. 2008, p.378). For instance, the Silicon Valley companies have grown because of the services they offer: providing reports and information through telephone or computer inquiry services. The information services of these companies include strategic and information reports and snapshots of the different levels of business. Information services can be customised to cater for the needs of a myriad of enterprises, for instance, medicine, law, architecture, or, alternatively, packaged to offer various solutions to problems facing businesses. Information is a unique resource since it can be grown and resold. It also encourages communication and relationships across boundaries. Information can be used to add value to products and, by extension, customers; it reduces the cost of doing business – transactions and processes – by optimising products and processes; and finally, helps companies venture into untapped markets through research and innovation.

Open innovation is a fresh form of breakthrough, which has forced enterprises to re-think their headship directions; thus, affecting the upshot of the business policies that have been adopted (Chesbrough and Aplleyard 2007, p.57). In essence, open strategy equalises the principles of conventional business approach with the assurance of “open innovation.” Thus, open strategy welcomes the upsides of “openness” as a tool for advancing expansion and value creation for enterprises. This strategy places particular limits on the traditional models of doing business, with the belief that such a move is essential to nurturing better implementation of an innovative tactic. In addition, open strategy welcomes fresh business paradigms, premised on coordination and invention. In a bid to ensure sustainability, effective open stratagem equalises value creation with value capture, as opposed to being unable to prioritise value capture when pursuing innovation (Chesbrough and Aplleyard 2007, pp.58).

In addition to the above drivers to globalisation, a number of factors can also be attributed to globalisation (Aswathappa 2008, p.3). First is emerging markets. Companies that have been operating below their capacity, especially in the industrialised nations, seek greener pastures in the rapidly emerging economies to boost their sales and profits. Second, multinational corporations seek labour (by establishing subsidiaries) in countries that can offer labour at low costs in a bid to reduce their operational costs. Third, changing demographics encourages the spread of globalisation. The employable workforce in developed countries seems to be getting older while that of developing nations such as India seems to be getting younger. Thus, the enterprises located in the more developed countries are now seeking employable manpower in these areas due to a decrease in the employable labour force in the developed nations. Moreover, regional trading blocs such as WTO, NAFT and EU are also precipitating globalisation by eliminating trade barriers (Aswathappa 2008, p.3).

With the existence of many drivers of globalisation, the question of whether globalisation is harmful or beneficial emerges (Faheem et al. 2011, p.291). The answer to this question has not yet been advanced because of the controversy surrounding the existence of globalisation. Nonetheless, besides all the talk surrounding the ills and benefits of globalisation, it is still expanding rapidly across the globe. For instance, if one visits a Super Store in Dubai, he will find products that have been brought in from many regions of the globe (2011, pp. 291). For instance, one may find products such as electronic devices made in Malaysia, food products, for example, rice imported from Pakistan, and Mobile phones that developed in India. Such a scenario is not only found in the United Arab Emirates but also in many countries across the globe. The following discussion reveals the upsides and downsides of globalisation.

One of the positive impacts of globalisation is the proliferation of transactions (Faheem et al. 2011, p.291). The volume of investments, goods, and services moving across national borders is very high. Today, transactions of approximately $1.5 billion are occurring on a daily basis. According to Faheem et al. (2011, p.291) statistics reveal that goods worth, about, $8.9 trillion are being exchanged across national borders, in addition to services worth $2.1 trillion. Thus, is correct to state that globalisation has revolutionised the World Economy. Reason being, the influx in cross-border trade, currency exchange, the flow of information, movement of people, and Capital flows has boosted many economies across the globe. Since the concept of a more integrated and borderless economy has been introduced, the way of doing business across the world has changed. Currently, many businesses do not only target customers in their homeland but also clients located in different areas around the world.

In addition to the above, economic globalisation contributes significantly to international political stability (Wells, Shuey and Kiely 2001, p.41). Reason being, countries become more economically interdependent and enhances the spread of democracy. According to the United States Defence Science Board Task Force, the move by the Department of Defence to use civilian businesses to make its operations more efficient has resulted in numerous benefits. For instance, meaningful gains have been realised in the military since the speedy insertion of high-end commercial technology.

An increase in cultural interactions has occurred due to globalisation (Herrmann 2012, p.1). Since globalisation has led to an increase in interactions between various countries and businesses in the world, the need for people to gain insights into the workings of different cultures has emerged. More employers are transferring their employees to many countries across the globe, in a bid to transfer expertise or build subsidiaries. The success of the newly established institutions is based on not only the need to learn the new languages but also an understanding of how the various sub-cultures, communication styles, and societal behaviours in each community work (2012, pp. 1).

Nevertheless, as much as globalisation has its upsides, it also has its downsides. For instance, the globalisation of production and markets weakens the efficiency of national politics (Homann, Koslowski and Lütge 2007, p.3). In this regard, the labour market and domestic economic policies create a more organised and well-legislated market. Since globalisation advocates for the removal of trade barriers, the power of governments to regulate the workings and organisation of markets through politics and national legislation becomes somewhat problematic.

Globalisation has also led to the erosion of sovereignty in the developing nations, especially in terms of economic and financial matters (Ibrahim 2013, p.87). Financial organisations, for example, the International Monetary Fund, the World Trade Organisation, and the World Bank have imposed have imposed development strategies that are hurting the economies of the developing countries. For example, African countries have been forced to produce products whose price value is determined by western nations. As a result, poverty has become prevalent in African countries, rendering Africans incapable of participating in the political and social life of their countries.

Globalisation also encourages anti-developmentalism (Ibrahim 2013, p.88). By asserting that the state should play a marginal or no role in development, the capacity of the government to combat poverty and foster development is limited. This part is left to external donors and non-governmental organisation that, in the end, take over the little authority that the government is left with. Consequently, these institutions begin influencing the policies that the government should adopt, some of which may not be very beneficial to development or the well-being of the masses.

Instead of spreading economic wealth and growth, globalisation has fostered despair, impunity, and mass impoverishment (Ahmad 2011, p.275). Society, due to globalisation, has been divided into classes based on gender and community, in addition to expanding the chasm between the wealthy and the not-so-wealthy nations. Moreover, research has revealed that resource extraction companies, among many others, have been engaging in not-very-legal operations, for instance, financing authoritarian state security agencies and using as security (Ahmad 2011, p.276).

In conclusion, globalisation is a term that is usually used very loosely. However, developing a conceptual framework that comprehensively describes the term can be somewhat perplexing. Nonetheless, the concept has expanded significantly across the globe over the past few years and influenced how businesses carry out their operations. Businesses can now compete around the world, tapping into the markets numerous countries macros the globe. In spite of this, globalisation also has a number of downsides, for instance, due to globalisation the authority of governments has been weakened.