Globalisation in the Business Environment - Case Study Example

Effects of Globalisation on the Business Environment In the current world, the business environment is expressed as a global village. This is where the businesses connect and relate to each other is an easy manner. In essence, many organisations are initiating ventures beyond the national borders, in a quest to enhance the business (Lange, 2010:23). This has created a larger market niche for many businesses, as they try to exploit and explore new markets. However, globalisation has had both positive and negative impacts on the business environment. At times, businesses have to conform to change that is inflicted by globalisation. As a result, businesses have to change according to change in the environment. This will ensure the businesses are making extensive improvement in serving the clients who need their products. To begin with, globalisation has led to provision of cheap labour in the business environment. In the previous decades, migrating from one place to another place was not an easy task. As such, there was minimal migration of people from one country to another. However, with developing globalisation, migration from one country to another has been made easy (Nederveen, 2009:13). As a result, people are migrating from one country to another with a variety of reasons. One of the ostensible reasons for migration is looking for employment. Many people feel that they have a greater chance, especially when comparing the remuneration when working in abroad countries. For example, there has been a recorded influx of immigrants in the United States. The ostensible reason for such immigrants is employment opportunities (French, 2008:9). This has increased the number of job seekers in the country. As such, the businesses and firms in the country have a variety of potential employees to delegate duties. This leads to critical decision making, especially when employing workers. Many businesses rely on the immigrants, since they provide cheap labour. This is an approach by many businesses, since they save on costs (Sullivan and Kymlicka, 2007:9). This leads to enhanced profitability, as the businesses optimise the cheap labour. While this is positivity to immigrants, it elicits negative sentiments from the natives of the region. For example, many natives in a country may find it easy to get a well-paying job. This is due to the reliance on cheap labour from the immigrants, which has been instigated by globalisation (DiLuzio, 2008:7). Globalisation has led to optimisation and expansion of businesses across international borders (Bertho, Crawford and Fogarty, 2008:14). As a result, it has led to enhanced investments across the borders. As a fact, foreign companies initiate investments in a country, to compete with the local companies. This has led to enhanced productivity in a country. The population of the region benefits from this approach, as they have accessibility to quality products. When there is immense competition, the producers will enhance their production criteria, to ensure they produce high quality products and services. This initiates a struggle to maintain a niche market for the products. Secondly, the increased competition leads to a change in business models. This is where a business engages various strategies of trouncing its competitors. For insurance, some businesses will enhance their branding, change marketing strategy and innovation (Hothi, 2005:13). With such approaches to business, the business environment becomes competitive. As a result, the strongest and well-established businesses continue to make immense progress. However, there is a limitation to some of the native companies in the country. At times, the foreign investors have immense control over the market. This leaves the small companies with little market niche for their products. While this approach is appreciated, small-scale businesses in a region are adversely affected. Several reasons can be cited in relation to this. First, the foreign companies always have larger capital base. As such, they have colossal amounts of cash that can be used in any investments. On the other hand, the native companies have a limited capital base. As such, they are likely to be driven out of business. Secondly, the foreign companies rely on large-scale production, which leads to economies of large scale. This is an advantage to the foreign companies as they accrue lower costs of production. On the other hand, small-scale businesses rely on small-scale production. This leads to high costs of production. Therefore, the small-scale businesses are not likely to compete with the large foreign investment companies. Thirdly, the foreign companies have lower price tags on their products. As such, the market is likely to rely on the products of a lower price (Marrell, 2007:18). On the other hand, the cost of production in small-scale businesses is high. This leads to higher price tag on the same products. This is a disadvantage to small-scale producers, as they have to struggle in the market in gaining a niche market for their products. Globalisation has enhanced the business environment by initiating location flexibility. In the recent times, business can start an investment in a different region over time (Mayer, 2007:21). This is due to the enhancement of globalisation, as foreign companies are allowed to invest in different regions of the world. This has proved positivity to many businesses in the world. Businesses initiate studies before formalising an investment in an area. For example, some businesses feel that the market is not exploited to the full potential. Therefore, they initiate an investment in the region to serve the population. In such an approach, the population is given vital products and services they need. Therefore, globalisation has a positive effect in the business environment as it provides some essential products and services that are not available. This is creating satisfaction to the population in a region. For a business to enhance its productivity, it has to enhance its market size, investment, and capital base. As a fact, many businesses do not have the resources and strategic planning to engage in such activities. However, many businesses have a solution to such situation. With the initiation of globalisation, many businesses find it possible to start ventures and subsequent investments. This is through joint ventures with multinational companies (Tisdell and Sen, 2004:25). When multinationals engage other businesses in ventures, there is a higher chance of making immense development and growth. For example, the business will have greater resources, including labour and capital. These resources can be used to steer the company into greater success. Secondly, globalisation has perfected the business environment in that many businesses engage in mergers. This is where businesses engage each other in a quest to control a particular market. The mergers have influenced the business environment as competition continues to steadily improve. As a result, many businesses are recording positive and recommendable growth over time. Globalisation has changed the business environment through reliance on new technologies. The world is developing each day, which includes technological development. Many companies have been adamant to change, especially when it comes to changing technology. However, these companies are changing their scope of business by engaging new technologies (Munck, 2004:9). For example, Kodak was a successful company in the previous decades. It had greater control of the market, as it was considered a great performer. However, due to globalisation, many companies were enhancing their production by relying on technological changes. On the contrary, Kodak was adamant to change. Other emergent companies continued to embrace technology, which led to their dominance in the market. This led to the dismal performance of Kodak in the market, as the world appreciates technological changes. In essence, the world is appreciating the changes that have been brought by globalisation. This has enhanced the market appreciation of technological changes, as the market needs products and services that are enhanced. Knowledge and information are considered some of the vital factors in production. Therefore, businesses and entrepreneurs have to gain ample knowledge, information, and skills in improving production (Branson, 2009:8). As a fact, globalisation has changed the business environment by enhancing flow of knowledge to many people across the globe. For example, many business people engage in training session to equip their workers with knowledge and skills. With immense globalisation, knowledge, skills, and information can be transferred from one region to another. For example, firms that deal in agricultural production are benchmarking some of the best practices used in other regions. This is proving a positive attribute, as most of the firms appreciate the immense development in the business (Christiansen, Turkina and Williams, 2013:17). Therefore, globalisation has positive effects on various sectors of the economy. Similarly, globalisation has led to exchange of ideas from one firm to another. Some firms that engage in traditional approaches of conducting businesses are influenced into using the modern ways of conducting business. For example, globalisation has influenced the use of computerised accounting systems. This is where the businesses use computers to store files, rather than the traditional filing system (Davies, 2011:14). This creates a competitive business environment as all the businesses enhance their productivity and performance. Globalisation has led to workforce diversity, which has changed the business environment. With immense globalisation, people are moving from one region to another. This has created an advantage in the business environment, as employers accrue workforce diversity. Workforce diversity is a positive attribute to business in numerous ways. First, it leads to exploitation of talents (Macleod, 2004:6). Workers from different origins will expose different talents, which can be used optimally at the work place. Secondly, it has improved specialisation, where different workers have different skills. For example, restaurants in the world appreciate workforce diversity, especially when they offer variety of foods and drinks from different parts of the world. In conclusion, globalisation has had an impact on the business environment. This includes initiating change in technological advancement and improvement in investments. Similarly, it has enhanced competition, which has led to improved quality of products and services. Conversely, globalisation has made it hard for some small-scale businesses, as they struggle to remain relevant in the business environment. However, the governments are initiating regulations to ensure such small scale companies are not driven out of business. References Bertho, M., Crawford, B. & Fogarty, E.A. (2008) The impact of globalisation on the United States, Westport, Conn, Praeger. Branson, R. (2009) Globalisation laid bare: lessons in international business, London [England], Gibson Square. Christiansen, B., Turkina, E. & Williams, N. (2013) Cultural and technological influences on global business, Hershey PA, Business Science. Davies, A. (2011) The globalisation of corporate governance the challenge of clashing cultures, Farnham, Surrey, England, Gower Pub. DiLuzio V. (2008) Effects of globalisation on North American biaxially oriented polypropylene (BOPP), New York, ProQuest. French, M.J. (2008) The impact of globalisation on less developed countries and the role of intergovernmental/multilateral organisations in promoting development in less developed countries, New York, Webster University Hothi, N.R. (2005) Globalisation & manufacturing decline: aspects of British industry, London, Arena books. Lange, H. (2010) Working across cultures: ethical perspectives for intercultural management, Dordrecht, Kluwer Academic Publishers. Macleod, D.V. L. (2004) Tourism, globalisation, and cultural change an island community perspective, Clevedon, Channel View Publications. Marrell, B.F. (2007) Economic Globalisation and Human Rights, London, Cambridge University Press. Mayer, F. (2007) Examination of the Cultural Effects of Globalisation, London, GRIN Verlag. Munck, R. (2004) Labour and globalisation results and prospects, Liverpool, Liverpool University Press. Nederveen, P.J. (2009) Globalisation and culture: global mélange, Lanham, Md, Rowman & Littlefield. Sullivan, W.M. & Kymlicka, W. (2007) The globalisation of ethics: religious and secular perspectives, Cambridge, Cambridge University Press. Tisdell, C.A. & Sen, R.K. (2004) Economic globalisation: social conflicts, labour and environmental issues, London, Edward Elgar Publishing. Read More