How Business Environment Forms - Assignment Example

Economics The current business environment in the world has been shaped by events that have been happening inthe world. These historical events, together with lessons learnt from them have shaped how countries conduct business in the international arena and within themselves. This paper will discuss how understanding of historical events and evolution of business and globalization helps in understanding the current business scene. Globalization is one of the issues that has changed our current business scene and shaped the world. The last 50 years have seen the world reach unprecedented levels of globalisation; this has been as a result of liberalising economic trade, which has seen human capital flow from regions where it is surplus to the regions where there is shortage (Gerdes, 2006, p87). Businesses have also capitalised on the opportunities brought about by globalisation and expanded their market in different regions in the world, which has necessitated them to send expatriates in those regions. Initially, when protectionism and imperialism were the order of doing business in the world, movement of people from one country to another was restricted and countries attempted to be self sufficient; both in terms of technology, human capital and goods (Boudreaux, 2008, p107). However, when countries realised that opening up their boarders to trade provided more opportunities for them, the process of globalization began. One of the greatest effects of globalization was movement of human capital from areas where there it was in surplus to where it was needed. This movement of people created several challenges due to different cultures and competitions. In order to overcome this barrier, there was need for businesses to develop intercultural competencies in order to deal with people from different cultures (James, 2007, p90). The desire to develop people with such skills has made organizations to train their employees, a practise that has been developing with time and which s currently very popular with a large number of international NGO’s and multinational corporations. Opening up of trade between countries which saw a shift in trade policies from protectionism to open economic systems is also part of history that can be used to understand why countries trade the way they do, for instance, countries are interested in making bilateral and multilateral trade agreements. In understanding the inspiration between these agreements, it is important to define open and closed economic systems as countries are moving from closed to open economic system. Open economic system is the type of economic system where a country can trade goods and services with other countries. In this type of economy, there are very few restrictions to trade with other countries and trade is usually controlled by the market forces of demand and supply. On the other hand, the closed economic system is a type of economic system where a country is not engaged in trade with other countries. In this type of an economic system, a country tries to be self-sustaining by producing all that it needs (Goff, 2007, p13). Developing nations has for a long time relied on the principle of protectionism of their industries in an attempt to help their industries to grow. Most of the good that enter these countries are usually faced with huge import taxes that in some instances surpass the original value of the good that is being imported; this is in a bid to protect the local industries producing similar goods. The impact of this is that due to lack of competition, most of the infant industries that were being protected have not been able to produce quality good that can satisfy the needs of the country. In addition, these high import duties have denied the citizens of this country the chance to own imported goods at a reasonable price (Winters, McCulloch, and McKay, 2004, p96). Other reasons that encourage countries to adopt protectionist policies include the following: one is that countries that impose protectionist policies are aiming at increasing their revenue; this is done through the huge taxes that such countries levy on all imported goods (Keen, and Baunsgaard, 2005, p70). National security can also be a reason for countries to engage in protectionism; some goods are crucial in a countries security especially during the time of crisis for production to be done by other countries, for instance, countries that do not have food security may face a crisis in case that supply is cut off by international crisis. Countries may also engage in protectionism to discourage unethical behaviour from the supplying countries, for instance, a country may put protectionist policies to discourage use of child labour in production of good that they are buying. Countries also engage in protectionist policies to prevent other countries from dumping substandard goods, in addition, they may also do so to reduce the balance of payment deficits in the current account (Kong and Zhang, 2010, p009). However, countries such as United Kingdom, which is one of the most developed countries in the world, has adopted a different strategy to that of protectionism since it has liberalized its markets by opening its boundaries to international trade. This has the effect that the country has been able to tap on the benefits of comparative advantage where it exports good that it produces at a cheaper cost and imports those goods that are expensive to produce in the country (Dadush, 2009, p 175). Currently, the world seems to be moving towards an open economic system where there are minimum restriction to trade, this can be seen in the reduction of trade barriers especially among the developing nations, which had largely embraced protectionism. The reason for this can be traced to the huge economic benefits that come with embracing free trade. Customer relations have also changed and the way that customers were treated in the past from the way that they are treated in the current global business environment. In the past businesses were not concerned with customer satisfaction and their sole aim was to make profits. However, in the recent past, businesses have put their clients at the forefront of their businesses in order to make profits. A case on point in the airline industry is the south west airline in the united states of America. In its mission statement, the southwest airlines aims at providing excellent service to clients with affection, affability and organizational spirit, therefore the organization has directed its efforts to ensuring the service that it provides to its customers is of the uppermost class; the company has done this by the type of employees that it employs. Southwest airlines tries to employ people who are enthusiastic with their profession, which makes them happy to serve the customers (Rhoades, 2006). The company tries to make its clients part of the company by inviting them to company events and adopting a friendly/ family atmosphere with them. Sending its customers birthday and gift cards and referring to them by their first names helps in creating a family atmosphere that makes the customers feel appreciated (Tierney & Kuby, 2008). In cases where the airline inconveniences its customers such as delayed flights or lost items, the company is quick to inform the clients and apologise on the spot if need be, in addition, the company also issues free tickets and other bonuses to customers that it has inconvenienced. In the case of delayed flights, the company also keeps the customers busy through a number of activities, which are fun and enjoyable to them. Understanding how business and globalization evolved is important in my career as it helps me in understanding the changes that businesses have gone through therefore help me to predict future trends with significant levels of accuracy. The current business environment has been shaped by events in the history of business and globalization. Some of the most influential events in history include globalization and the metamorphosis in business especially in how organizations interact with their customers. this information is especially important in predicting future trends in globalization and business. References Rhoades, D. L. 2006. Growth, customer service and profitability Southwest style. Managing Service Quality, vol16. no5, pp538-547. Tierney, S., & Kuby, M. 2008. Airline and Airport Choice by Passengers in Multi-Airport Regions: The Effect of Southwest Airlines∗. The Professional Geographer, vol 60 no. 1, pp15-32. Dadush, U. 2009. Resurgent protectionism risks and possible remedies. Carnegie Endowment for International Peace, Washington, DC. Goff, P. M. 2007. Limits to liberalization: local culture in a global marketplace. Cornell University Press, Ithaca. Baunsgaard, T., & Keen, M. 2005. Tax revenue and (or?) trade liberalization. IMF Washington, DC. Kong, Q. F., & Zhang, S. P. 2010. Trade Protectionism: the Reasons for Its Prevalence and Our Countermeasures from the Perspective of Game Theory [J]. Journal of Business Economics, vol 6 no.1, pp009. Winters, L. A., Mccullogh, N., & Mckay, A. 2004. Trade liberalization and poverty: the evidence so far. Journal of Economic Literature. Vol 42 no. 1, pp72-115 James, P. 2007. Globalization and culture. SAGE, London. Boudreaux, D. J. 2008. Globalization. Greenwood Press, Westport. Gerdes, L. I. 2006. Globalization. Calif, Greenhaven Press, San Diego. Read More