Is Globalization an Opportunity or a Threat to International Business - Essay Example

? Globalization: An Opportunity or a Threat to International Business? Details: al Affiliation: Date of Submission Globalization: An Opportunity or a Threat to International Business? Introduction A pervasive phenomenon whose effects can be felt right at the comfort of every individual the world over yet with very limited unanimity in meaning, globalization has had a history that can precisely be termed as controversial. From the limited technology used by trade merchants to access markets across seas and oceans to the Islamic crusades and the missionary activities that preceded colonialism and the subsequent entrenchment of the imperialistic ideals on people of distant lands [hereafter as the third world], scholars and/or readers seem to be in agreement that all bear the marks of globalization. A fundamental dynamic of our epoch driving the change processes of the 21st century, globalization is promoted and resisted in equal measure, with its management touted as the most satisfying and morally upright compromise (McGrew, 2000, p. ix). From the perspective of the radical right reaching other continents with mutually beneficial effects to the more adaptive strategies that has found favor in the mainstream politics of the Third World, the writing, which may seem obscure, is on the wall; the weight of the concept is felt in both the extremes. Indeed, as the confused ideals of globalization become more pronounced with opportunities that more than break into the hitherto insulated environments for certain ventures, the multifold risks in the enlarged business environment are increasingly taking ventures even closer to complete elimination. Put into perspective, it is most revealing that even in the face of fierce criticisms, notwithstanding how both sides of the divide conceives or rationalizes the concept, it is firmly accepted that globalization is but a reality on course (Held, et al, 1999). Though not accurately defined due to the controversy that is seemingly fastening on both sides, the extent to which the concept discussed herein is an opportunity or a threat to international business can be gleaned right from the very varied definitions provided by academics and authorities writing from different disciplinary backgrounds. Held, et al, (2000) define globalization as “a set of transformative processes reorienting the spatial organization of social relations and transactions- in terms of intensity, velocity and impact- to generate transcontinental flows [networks of activity] that by and large result in the creation and the subsequent exercise of power in conformance with the new transactional model [emphasis added].” Petras and Veltmeyer (2001, p.11), echoes the same in their definition that more than captures the widening scope of the international flows that combines not only the exchange of capital, but also of technology and information within a single integrated market; a representational shift that Teeple (2000, p. 9) notes has diffused capital accumulation from single production units to integrated venues situated in different parts of the world. Observably, global flows, as Ohmae (1995, p.15) points out, are without a doubt, the basic elements of globalization found in the different definitions that distinguishes our moment in history. It is clear that the new globalizing logic of the market and capital is at the epicenter of the different angles taken by the scholars already sampled. To be sure, globalization is viewed as a process that not only reconstitutes national economies, but one that restructures international engagements through building and/or the destruction of the existing relations in order to integrate the global economy into a single system. That is to say, its integrative aspect in effect involves homogenous interconnections across and within boundaries, with cooperation driving the interdependence among independent states/regions (Hurrell and Wood, 1995, pp.447-448). Noteworthy, the singularization of the global economy does not in any sense signify globalization as unidimensional process. In fact, literature is awash with evidence that clearly suggests the contrary, manifested in almost every aspect of human life (UNDP, 2001, p.12). As a complex social phenomenon, globalization interfaces with quite a lot of elements of social life, infiltrating other cultures with ambiguities and uncertainties through values considered incompatible (Nnoli, 2000, p.173). Scrutinized from varied perspectives, the multidimensional aspects of globalization raises fundamental questions that leverages thinking beyond the confines of economic sphere; highlighting the comprehensibility of arguments projected on both sides of the debate. Globalization as an Opportunity The conventional opinion in support of globalization as a positive process with regards to international business is a topic widely discussed with observable evidence on the ground. To begin with, it is undeniable that economic growth momentum registered by countries in the 21st century has been made possible due to the universalized shared believes about development. Through the liberalization forces that have done well in spreading the ideals of democracy, more countries have today adopted market economies as a new model of engagement with international community, thus opening doors of the hitherto insulated economies to international flows. As a result of liberalization policies pushed in part by the IMF and the World Bank, impediments to the expansion of trade within certain regions have been reduced to the bare minimum (Hirst, and Thompson, 2003). More importantly, the swift and smooth transfer of goods and services, flow of capital and technology, the direct foreign investment from the developed to the developing world, and the internationalization of production have more than increased the competitive prospects of countries, enabling the utilization of the raw materials to their near full production potential. Cox (1997, p.2) explains that globalization has markedly won the battle of faith in the efficiency of production, and that organizational discipline has been redefined to eliminate waste by leveraging individuals’ freedom through innovation. As an important aspect of competitive advantage, globalization has pushed innovation to the center of production dynamics. Through globalization, alliances have been elevated as useful avenues of not only gaining access to the skills and capabilities of partners, but also of strengthening organizational core competencies (Bleeke and Ernst, 1995). Indeed with the globalized competition, it is no longer possible to compete in the traditional sense of self-sufficiency, which, in a sense, is untenable as markets increasingly become highly volatile, rapidly rendering techniques and products obsolete almost as fast as they are invented. The cross fertilization of skills through the mobility and unbundled interactions between firms worldwide has opened up opportunities, particularly in the regional clusters of innovation such the Silicon Valleys, bringing to light new businesses capable of tapping the potential of unutilized and underutilized markets (Engel & del-Palacio, 2011). Indeed as such ventures reaches out to capitalize from the international opportunities, best practices are further disseminated to abroad, in many cases accompanied by resources, for new star-ups that are globally wired for the access of resources and modern technology from the innovation clusters situated in other regions in the world. Simply put, globalization provides some countries with opportunities for accelerated growth via specialized cost-cutting innovations that are in themselves defense mechanisms against deleterious market competitions. Brought out more forcefully courtesy of globalization is the aspect of specialization of countries/regions, which in effect, allows economies and/or such particular regions to channel energies in sectors where they are best suited. Such a focus in production of goods and services not only raises the prospects of countries in terms of the comparative advantage, but promotes market efficacy by engendering specialized knowledge of division of labor and administrative discipline resulting in efficient allocation of resources. As agents specialized in the production of specific goods and services, globalization has enabled access to support in a lot of areas that include but not limited to financial aid needed to facilitate exchange between countries (Osakwe and Osakwe, 2005). More specifically with regards to specialization, globalization has offered greater market opportunities for individual entrepreneurs and economies so to speak to sell the fruits of their labor as they tap in more capital flows, technology, and cheaper imports to enrich their production. Indeed as Hirst and Thompson (2000) writes, the internationalization of entrepreneurship dates back to the Middle Ages. Throughout history, therefore, globalization has provided technical developments that have more than simplified the conduct of international business by substantially clearing the barricades hitherto erected by national boundaries, laws and regulations. Most critical to the 2st century international business engagements is the softening of international relations historically riddled with gridlocks and wars that great increased the business risks beyond the sustainable levels. A golden age for business, commerce and trade, the 21st century has provided to the world a rare opportunity to sell virtually everything to as many people as possible. The world market has flattened, with big and small companies alike competing on an almost equal platform; for the most important thing for both depends on how well the product information reaches and gets the targeted consumer at the rear end (Bhagwati, 2004). With the Internet and state-of–the-art technologies of communication, technical assistance can be received in real time over wide geographical distances to salvage customer relations on the verge of collapse. Back-office insurance claims can be located and settled thousands of miles from company headquarters in real time in attempts to strengthen business ties. Globalization as a Threat Unimpressed with globalization as a positive phenomenon, critics are up in arms faulting globalization as an exploitative force that takes away even the very little in the custody of the poor. Indeed there is a great deal of evidence that millions have been pushed to the margins of the world’s economy as a result of the stronger competitive forces emanating from the developed world. That although a firm’s market opportunities have been enhanced to great levels, trade liberalization, technological developments, and the convergence of macroeconomic policies associated with globalization have created “hypercompetitive markets” much more susceptible to damaging risks (Hitt, Keats, and DeMarie, 1998, 24). Accordingly, the 21st century consumer is now well informed with a stream of information available at fingertips and at very low costs, and thus, are capable of switching allegiance within the shortest times possible in the event of a mistake. As a result of competition and the advances in technologies, global resources are increasingly becoming scarce, taking certain global businesses to near dead ends (Dess and Beard, 1984; Singh, House, and Tucker, 1986). Chimerine (1997) further notes that the phenomenon has watered down the pricing strategy of the firm as more firms reaches out to markets hitherto untouched, effectively lowering the rate of return to near unsustainable levels as we head into the future. From a different perspective, Falk argues that globalization, more so in the recent times, has been repackaged in such a way that promotes “the Washington Consensus”; ideals that only protects the interest of the west, while erecting caps to anything foreign (Falk, 1999, p.1). Indeed the evidence of failure of the liberalization policies under the stewardship of the west-controlled institutions in the third world is quite extensive, particularly in Africa. Several decades into an experiment that targeted mostly the weak states, GDP growth momentum has been comparatively in decline, sticky inflation has been the norm, and more than any other time in history, these weak nations have accumulated substantial deficits in the west controlled trade ties with them. Zambia is a classic example of such failed policies (Nellis, 2003). Described as a successful case study of the liberalization policies in the World Bank report of 1998, Zambia privatized roughly 90% of its state owned enterprises, but has since slumped into one crisis after another. There is no doubt that while the west continues to reap super normal profits from their investments in the lesser competitive third world, more destruction, particularly of the natural resources, has increased disproportionately, leaving them even much poorer. Soon there will nothing or very little left to sustain their sorry state of affairs. According to the UNDP Human Development Report (1999, p.3), “the top high-income countries net approximately 86% of world GDP... The world’s 200 richest people more than doubled their net worth in the four years to 1998, to more than $1 trillion. The assets of the top three billionaires are more than the combined GNP of all least developed countries and their 600 million people.” Much more evidence points to a destructive force that further marginalizes the already marginalized by taking away the very little capacity through which they can influence and fairly paly in the global market (Poku, 2000, p. 40; Ajulu, 2001, p.27). It is no wonder, therefore, that the multinational ventures such as the McDonald's, the Starbucks coffee shops among more such like businesses internationally have become favorite targets for vandalism, protests as well as outright terrorism.  Most certainly, challenges to the globalized business ventures have intensified in the 21st century, with terrorism, global diseases and computer viruses increasing in leaps and bounds. Such threats, which are random in their occurrences, have “evolved,” changing their nature and impact over time to affect businesses with harmful impacts. According to Enderwick (2006,p. 63-64), 73% of business ventures that fall prey to such disruptions lasting at least 10 days completely close shop or suffer prolonged damage that take quite a huge chunk of efforts, resources and time to rectify. It is worth mentioning that businesses have long been favored targets of terrorist attacks. In fact, more than 80 % of attacks on the U.S. interests alone have been ventured on businesses (Rice, and Caniato, 2003). Computer viruses and hacking on personal/private details impose major costs on business operations. Globalization is culpable in the major economic, political and social or cultural conflicts that are currently underway in most regions of the world; for it has been the source through which weak and fragile nations not only receive but gain knowledge of creating and using weapons of mass destruction (Nnoli, 2000). The flaws in international law with reference to the international flow of arms across the globe has let loose the mushrooming of private militias across the globe, making it difficult to do business with/in certain parts of the world (Nnoli, 2006, p.99). The result has been the rebel movements and illegitimate governments recognized by the developed world, both doing non-transparent, forced and exploitative business with the outside world as they increase their military stockpiles, to confront each other. Such is the explanation for the conflicts that have ravaged Africa since the 1970s (Manuel, 2004). From the Rwandan genocide to the mineral-tagged conflicts of Sierra Leone, DRC, and several other countries, globalization has been at the epicenter of the serious economic dislocation perpetuated mostly by the west for own interests (Garfinkee, et al, 2004). Conclusion It is evident from the foregoing that globalization is a two-faced phenomenon that builds opportunities by crashing everything deemed an obstacle on its path. Whether it holds the promise to a better future is doubtful, for account balances of the international trade gives a tilted perspective that largely favors the west. 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