What Is Globalisation Today - Essay Example

Globalisation Today Table of Contents Summary 3 Issues 3 Background 3 Emerging concept of globalization 4 Globalisation today 4 Main trends in globalisation which have influenced international marketing 5 Globalization today 5 Conclusion and Recommendations 7 Reference List 8 Additional Reading 10 Subject: Globalisation today: What it is and what it means for international marketing Summary Globalisation has brought many changes in the international business environment and has also influenced the international marketing strategies to a great extent. There are many factors that are related to globalization, which has the capability to influence international business. The factors include increased competition, choice of location, increased opportunity and many more. However, few are discussed in the note so as to highlight the important aspects of business. Issues A number of studies have been reviewed, which encompass the concept of globalization in modern business environment. Nevertheless, there are limited concentration on impact of globalization on international marketing and business. It is crucial to highlight the impact as the companies around the world have to consider the effect of globalization as it is a driver for change among the population. Background For the past few decades, the companies around the world have been affected by the changing business environment; it is also influenced by the strategies and practices that are undertaken at the international marketing level (Archer, 2004). International marketing generally refers to the rules or principles that are used by the companies in more than one country either overseas or beyond the national border. It is basically based on the extension of the marketing strategy that is used at national level. It not only pays focus on targeting a market or decision making but it also concentrates on improving the relation with the customers overseas. Thus, international marketing takes into account the global economy, where a company can increase its business operation (Vrontis, Thrassou and Lamprianou, 2009). The global economy has experienced development in technologies, which have also altered the consumer consumption pattern and overall performance of the market. Hence, the companies have to determine the customers in the first place and then identify their taste and preference (Brunet and Garrett, 2005). In the competitive market, the companies have focused on satisfying the needs of the customers and follow the present trend in the market. In this regard, globalization has played a significant role in many countries and encouraged it to become the independent developer in global market. It is observed that globalization has created dramatic change in business environment globally. The threats and opportunities related to globalization have forced the companies around the world to devise strategies accordingly (Cable, 1995; Poggi, 1978). The companies respond to these trends for improving their performances and retain the customer base without losing them to its competitors. Globalization is defined as closer integration of countries around world and its people. Closer integration helps in connecting the people around the world with each other on a common ground. It refers either to a company or an economy. Globalization results in reduction in cost of communication and transport; globalization also helps in breaking the artificial barriers that are developed against the flow of services, goods, capital, people and knowledge. It is actually a complex range of social, cultural, political and technological changes that can be observed as an increasing interdependence, interaction, integration between the companies and people (Held, 1991; Modelski, 1972; Hirst and Thompson, 1996). International business is referred to the wide range of business activities that can be undertaken across the national border. With the increasing globalization, it is observed that international business has gained prominence and drawn attention of government officials, business executives and academics. It is evident that there are both opportunities and challenges in the international business. Hence, the managers of the companies have to take care of this phenomenon before devising any strategy internationally and manage the international operations. Emerging concept of globalization Globalisation, in the contemporary scenario has transformed into a rapidly spreading phenomena in context of the corporate sector. However, in the old times it basically influenced the international business sector and the multinational firms which are depicted by various scholars such as Held (1991) and Modelski (1972). Presently, according to Castellani and Zanfei (2006), the impact of globalisation on the MNEs can be better reflected by observing the fundamental characteristics of the business houses. The large scale operations and functional network of the business houses urge them to expand their market place and redesign their business processes according to the modifications changes occurring in the firms. As the firms are shifting from their primary markets to unstructured market places, the business factors are being influenced by political and economical elements such as government policies, taxation and changes in currency units. In the words of Moffett, Stonehill and Eiteman (2011) the change in market place has the potential to enhance the consumer base of a company but also in a manner increases operational expenses of a particular business. Noorbakhsh, Paloni and Youssef (2001) had argued that the operational expenses of a business are based on the changes in the supply chain or the labour market management rather than globalisation. Globalisation today Focusing on another aspect of globalisation, Chung (2010) had mentioned that business firms operating in multiple market places are facing a stern challenge from cultural diversity in their employee base. Supporting this statement, P. Gabrielsson, M. Gabrielsson and H. Gabrielsson (2008) had considered managing cultural differences in the employee base also effects the core values of the firms. For instance, American giant Coca-Cola has a transparent vision which clearly reflects their objective of earning large profit for supporting the responsibilities of the company. This vision have also been criticised by researchers such as P., Gabrielsson, M. Gabrielsson, and Seppäl (2012) and is termed as capitalism. Relating to this, it can be assumed that operations of Coca-Cola in emerging markets such as India may not accept the operational style considering their emotional attachments to culture and psychological values. A stronger example was highlighted in the study of Viswanathan and Dickson (2007) in context of the energy sector where the exploration of natural resources and hazardous events have reduced the brand equity of big firms such as BP and Exxon on a global scale (Jiang and Wei, 2012). Main trends in globalisation which have influenced international marketing Firstly, low wages of the workers and the high profits of the companies have strengthened the situation in labour market globally. This has not only affected the international business but has huge impact on the strategies that are devised by the companies at the initial stages. The labour unions are against the profit of the companies in the Western countries. Secondly, with the increase in migrants in poor countries, the companies obtain the labour force at a cheaper rate; however these labour lack in appropriate skills, which are necessary for doing the work efficiently (Hirst and Thompson, 1996). Thirdly, there is low interest rate and inflation despite the increasing growth in economy; this affects the international business to a great extent. The managers of the companies should take into consideration all these factors in order to operate in the world market and cater the needs of the customers (Modelski, 1972; Rhodes, 1996). Globalization has accelerated the growth of the world economy in the past 20 years. It is noticed that during a particular period of time, an economy exports around 20% (in 1994) of the GDP and this figure had kept on increasing over the years (Weiss, 1997). However, it decreased during the financial crisis period and this shattered the global trade market. The companies around the world can earn profit by increasing the investment in foreign countries; as it measures the capability of developing economies. Foreign Direct Investment (FDI) is a strategy adopted by an organisation to acquire productive assets in the foreign countries such as lands, factories and mines. It is worth mentioning that the largest flow of foreign investment usually occurs between industrialized countries. Nevertheless, the inflow and outflow have increased in the recent years (Weiss, 2000; Garten, 1996). It is worth mentioning that the companies are exposed to the global forces such as supply, market competition and demand, which have relevance to global issues. Apart from the issues, political considerations and demographic changes are protected by the environment. The interest of the stakeholders is affected because of these factors. Globalization today In the contemporary world, the following factors of globalisation are responsible for affecting international marketing. Rising competition: During the past few decades, globalization has enforced increased competition in the global market. The competition is related to services, products, target markets, adaptation of technologies, quick production, and response and many more. If the company aims at decreasing its cost of production and sells products or service at a lower price, it can increase the market share. Hence, the company around the world has to deal with competition very seriously and they focus on the quality and standards to a great extent. Their main goal is to improve their international marketing strategies for attracting new customers and retain existing ones (Katsikeas, Samiee and Theodosiou, 2006). Increase in number of opportunities: With the increase in number of resources and industries in the global economy, opportunities for the people have grown exceptionally. The number of jobs has increased and the employees are exposed to lucrative benefits for going abroad; hence it enhances the rate of immigration and thus a nation is exposed to growth both socially and economically. This has influenced the companies to give emphasis on international marketing (Okazaki, Taylor and Zou, 2006). Fulfilling expectation of the consumers: The consumers have become conscious about the use of products and services, which have encouraged them to utilize their hard earned money in a better manner. Hence, the companies should focus on devising appropriate international marketing strategies and meet the high expectations of the customers in order to sustain in the long run (Okazaki, Taylor and Zou, 2006). Choosing right location: The companies have choice to prefer location where they are planning to expand or set up business. They have the option of setting up their business in an efficient and cheaper location in order to save the cost of buying an expensive land. Hence, there is an increase in movement of job and business at a continuous basis, as the companies keeps on penetrating different areas to earn profit and increase the customer base. This movement have forced the government to provide low cost and attractive locations (Okazaki, Taylor and Zou, 2006). Transfers of valuable information: Information is regarded as the most valuable and expensive production factor in the international marketing. As it can be easily exchanged and transferred within a country. When a country adapts the information that is available internationally, then it is capable of adapting the changes that are figured out through the information. The issue is quite similar to technological transfer, which can be identified at a global level. The rapid change in the market takes knowledge and efficiency into consideration in order to deal with the information (Vrontis, Thrassou and Lamprianou, 2009). Increasing number of acquisition and merger: Globalization has allowed several businesses to access markets at international levels through mergers and acquisitions. Hence, international marketing has become quite cost-effective and profitable for the company as it brings success to any company (Okazaki, Taylor and Zou, 2006). Multi-cultural and multi-national management: These two factors are crucial for the management of any company. A multinational company has many complexities as compared to national companies as there are many variables. These variables are often difficult to manage at a time. Likewise, multi-cultural management also leads to conflict in a company, where there are different nationalities, culture and religions (Griffith and Yalcinkaya, 2010). The employees in different parts of the world do not respond to any change in a same manner, as their organisational culture is separate. Employees in different countries respond to motivation and incentives differently. It is quite impossible to find managers who are affected by different factors around the globe. Hence, any international marketing should consider the cultural part of the organization so as to avoid conflict. International marketing becomes very difficult if the companies are not able to rectify the cultural barriers in the international grounds (Okazaki, Taylor and Zou, 2006). Conclusion and Recommendations Considering the influence of globalisation on an operational level, the aspect of cultural diversity is also supported by the infrastructural development of the overseas market. The development of the transpiration, communication, and infrastructural facilities of a country is closely related with the strategic decisions and expansion plans of the business firms. Therefore, the economic condition of the country can be considered as highly responsible for the growth and development of the firms. The changes in one market also affect the subsequent markets and nations. For example, the recession of 2007-08 began in the US with micro credit financing and had spread to the European market and hampered the national economy of countries such as UK and Germany. Though many countries are close to the changes that are brought by globalization, but many improvements are required in order to experience success in the near future. The internal marketing strategies should be improved in order to cater the needs of the customers at the global level and also concentrate on the cultural diversity in the work place. Hence, it is recommended that the companies should focus on cross cultural management. Reference List Archer, J., 2004. Globalization and the alleged demise of the sovereign state. Journal of South Pacific Law, 8(2), pp. 1-4. Brunet, N. and Garrett, G., 2005. The globalization Rorschach test: International economic integration, inequality and role of government. Annual Review of Political Science, 8, pp. 1-36. Cable, V., 1995. Diminished Nation State: A Study in the Loss of Economic Power. Daedalus, 124 (2), pp. 23-53. Castellani, D. and Zanfei, A. 2006. Multinational Firms, Innovation and Productivity, Edward Elgar, Cheltenham. Chung, H.F.L., 2010. International marketing decision governance, standardisation, and performance: a framework in the crossmarket scenario. European Journal of Marketing, 44(11/12) pp. 1642-66. Gabrielsson, P., Gabrielsson, M. and Gabrielsson, H., 2008. International advertising campaigns infast-moving consumer goods companies originating from a SMOPEC country. International Business Review, 17(6), pp. 714-28. Gabrielsson, P., Gabrielsson, M. and Seppäl, T., 2012. Marketing Strategies for Foreign Expansion of Companies Originating in Small and Open Economies: The Consequences of Strategic Fit and Performance. Journal Of International Marketing, 20(2), pp. 25-48. Garten, J., 1996. On The big emerging markets. Columbia Journal of World Business, 31(2), pp. 6-31. Griffith, D.A. and Yalcinkaya, G., 2010. Resource-advantage theory: a foundation for new insights into global advertising research. International Journal of Advertising, 29(1), pp. 15-36. Held, D., 1991. Democracy, the Nation-State and the Global System. Economy and Society, 20 (2), pp. 138-72. Hirst, P. and Thompson, G., 1996. Globalization in Question. Cambridge: Polity Press Jiang, J. and Wei, R., 2012. Influences of culture and market convergence on the international advertising strategies of multinational corporations in North America, Europe and Asia. International Marketing Review, 29,(6), pp. 597-622. Katsikeas, C.S., Samiee, S. and Theodosiou, M., 2006. Strategy fit and performance consequences of international marketing standardization. Strategic Management Journal, 27(2), pp. 867-90. Modelski, G., 1972. Principles of world politics. New York: Free Press. Moffett, H. M., Stonehill, I. A. and Eiteman, K. D. 2011. Fundamentals of Multinational Finance. 4th ed. Boston; London: Pearson. Noorbakhsh, F., Paloni, A. and Youssef, A., 2001. Human capital and FDI inflows to developing countries: New empirical evidence. World development, 29(9), pp. 1593-1610. Okazaki, S., Taylor, C.R. and Zou, S., 2006. Advertising standardizations positive impact on the bottom line: a model of when and how standardization improves financial and strategic performance. Journal of Advertising, 35 (3), pp. 17-33. Poggi, G., 1978. The development of the modern state. London: Hutchinson. Rhodes, M., 1996. Globalization and West European Welfare States: A Critical Review of Recent Debates. Journal of European Social Policy, 6 (4), pp. 305-327. Viswanathan, N. K. and Dickson, P. R., 2007. The fundamentals of standardizing global marketing strategy. International Marketing Review, 24(1), pp. 46-63. Vrontis, D., Thrassou, A. and Lamprianou, L., 2009. International marketing adaption versusstandardization of multinational companies. International Marketing Review, 26(4/5), pp.477-500. Weiss, L., 1997. Globalization and the Myth of the Powerless State. New Left Review, 225, pp. 3-27. Weiss, L., 2000. Globalization and state power. Development and Society, 29 (1), pp. 1-15. Additional Reading Akaka, M.A. and Alden, D.L. (2010). Global brand positioning and perceptions: international advertising and global consumer culture. International Journal of Advertising, 29(12), pp.37-56. The authors here have discussed about the concept of globalization through the eyes of marketing. The idea of global branding has been very well portrayed by the authors. One of the most interesting idea presented is how globalization has forced companies to adopt standardized advertisement and branding. Alimien, M. and Kuvykait, R., 2008. Standardization/Adaptation of Marketing Solutions in Companies Operating in Foreign Markets: An Integrated Approach. Engineering Economics, 56 (1), pp. 37-47. The notion of standardization and adaptation has very well been discussed by the authors. The advent of globalization has brought about these two concepts and these are now heavily practised by the companies across the globe. Read More