Modern Understanding of Globalization - Essay Example

Running Head: Globalization Globalization Customer’s Name: Institution: Customer’s Course Tutor’s Name 21st March, 2013. Introduction Globalization is commonly seen as being among the strongest forces that are changing the modern world. This essay sets out to discuss what is meant by the term globalization, the essay will also discuss the costs and benefits of globalization, this section will closely be followed by a discussion of the challenges that globalization has posed to the national governments. The other section will deal with the impacts of globalization on an organization that I am familiar with and in this case, I will use Apple Inc. Lastly there will be a conclusion of the discussion. Globalization Globalization does not seem to be a concept that can be encompassed or defined within a certain time frame, nor can it be a process that can clearly be defined by an end or a beginning. In addition, its definition cannot be expounded upon the applicability and certainty of all individuals and situations. Globalization is said to involve the economic integration, cultural stability, transfer of various policies cross international boundaries, an international process, a revolution, a concept as well as the development of universal market that is free from social and political control (Fox, 2001). In my own opinion, and also based on the knowledge of globalization, globalization can be termed as the process that entails the course, causes as well as the consequences of the trans-cultural and transnational integration of non human activities and the human activities. Another common definition that can be applied is the definition by Giddens, where he defines globalization as the intensification of international social relations which tend to link distant localities in a manner in which various local happenings are greatly influenced by various events that occur many miles away and vise versa. Benefits of globalization Globalization seems to be a very controversial and complex issue. It is said to have some benefits as well as some costs which are associated with it. One of the major benefits of globalization is that, it has enabled free trade. Free trade is commonly seen as a way in which countries are able to exchange their resources and goods. By these some countries are able to specialize in producing certain goods in areas where they have certain comparative advantage (Bhagwati, 2004). By doing so, these countries are able to produce the goods at lower opportunity costs. When this happens there seems to be several gains that are associated with the trade for example there seems to be bigger export opportunities for the a great number of the domestic manufacturers. Another advantage is closely linked to the low prices that are offered to the consumers and lastly the consumers have a greater choice of commodities when they are making any kind of purchases. Another benefit of globalization is free movement of labor. It has been noted that with the concept of globalization there have been free movement of people in search for labor in other countries. This tends to have some benefits to both the recipient countries and also to the workers. In one country experiences high rates of unemployment citizens in these countries can move to other countries in search for better employment opportunities (Fox, 2001). The movement of people in search for job opportunities in other countries assists a lot in reducing the geographical inequalities in various locations. A good example of this is in the EU, where a great number of people in Eastern Europe have migrated to the west. Also through the movement, countries which tend to experience certain labor shortages in some professions tend to recruit people from other countries so as to fill the vacant positions in their organizations (Fox, 2001). Also, through globalization there has been a noteworthy increase in the economies of scale. Production in most markets is increasingly being specialized. Through the concept of globalization goods are usually produced in various parts of the globe (Wolf, 2002). The greater specialization makes certain that the products are offered at lower prices and also at lower average costs to the consumers. Globalization has also led to growing competition and mainly on a global basis. While a great number of people fear globalization, there also seem to be various beneficial effects that are associated with competition that can in a way increase efficiency and production. Widening of markets and competition can eventually lead to division of labor and specialization as it has been asserted by Adam Smith and other noteworthy classical economists who have written about the advantages of market systems (Fox, 2001). The division of labor and specialization and their implication for an increase in production, currently exists not only in a nation but also on a global basis. The last benefit that is closely associated with globalization is that there is an increased level of investment. Globalization has in a way increase the level of investment in various countries. Globalization has enabled countries to attract both short and long term investments. These investments tend to play a leading and major role when it comes to the improvement of the economies in most developing countries. Costs of globalization Irrespective of the fact that globalization tends to have a lot of benefits, it still have some costs that are closely associated to it. The costs of globalization could eventually lead to various forms of conflicts at the national, regional and international level. One of the major costs is linked to the issue of who actually gains from the perceived benefits of globalization (Bhagwati, 2004). There are usually substantial equity issues when it comes to the distribution of the gains that are achieved through globalization among various nations, organization, regions as well as among various individuals. In reality most of the benefits have been going to the rich individuals and nations and thus a creation of greater levels of inequalities which have eventually lead to potential conflicts both internationally and nationally. Some individual has also suggested that there should be a convergence of incomes on a global basis based on the fact that it has been observed that most poor countries seems to be growing at faster rates when compared to the rich countries. The other cost of globalization is based on the fact that there seems to be potential global as well as regional instabilities that stem from the interdependencies of the economies on a global basis. It is evident that a small fluctuation in the local economy could have impacts on a regional or on a global basis. This ought not to be viewed as a just a theoretical possibility, for example the financial crisis and the exchange in Asia, which were believed to have started in Thailand had eventually spread to various other parts of the continent for example in other southeast Asian economies. This kind of linkages and the potential instabilities depict that there is a great potential in mutual vulnerability of the interconnected economies. Another cost of globalization is that the control of the various national economies is viewed by some individuals as being possible by shifting from the sovereign governments to various other entities that comprise of the most powerful nations, international and global firms. The ultimate result of this is that some tend to perceive the national sovereignty as being destabilized by the various forces of globalization. Therefore, globalization could eventually lead to a common believe among various national leaders as well as among the individuals in the countries that there are at the helpless grip of the various global forces and they can at times develop an attitude of estrangement. The result of this can be extreme xenophobia and nationalism as well as calls for protectionism. There will also be an ultimate growth in extremist or in the fundamentalist political movements which may eventually lead to various potential conflicts. It is also alleged that unemployment is another cost of globalization. Due to globalization, there have been high unemployment rates in the high wage manufacturing economies. The comparatively low rates of employment in the high wage nations as well their high rates in various low wage nations tend to disprove the above allegation. Technological trends and the national policy are seen as being the adequate determinants of employment rates as compared to the global factors. A closely related myth is the assumption that globalization seems to be threatening the social welfare provisions in a number of countries, but other crucial factors are factors such as demographic trends and the fiscal policy trends. In both of the cases above, globalization seems to be a very convenient scapegoat for failures that are currently being experienced in the national policies. It also seems adequate to appreciate the economic aspects of globalization are also composed of its outcomes. There are a number of non - economic impacts of globalization such as the potential costs and greater risks and even the possibility of catastrophes. An example of that is security; negative effects of globalization can eventually lead to conflicts between nations. In fact, the notion that globalization leads to the integration of various markets can eventually makes conflicts to escalate even beyond certain regions and thus raise the stakes of the conflict, a good example of this is the conventional weapons and the weapons are used for mass destruction. The other non - economic aspect of globalization is that it can eventually lead to catastrophic outcomes is related to the political crisis that can escalate from a local scale to a large scale challenge for all. The other area is more related to the health and the environment, in this case the interconnectedness that has been brought about by globalization can eventually lead to various catastrophic outcomes for example pandemics and global warming. Challenges posed by globalization for national government The progress of globalization cannot be seen as a smooth process. The various changes that have been as a result of it or the change that globalization are perceived to have caused has in a number of ways stimulated a political backlash. Two of the major challenges of globalization to the national government are related to the commonly undermined environmental standards and the labor and thus there has been an increase in the gap between the rich and the poor in the society. Globalization has in a way created certain specific policy challenges for all the governments in the world (Bhagwati, 2004). A good example of this is the international financial system that is currently applied in the world. Back in the early 1990’s there was a wave of financial crisis that caused the awakened the policy makers in the world to think thoroughly about how they are supposed to respond to the new vulnerabilities that exists in the world economy. Another major challenge that is facing the national governments when it comes to the aspect of globalization is that it proves hard for all of them to ensure that the benefits that are associated with globalization are distributed fairly to all countries irrespective of their locations. This seems not to be an aspect that can happen involuntarily. Thus in relation to this, government’s face the challenge of designing public policies that are aimed at maximizing the benefits of globalization and at the same time minimize the risks that are associated with marginalization and destabilization. Another challenge of globalization to the global economies is that the national governments tend to deal with the fear that is instilled in the citizens of their countries since most people believe that globalization can eventually lead to instability and this seems to be the case in most developing countries (Sheila, 2004). National governments are also faced with a challenge of addressing the fear that is evident among the industrial world where it is commonly believed that, with the increased level of global competition there will be an inevitability to race to the bottom in terms of the wages, employment practices, environment and labor rights. Impacts of globalization on Apple Due to globalization, Apple had about three hundred retail stores in various countries and in addition they were still operating the online stores that currently offer Apple’s products to all customers around the globe. Based on Michael Porter, 1998 an organization is said to use two common types of business strategies in the aim of leveraging its business by the utilization of the organization's strengths and at the same time combining them with all the available positions in the aim of marketing its products (Castells, 2001). This two business strategies are the differentiation strategy and the cost leadership strategy. Currently Apple is said to be working on its differentiation strategy in that they are putting unique elements in the development and design of their products (Sheila, 2004). Furthermore, Apple strategies are also aimed at expanding its distribution channels so as to improve its global reach and this can be achieved by offering high quality services and products which can also be coupled with certain sales services for their customers. The other impact of globalization is on Apple’s markets and distribution. The customer segments of Apple are actually divided into various different categories. Apple caters for the needs of the medium and small businesses, large corporations, education sector and any other related markets (Hoover, 2011). In the aim of meeting the needs of their customers the company is currently utilizing the indirect and direct distribution challenges which also include the online sales services, direct sales, retail stores and also a number of third party resellers. The other impact of globalization is based on its completion level in the market. Due to globalization, the company faces a lot of competition from both local and international firms. Hoover 2011, asserts that, Apple’s top three competitors are IBM, Media Net Digital, Fujitsu technology. The market needs that Apple caters for seems to be highly competitive based on the fact that there is always advancement in technology and thus there is a need to keep up with it. The competitors of the company seem to be applying the cost leadership styles by either reducing the prices of their commodities or at times, they opt to maintain low profit margins in the aim of maintaining the market share that they already have (Castells, 2001). Apple has also outsourced some of its plants and this has been made easier by globalization. One of such areas where it has integrated design and manufacturing facilities is in Singapore and also in California. The global connectedness has enabled the company to launch some of its products in markets such as Europe, America and Asia (Castells, 2001). Conclusion Based on the above discussion, it is evident that there exist a number of definitions of globalization but the most commonly accepted one is the one that defines globalization as intensification of international social relations which tend to link distant localities in a manner in which various local happenings are greatly influenced by various events that occur many miles away and vise versa. Though globalization tends to have a number of benefits it is also worthy to note that it still have a number of costs that are associated to it. Globalization also tend to pose a number of challenges to the national governments and this challenges needs to be solved so as to ensure that there is no occurrence of nay form of conflict. Globalization has also had a lot of impacts on organization and in this case Apple has been affected and the core areas of the impact of globalization of Apple have been in relation to its market and distribution, competition and the business strategy of the Apple. References Bhagwati, J. (2004). In defense of globalization. Oxford, New York: Oxford University Press. Castells, M. (2001) 'Information technology and global capitalism' in W. Hutton and A. Giddens. (Eds.) On The Edge. Living with global capitalism, London: Vintage.  Fox, J. (2001) Chomsky and Globalization, London: Icon Books. Hoovers (2011). Apple INC., competitive landscape, retrieved on March 21, 2013 from http://ebookbrowse.com/hoovers-competitive-landscape-report-sample-apple-pdf-d417491465 Porter, M (1998). Competitive Advantage: creating and sustaining superior Performance. New York: Free press. Sheila, L (2004). Globalization and Belonging: The politics of Identity in a changing world. Rowman & Littlefield: Maryland. Wolf, A. (2002) Does Education Matter. Myths about education and economic growth, London: Penguin Read More