International Business and the Primary Distinct Elements of Globalization - Research Proposal Example

GLOBALISATION AND THE IMPACT ON INTERNATIONAL BUSINESS ACTIVITIES Introduction Globalization is the drift toward a superior cultural, economic, political and technological interrelation among national organisations and economies. As Adler (2004) reiterates, it is denoted with denationalization and not internationalization, which differs in subject and scope. The phenomenon embraces the models and theories from finances, political paradigm, anthropology, sociology, and idealism. The process of Globalisation dates back to the 15th century with the fruition of capitalism, and consequently stretched to other parts of the world. The process is further understood in the 20th century colonialism in Africa and Latin America, where the capitalists seek to extend their dominion and individualism ideas to the ‘new’ worlds. During this epoch, new economies emerged through the adoption of capitalistic model of governance, which catapulted the Western European countries to financial glory in the early 19th century. Mann (2006) summarises in his book that the process of Globalization was deeply founded in imperialism. Economies opened up for accrual in the First World realms at the cost of exploitation of the Third World nations. In this phase, the outlook of Globalization relied on the leadership fashion of the rulers of that time. The leadership mentality enabled the imperialists distinctively segregate people based on social strata, enabling them further exploit the Third World countries. The raw materials from these nations were extracted and utilised in military and administrative developments by the First World countries; this way, the economies continued to flourish whereas the poor nations were hard-pressed more to paucity. The next stage of Globalization centred on inter-imperial business actions. The joint trade between the European states, the United States of America and more recently, Japan founded a chain of groups on regional echelon, collectively with the governing powers. The economic alliances gave rise to collaborations and competitions in the business realm, leading to a faceoff for market share control by the multinationals. The coalition also bolstered the exploitation of the Third World markets more effective (McCarthy, 2012). The Evolution of Foreign Trade Foreign trade forms a fundamental part of Globalization. Transfer of supplies on an international scale is closely interlaced with the different orders of the social ladder and the commercial markets. The nature of the relationship helps the facade of Globalization attain a class disposition (Gilbertson, 2009). As much as the morphology of Globalisation is concerned, it can be deduced that the phenomenon has taken different forms, which changes with various phases of state economic developments. The impacts of Globalization are diverse, touching various features of the world economy to create an overall financial improvement. The effect of Globalization wields deep influence on the financial and industrial sectors of a nation. Globalization conceives markets based on industrial production and the market dynamics across the world. This sequentially broadens the access to various varieties of far-off commodities, thanks to the better marketing strategies employed by different corporations (Adler, 2004). In the global ground, the occurrence has enabled the formation of a universal worldwide market, on the model of the liberal exchange of products and services. The other aspect of Globalisation called political Globalisation has enabled governments attenuate the existing exchanges among countries. It also guarantees the manifestation of positive attributions of the Social and Economic Globalisation. Endorsement of noninterventionist trading activities is perhaps the most significant role played by Globalization, by acting as a benefit to the world economy. Advantages of Mutual Free Trade Countries that engage in a mutual free trade have a substantial cut in the cost of transportation, particularly with the advance of containerization concerning overseas oceanic shipments. In her summary, McCarthy (2012) reiterates that overseas transportation cost forms almost half the transaction cost; if it reduces, then the overall cost of the transnational business is condensed too. The other benefit includes a decrease or eradication of control over capital as well as the capital market. When all the players are allowed to establish a niche in the market domain, the market becomes more elastic. The outcome is beneficial for a good investment environment, hence promoting international transactions. The business relations create free zones for conducting business, against an imbursement of little or no tariffs at all. Removal of tariffs and barriers on international borders will facilitate free movement of goods and services, therefore cutting product and service costs to the client or customer. The business pact allows harmonization of subsidies in local trades through eradication of tariffs. The concept of free trade emerging from Globalisation suffers from a few odds, mostly revolving around limitations imposed on the recognition of intellectual materials. The idea implies that the patents granted by a particular nation must be accepted in another country. Furthermore, harmonization of intellectual asset decrees across most countries is subject to extra restrictions (Tromennar, 2010). The Global Business Economy The global economy institutes the world economy; it gives a reflection of the total amount of quantifiable economic activities around the world. During the 1930s, the Great Depression made most nations reluctant to increase their global markets, as governments and transnational were apprehensive about paucity and unemployment (Beaverstock, 2012). The attitude changed after administrations joined hands to form strong business ties that laid the foundation for the current global economy. The transnational corporations that view the world as a unitary entrepreneurial system have facilitated the global economy; their business activities focus on the global supply and value chain. The best case involves the fashion industry where for instance, the fashion clothing is designed in Sydney. The parts are sent to China for manufacturing. The manufactured materials are exported to Fiji, where the fashion clothing are sown and completed. The finished products are imported to Sydney, where distribution to various stores for sale occurs. The trade exemplifies the process of global supply chains that reflects globalisation in action. Globalisation also focuses on the capacity and potential to move across international borders, investment boundaries, technological precincts, labour, and finance markets (Adler, 2004). International bodies like the International Monetary Fund (IMF) and World Trade Organisation (WTO) have facilitated the process of international business activities (Mann, 2006). The input of the monetary bodies has been reducing tariffs and subsidies, and deregulating the world financial markets. The international business community has been able to take advantage of the trade liberalisation that has enabled higher levels of economic development and poverty reduction. Conversely, globalisation has been cites as the main cause for the growing environmental problems; some multinationals have caused significant environmental degradation in the (Third World) countries where they have their plants. Alternatively, the accelerated global environmental concerns have become fundamental in addressing pollution resulting from large-scale industrial activities. The growth of international business has propelled economies like Australia and most recently China to make great economic strides in the world mark (Beaverstock, 2012). The progress gained from the diminutions in excise duties and protections that encouraged growth in world trade. The Chinese government has been a huge beneficiary of globalisation due to its reduced business convolutions, making it the preferred manufacturing hub by the multinationals. Impact on International Business The impact varies from one area of business to another and from one country to another. The development of a potent communication infrastructure has fuelled the process of globalisation; however, this does not apply to all business environments as not all environments have equal technological advancements (McCarthy, 2012). The non-traded sector represented by some domestic services and goods cannot be traded internationally, hence not becoming a factor of globalisation. Globalisation has contributed to a level competition in the international business spheres. Deregulation has opened up domestic and international markets for competition, by motivating innovation in new products and services that have dared the conventional market leaders. The foreign establishments have bought into the domestic market, leveraging on the concept of competition on a global front. International business has evolved from traditional models to the current trend that focuses on meeting customer expectations and tastes (Mann, 2006). Generally, the international consumers have utilised information technology to better understand and compare products and services from different sources. The increasing buyer purchasing force has motivated higher expectations of product qualities, therefore spawning differentiation in the business fraternity. Product specialisation and differentiation has been a leading benefactor of the increasing consumer income expenditure; different products are designed for different markets that have different economic status. The concept forces the industry to meet higher standards imperative for economic survival in the contemporary competitive business environment. The international business has also benefited from enormous economies of scale, although not all per se. Large markets like the Chinese market has been pivotal to the growth of international business; recently, some companies have preferred launching their products in China to benefit from the large domestic market presented by the populous nation. Globalisation of Markets Globalisation has presented a massive degree of freedom to multinationals in the choice of location. Companies are freer to select their preferred point of operation, and can shift to a more economical and proficient location. In the last two decades, countries like the UK have been a hub for many corporations, especially in the financial sector (Trompennar, 2010). The economic move has boosted the domestic economy, but consequently increased competition for the local enterprises. This growing transfer of businesses and professions has, made nations compete with each other in giving an attractive and cheaper business location. Manufacturing ventures are progressively relocating to countries like China and Indonesia due to their attractive economic terms. The variation of the cost of inputs has also enabled ventures to select the location with the most economically beneficial cost of inputs e.g. labour in the developing nations, or the lucrative fiscal advice in London. The main limitation presented by the movement is that some senior staff of the businesses might not move to the selected business countries if the living conditions are unfavourable, or even perilous (McCarthy, 2012). The other challenge presented is the multinational and multicultural management. A multinational business comes with intricate multinational challenges that might be a challenge to the business and the management. Multicultural employment procedure leads to a culturally diverse pool of employees from different administrative centres across the globe. The diverse employees have different strategies, and hence cumbersome to find managers responsive to all the diverse factors. Additionally, it is very simple to unintentionally give misdemeanour that demotivates employees. The most recent case involved a Japanese corporation that was originally frustrated with their Thai workers who did not react well to Japanese style of strengthening corporate devotion and impetus (Beaverstock, 2012). The Japanese responded by turning the production targets into a game that instantaneously yielded enthusiasm in the employee work spirit. National borders have become much less significant in international trade. Markets have continued to stretch across borders, and the multinational companies have taken advantage of the entrepreneurial development. The process has also led to rise in the issues of foreign language and culture. Both the consumers and the commercial sectors have adapted to the changes that have resulted from increased international influence; many enterprises have made costly mistakes by not considering local variation. Marketing requires an in-depth knowledge of the business language at local and international level; multinationals must be aware of the meaning of linguistic stereotypes before launching their products in those markets. For instance, the GM Nova did not do well in Spain because NoVa means ‘does not’ go in Spanish (Trompennar, 2010). There are several other examples of business failures in specific linguistic environments simply due to failure to analyse product name’s meaning in the new market. Challenges The main challenge for international business continues to be the relations between employees of different cultural backgrounds across the world. Based on the progressing globalization agenda, this will be a primary dilemma, unless corporations become conscious of the predicament, and make the most accurate resolutions. Sufficient preparation is necessary before takeoff to the echelons of the international business enormity; the management has to understand the most viable cultural approach they intend to use, in order to survive in the new commercial environment (Adler, 2004). An elaborate communication channel is necessary for informing the employees of the new strategies in the current commercial epoch. They must be enlightened about the cultural differences, and the pending challenges that will confront them. A cultural consciousness and perception of the predicament will likely lead to an opening communication between the subordinates. The next challenge then becomes finding the right people to fit the company’s environmental and cultural strategy. The changing cultural environments resulting from the ongoing globalisation has to be monitored closely; the train of cultural change is influential and should not be missed if the business is to thrive in the contemporary commercial setting. Every change has the capacity to influence one of the business entities, hence affecting employees and the company’s corporate culture. Conclusion International business is important in globalisation because it occurs within a vibrant, incorporated system that knits together the primary distinct elements of globalisation. Globalisation has transformed the current societies and business activities by driving competition in the market, hence promoting economic development (Beaverstock, 2012). The international business environment has a direct influence on how commerce occurs. The corporations must understand the changes occurring in the global business front, and equip their managers with the competent knowhow in the markets in which they establish their business. Bibliography Adler, N. 2004, International Dimensions of Organizational Behavior, Cinncinati, OH, USA: Thomas Learning pp. 246-255. Beaverstock, J. 2012, Highly Skilles International Labour Migration and World Cities: Expatriates, Executives and Entrepreneurs in International Handbook of Globalisation and World Cities, Cheltenham, Uk: Edward Elgar Publication Ltd pp. 240-249. Gilbertson, C. & Lehman, M. 2009, Century 21 Accounting, Mason, OH: South-Western Cengage Learning pp. 147-166. Mann, C. & Götz, K. 2006, Borderless Business in Westport, Conn.: Praeger pp 224-231 McCarthy, J. Shelmon, N. 2012, Financial Guide for Not-for-Profit Organizations. Hoboken: John Wiley & Sons pp. 198-209. Trompenaar, F. & Asser, M. 2010, The Global M&A Tango, Oxford: Infinite Ideas Limted. Read More