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Globalization and Business Organizations

By kchrisop Nov 15, 2013 1393 Words
Globalization
“Globalization is the process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, culture, political systems and economic development and prosperity” (“Globalization 101”, 213). Fundamental changes are occurring around the economic and business world. Countries are no longer isolated from one another, and distance, language, time zones, culture, regulations and different business systems are no longer as difficult to overcome as they were in the past. There are two essential types of globalization; globalization of markets and of industries. Globalization of markets is the integration of separate markets into one vast marketplace. This can can be demonstrated by increasing homogenization of consumer tastes and product preferences. Popular global brands such as McDonald’s, Burger King, Calvin Klein, Coca-Cola and Pepsi are just a few examples of this. By these brands offering standardized products worldwide, they are helping to create a global market.

Even though the globalization of products is very popular, national markets will never disappear because there are still significant differences in consumer tastes and preferences. Product features and marketing are often customized for local conditions.

The globalization of production is the inclination amid companies to outsource goods and services form different locations around the world in order to take the gain of national differences in the price and superiority of production in labor, energy, land and capital. Companies who take this route look to lower their overall cost, improve the quality, improve the functionality and compete more effectively in their market. Opportunities Associated with Globalization

Globalization has a large number of positive features when it comes to improving and developing a country’s GDP, world market and employment rate. Freeing up regulations that prevent globalization allows money to move much more freely. With money moving more freely, investors from around the globe are much more interested in investing their money into the growing economy. It also allows for the expanse of operations and increase in business for corporations in areas this is taking place, which will provide additional goods and services in the area. It will also bring an increase of available jobs in the surrounding area.

Education levels tend to increase due to the demand of globalization. As technology makes the world a smaller place, it is easier for people to be much more aware of what is happening in regards to world concerns. Due to this governments and academic institutions have started collaborating in order to have better educated residents.

Technology is a main reason it is easier for people to access information. Internet and telephones make it so people on all levels of society and around the world are becoming better informed. Companies, governments and agencies can use technology to convey information across a much larger scale. Making the world smaller through technology and globalization also promotes peace and cooperation. Societies have become much more aware of one another and rely on each other for the input and output of information. The likelihood of warfare can often be reduced due to the increased interdependence between societies. The collaboration can also create friendly competition and international businesses fight to create the best products. Challenges of Globalization

Although globalization helps increase wealth in developed countries, it can also increase the inequality between the world’s wealthiest countries and the poorest. According to Justin Schamotta (2013) “the UN delegate for Indonesia said that globalization had exacerbated the marginalization of developing countries. The Cuban delegate pointed out that just 20% of the world’s population consumes 80% of global production. The role of poorer countries is to provide cheap raw materials and labor force for more developed countries” (para. 2).

The homogenizing of products through marketing and globalization has also had an adverse effect by giving different cultures the idea that the products from the dominant countries of North America and Europe are accepted as the norm. Although it’s good for businesses, it is essentially forcing individualistic world views on others.

Furthermore, there is no global government to oversee the operations of the global economy. Several organizations exist, but do not include all of the world’s countries and so are not allowed to enforce the international laws. The lack of laws allows companies in foreign countries to operate in a way that would be illegal in their own. “An example would be relocating industrial processing plants to countries that have not established strict antipollution legislation” (Schamotta, 2013). Domestic Organization

A domestic business organization is one that only identifies itself with a specific country or culture. It is an organization that is founded in a country, and then stays in that country. An example of a domestic business would be Mac & Jack’s Brewing Company, which was founded as a home brewery in the early 1990’s by Mac Rankin and Jack Schropp, then moved into its own shop in Redmond, WA in 2001 (Wikipedia, 2013) It is still currently just a Washington based company.

International Organization
And international business is an organization which has business interests in other counties, and partners in other countries who work together for the same foundation, and it can be government, non-government, profit or non-profit. An example of an international organization is Coco-Cola Company or Toyota. Multinational Organization

Multinational corporations are also international. Multinational corporations are registered in more than one country, and also sell and produce goods in various countries. Multinational organizations also focus on adapting their products and services to each individual market, so it can vary per country. An example of a multinational organization is McDonalds. Regional Organization

Regional organizations are similar to an international organization because they have international memberships and cover geopolitical units that made up a single national state. Their memberships are made up of close boundaries and take form in surrounding regions to an area. They are established for political and economic reasons. An example of a regional organization would be the European Union, which has 28 member states which are primarily in Europe. Global Organization

Global organizations are similar to multinational organizations, but tend to have a more centralized approach. Global organizations will tend to have a global headquarters and they promote a singular product or service that doesn’t change depending on the country it’s sold in. These organizations don’t adjust their products or integrate them, but sell them as they are. Apple is a good example of a global organization because they sell the same product all over the world and they don’t adjust it depending on the country they are selling it in. They have set products that can be purchased in many different countries. Trends

In simple terms, outsourcing can be considered sub-contracting. In terms of globalization, many companies outsource their employment for various reasons, but mostly to reduce cost and overall expenses which is easier to find overseas, but can include both foreign and domestic contracting. The overall implications of outsourcing is to be positive, since in theory it is able to reduce costs and save money but that is not always seen by the customer.

Global branding means to create a brand name of a product that has worldwide recognition, which will create an advantage in terms of packaging and recognition. Having a global brand is not necessarily needed for a company which is comfortable with being domestic, but is extremely important for any type of organization that stretches to other countries. Conclusion

Globalization is the process of taking advantage of different countries by linking the economies of the world. It has both positive and negative impacts, but there are too many positive and negative aspects to determine it is in one category or the other. Global communication technology has played a role in creating global customer needs and increasing awareness around the world while also playing a major role in the economic and political changes by connecting the world. Since different countries have different policies in regards to globalization, there needs to be laws which should not disturb the social and environment aspects of the countries, and encompass all countries for fair trading and agreements.

References
Globalization 101. (2013). Retrieved from http://www.globalization101.org/what-is-
globalization
Schamotta, J. (2013). Negative Consequences of Globalization. Retrieved from http://www.ehow.com/info_8595856_negative-consequences-globalization.html Wikipedia. (2013). Retrieved from
http://en.wikipedia.org/wiki/Mac_%26_Jack%27s_Brewing_Company

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