Defining Globalization - Essay Example

? Globalization BY YOU YOUR SCHOOL DATA HERE HERE Globalization Defining globalization Globalization is defined by business and economic professionals as: “a set of economic, social, technological, political and cultural structures and processes arising from the changing character of the production, consumption and trade of goods and assets that comprise the base of the international political economy” (unesco.org, 2011, p.1). This definition encompasses a variety of different factors that continue to drive the internationalization of business, impacting many different areas of industry that include information technology enhancements, sales and marketing, production, procurement as related to the supply chain, and even human resources. There is virtually no area of business that is not opportunistic for globalization if the organisation is focused on finding new market opportunities, identifying opportunities for exportation, and strengthening global business relationships with foreign organisations. Consumer behaviour characteristics, related to a variety of products produced both domestically and internationally, also play a role in defining globalization. These are cultural elements that are driven by social characteristics and the economic status of a region. As the need for raw products continues to grow, new procurement avenues and education regarding manufacturing drives globalization efforts. New trade agreements support globalization as businesses spread their knowledge in the form of acquisitions, mergers and other business partnerships in order to enhance competitiveness. By most practical definitions, globalization is taking a self-sustaining industry and extending it beyond borders to improve the social well-being of local and foreign citizens and improving the infrastructure that drives business activities in a variety of segments. Four drivers of globalization in Belgium One aspect associated with Belgium that drives globalization efforts is the local cultural dimensions that exist as related to business practices and social identity. Belgium, under Hofstede’s model of cultural practices, maintains a culture that is risk averse, known under this model as uncertainty avoidance. Belgium business leaders demand its internal political structure that drives the hierarchy to consist of clear choices with a strong rationale, expects senior leadership to produce detailed plans before launching any effort linked to finance, and develop contingency plans in the event of potential failure (Donnison, 2008). The Uncertainty Avoidance Index consists of Belgium business cultures that have little tolerance for ambiguity and demand a very rigid structure in most business objectives. This risk-averse culture drives globalization in a way that is unique from other countries with less uncertainty avoidance. Rather than extended business into multiple foreign markets, Belgium demands its partnerships to include very detailed schematics and plans before making an investment decision. Belgium businesses would rather maintain control over its organisational principles and financial decision-making, therefore it allows much more foreign direct investment directly into the country rather than seeking expansion to foreign territories. As one example, Belgium’s culture dictates a need for domestic controls, therefore when new business acquisitions or mergers are necessary in order to achieve higher profitability or improve domestic production capabilities, Belgium will seek out partners to bring their own knowledge and skills directly into the country. This has provided many opportunities for investors in a multitude of industries to enter the Belgium consumer and industrial markets, without Belgium having to sacrifice its long-standing social and business principles. This has opened new market opportunities for foreign countries to expand their marketing and sales presence, along with industrial exports, thus improving supply chain, expanding international knowledge in management and technology, and improving long-term outlook for cultural exchanges. Belgium has managed to optimize its manufacturing and production capabilities by maintaining control over its domestic business functions through this foreign direct investment effort. The knowledge base provided by foreign business leadership makes Belgium’s multinational and domestic firms less sensitive to competitive conditions in the global economy as it provides the country with the ability to be self-sustaining domestically and improves output product levels in the process (Coucke & Sleuwagen, 2008). By being risk-averse and wanting to maintain tight controls, Belgium is equipped with the knowledge to take its business international and also to remain confined to distribute product domestically when global economic conditions begin to deteriorate and affect global consumer buying trends. There has also been a very modern push toward improving the human resources capabilities of businesses across the globe, as it becomes recognised that in order to remain competitive in a global market, there must be new approaches to managing people. New focus on improving employee relations in order to build competitive human capital includes, in Belgium, “a focus on cultural sensitivity, knowledge of global business trends, technical skills development, and innovation in the human resources function” (Friedman, 2007, p.158). Champions for human resources innovation continue to push for decentralization of business, the process by which the organisation achieves a streamlined decision-making hierarchy rather than most decisions being driven by top-level leadership and then being forced downward throughout the organisational structure. Belgium citizens and employees are individualistic, meaning that there is more emphasis on individual accomplishment rather than being focused on teamworking and extending rewards amid a group mentality (Blodgett, Bakir & Rose, 2008). This has given Belgium workers more autonomy in their job roles, thus providing new opportunities for innovation and forward business strategy by using the resources and skills that come from lower-level organisational employees. This individualism drives the human resources function to include more diversity initiatives, such as hiring foreign expatriate workers, thereby changing the scope of global human resources practices in this country and abroad. The demand for Belgium decentralization of business is a significant driver that improves global business and expands globalization across the world. Belgium recognises that decentralization “allows decisions to be made more quickly and can produce more perceptions of procedural fairness to employees” (Carpenter, Bauer & Erdogan, 200, p.2). Belgium has a very focused decentralized business strategy that is often more attractive to job candidates both domestically and from foreign nations. This improves the labour pool in Belgium to include much more capable and skilled workers, thereby changing the pace by which employees are recruited and retained. Another driver of globalization in Belgium is the changing pace of marketing and sales, especially related to changing consumer behaviour patterns and the methodology by which companies advertise their products. Belgium maintains a very strong family structure and family-oriented values in the household, therefore mealtime within the nuclear family is part of a tradition in which everyone is able to share experiences and thoughts. This has changed the methods by which foods service businesses market their products domestically and many marketing firms have experienced significant financial gains with new family-oriented marketing. What this creates is a situation in which companies have more profit earned from consumers, thus allowing them to expand their products into foreign countries. Some countries, in the face of the current economic decline being felt across the world, are tempted to build more consumer interest by offering short-term promotions and discounts which can ultimately cheapen a product brand (Helm, Boyle & Matlack, 2009). Instead of following this foreign trend in sales and marketing, Belgium instead seeks out new market opportunities in countries like China or India as a means of building higher profitability. What this creates, in the long-term, is more cultural knowledge about foreign businesses and new production methodologies that improve the product quality and function to serve global market characteristics. As one example of the marketing function as a driver of globalization in Belgium, the presence of new technologies and higher Internet usership across the globe provides new advertising opportunities. The social media revolution, such as Facebook and MySpace, has changed the international platform for communications. Businesses in Belgium take advantage of higher social media platforms such as blogs or video sharing, in an effort to gain the attention of domestic and foreign consumers. Social media provides opportunities for consumers to share their opinions and it has become mainstream in many international cultures (Smith, 2009). Traditionally, businesses that need understanding about what drives foreign consumer behaviour have been forced to use questionnaires, interviews, focus groups and surveys as a means of identifying with consumers. This can be costly, labour-intensive, and does not necessarily provide meaningful results to improve product viability. The social media platforms and higher Internet usership globally provides inexpensive opinion polls and similar surveys that can be compiled with existing information technology support specialists. Belgium achieves higher international marketing gains through these platforms and changes the scope of production, distribution and product innovation in the process, which ultimately leads to a global lifestyle improvement for foreign consumers. As another example of the sales and marketing function as a globalization driver, there has been an increased demand for automotive steel used with major manufacturers. As industrialized countries begin developing more businesses and improving education, foreign citizens begin sustaining higher disposable incomes and demand more luxury products as a result. In fact, there is such a high demand for automotive-related steel in world markets today that there is not the capacity to serve it effectively (Clarke, Fields, Jutte, Morton, Press & Ridenour, 2006). Belgium has found new opportunities for industrial product distribution due to these changing consumer trends in countries such as China which is based solely on the demand levels of these foreign buyers. Finally, there is a driver that changes the scope of globalization and how it impacts Belgium that is directly related to procurement and the supply chain. There is an increased push for global businesses to improve their cost recognition systems and identify opportunities to improve their profit margins. One of these efforts in cost reduction is a push toward lean manufacturing, a just-in-time delivery methodology that avoids taxation for stored inventory and prevents waste when production schedules are unexpectedly changed, thus leaving the business with unneeded stock for production. Toyota is one of these companies with a top quality push for lean manufacturing (Katz, 2010). Lean methodology changes the scope of the raw materials supply chain internationally, as in order to keep with this philosophy, multiple vendors must be selected to improve delivery efficiency and also as a contingency in the event that a supplier has disruptions to their own supply and production capabilities. What this does is open new channels for distribution for companies in Belgium that serve organisations with a lean methodology in production. Just-in-time deliveries demand transportation by air, land and sea in order to meet these new stringent, cost saving efforts. New supply lines are opened in the process which ultimately has a long-term positive benefit in multiple industries as new avenues for delivering product become available. Other companies that create consumer products are the beneficiaries of these supply chain improvements when costs are reduced and deliveries can be guaranteed faster and more efficiently. This can improve the profit margin of many companies that rely on the global supply network in order to distribute their products domestically and across foreign territories. This change in supply methodology and improvements in distribution also reduce many tariffs on imported goods that once had a strangle-hold on companies looking to flood foreign markets with domestically-produced products. In 2002, in the United States, political forces imposes a 15-30 percent commission on imported steel, which ultimately led to labour disputes and reduced competitiveness when foreign importers began looking for cheaper nations to buy their products that did not have high import tariffs (Blecker, 2002). Reduction of tariffs is also a by-product of improved supply chain efficiency that makes foreign markets more inviting for many varieties of businesses. Personal globalization reflection Personally, tourism is one aspect of globalization that has impacted me personally. As new avenues of supply open for consumer products through lean manufacturing methodology, so does the presence of new tourism opportunities. A stronger air and sea transportation network opens borders that had once been closed, thus providing new travel options. For example, low-cost air carriers such as RyanAir were developed as a by-product of globalization and for companies looking for cheaper distribution options. “Fast and relatively inexpensive transportation has had a positive impact on accessibility” (Ivanovic, Katic & Mikinac, 2010, p.46). This has had an impact on consumers across the world that now have opportunities to visit foreign countries that had once been unreachable by traditional transportation systems. The knowledge gained in foreign countries by skilled expatriate leaders also provides new cultural knowledge related to travel as the foreign country provides more food and recreational options to serve citizens hailing from a foreign country. This has personally impacted me in my travel goals, knowing that there will always be food products, clothing and retail products, and entertainment options when travelling abroad. All of this is the product of globalization, including, as well, new sales, marketing and advertising objectives. The cultural knowledge gained from globalization also has a personal impact especially in the educational environment. It is common for schools to have many diverse leaders and specialists working together to achieve common goals. In order for this to be effective, human resources leaders need to design diversity initiatives and establish group harmony from the leadership perspective. Changing student and educator profiles in the academic environment also changes the nature by which people of vastly different cultures work together. For example, a person from a collectivist culture that values group goals and teamwork might not work especially well with a person from a highly individualistic culture. There can be many cultural conflicts in the process. However, with the new focus on human resources and empowerment through decentralization, even the university becomes more sustainable for cultural development and team development. People from radically different cultures might not have worked efficiently together without ongoing conflict that impedes educational goal attainment. Today, however, with the presence of more foreign learners in school, it has become commonplace to have a more stable social network in the academic environment to improve efficiency and learning. I have also personally been affected by globalization domestically with a new variety of products available on store shelves in areas of food and retail. Many products available to enhance personal lifestyle are foreign-made and consist of competitive innovative products that continually improve, such as the U.S. produced iPad from Apple, Inc. This has radically changed socialization, communication and lifestyle by having a new outlet to distribute these products to my home country. New availability of luxury products developed by partnerships from vastly different cultures also enhances my personal lifestyle and the choices of product to improve education, knowledge and personal comfort. Globalization, in my personal opinion, has been highly beneficial to my own lifestyle and even improves job opportunities as it is no longer necessary to be geographically limited when looking for new employment. The Internet and mass communication technologies, often produced from global partnerships, improves the speed by which a person can look for work outside of their home country. Social media allows for distanced communication for job interviews that had not been present before today’s concentrated globalization outcomes. Globalization has many more advantages than disadvantages in this area, and many other areas, that have greatly improved my life. References Blecker, R. (2002). [internet] The effects of the over-valued dollar on U.S. manufacturing and the steel industry, American University. [accessed 3.7.2011 at http://www.1.american.edu/cas/econ/faculty/blecker/dollarpaper.pdf] Blodgett, J., Bakir, A. & Rose, G. (2008). A test of the validity of Hofstede’s cultural framework, The Journal of Consumer Marketing. 25(6), p.339. Carpenter, M., Bauer, T. & Erdogan, B. (2010). [internet] Principles of management. [accessed 3.7.2011 at http://www.flatworldknowledge.com/pub/1.0/principles-management/29065] Clarke, T., Fields, M., Jutte, L., Morton, J., Press, J. & Ridenour, E. (2006). No more protection, Wall Street Journal. December 14, p.A20. Coucke, K. & Sleuwaegen, L. (2008). 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The social media revolution, International Journal of Market Research, Henley-on-Thames. 51(4), p.559. Unesco.org. (2011). [internet] Globalisation, United Nations Educational, Scientific and Cultural Organization. [accessed 3.8.2011 at http://www.unesco.org/most/globalisation/Introduction.htm] Read More