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Globalization Case Study

Introduction

Globalization is a channel which creates interconnectivity among countries. The role of globalization varies as it depends on the nation’s ability to attain maximum potential from the available resources. Once the maximization of these resources has been attained, then it will eventually result in economic development of any country (Goldin & Reinert, 2012). Many countries are increasingly reaping the benefits of globalization as it brings with it technology transfer, opportunities of trading, benefits of a powerful currency, job opportunities, variety of products and services and a host of other benefits but then there are negative aspects also related to this whole globalization business.

For this particular assignment a case study has been provided in which views are shared from three level of participants which include an international business executive, an anti-international business activist and a government trade official. Each of these individuals shared their personal opinions regarding globalization which were critically analyzed in the below sections on the basis of questions mentioned at the end of the study. Globalization is a good phenomenon but it has created various unseen problems for the countries which cannot handle this phenomenon truly. From the bird’s eye view it may appear that there are end of territories due to globalization and there exists no problem while having transnational mobility but all these transformations are creating problems towards the sovereignty of that state. Below find a critical analysis on the responses which have been shared by a varied set of individuals having contrasting opinions about globalization.

Response to Question 1

Do you think globalization and MNE activity are creating problems for the world? What kinds of problems can you identify? What are the unintended consequences of international business?

Considering the debate among business executives, activists and trade officials the effect of globalization is clearly evident not only on human beings but also on culture, industry and environment. The first consequence of globalization which is apparent is concerned with ignorance of basic human rights of workers such as exploited labor conditions, low wages and loss of jobs at domestic level. If such conditions prevail in any country then the people of that country would get worsen and they will not be able to utilize the benefits of technology. The second identified problem created by MNEs due to globalization is destruction of the natural environment such as global warming, air pollution and stratospheric ozone loss. It is an undeniable fact that globalization make people life easier and better to live in, however there are some cultural conflicts which also come across due to globalization and these involuntary consequences can never be ignored. There is a drastic increase in environmental hazards such as gases emitted from these industries pollute environment while the chemicals waste coming out of these factories affect rivers and seas.

Apart from this there are some indirect consequences which are experienced because in globalization every country is integrated and becomes interdependent on each other. Hence in such scenario if a certain business face any monetary risk or financial crisis then it will automatically be spread to all other economies. For instance when financial crisis hit US in 2008 then the effect of this depression was felt on entire globe. Another important dimension which needs attention is national sovereignty which gets affected by liberalization of trade barriers on multinational corporations. In such condition when such MNE start their operations they utilize most of the target nation’s resources and exploit them to their fullest. In the end such foreign companies exploit these liberal trade laws and get a hold on the social and political environment of these nations (Adams, 2013).

It is true that globalization has opened doors to many job opportunities and every other country is trying to get their hands on cheap and quality labor. This may appear advantageous on one hand but on the other all these jobs are taken from one country and given to other nation on the basis of cheap and quality labor. There are many UK and US companies which are outsourcing their work to Asian and Chinese companies as they are offering same work in good quality but in cheap process. Eventually this is creating a situation for less jobs for the residents of UK and US. Another unintended consequences due to multinational operation is targeting the countries resources to their fullest. MNE’s thus over utilize the power and labor is not paid properly and their resources are exploited beyond their normal work. Most of the third world countries are employing child labor which is affecting the children as they cannot attain proper education and other necessities of life (Alcántara-Pilar & Miguel, 2015). Hence it can be asserted than globalization has provided opportunities to explore every nation’s culture as it is passed on to generations. But there are some negative effects which are also being passed only through globalization which includes disco culture, drugs utilization and porn culture.

Response to Question 2

Summarize the arguments in favor of globalization made by the business executive. What is the role of technology in supporting company performance in a globalizing business environment?

The responses which are mentioned above by the business executives support globalization and is based on the following arguments:

Better Compensating Jobs: Globalization has provided opportunities not only to companies but also to the individuals from the grass root level as they offer better jobs to people across the globe. Companies are earning enhanced profits and are also able to retain the quality level of their product or service for their customers. MNE companies send expatriates to foreign subsidiaries for retaining the quality level of their firms hence they recruit talented and skilled individuals on high salary packages which eventually improves the standard of living of the people (Bertucci & Alberti, 2012). Globalization increase working opportunities which also increase competition and increase global awareness of issues at the collective level.

Increase in Living Standards: Globalization increase living standards of the nations in which they operate, because when living standard are improved awareness about better working opportunities in also increased. Once the developing nations invest in least developed nations then a gradual shift is apparent in the agricultural and raw materials production which is followed by rising levels of technology and education. Globalization has significantly improved transportation levels and has made the world accessible to everyone especially for the merchants to expand their trade to new markets. The increase in population has also left positive effects on the economic development of every nation. As money is distributed into developing countries, there are chances for the people to succeed and increase their overall standard of living economically (Chandan & Christiansen, 2019).

Socially Responsible: When Multinational Corporations invest their resources in globalization then it they make themselves open to challenges hence they make every effort to adapt to the changing environment. Hence corporate social responsibility is promoted in MNEs employing international business as they recognize the negative consequences arising from globalization.

Technological Innovation: Most of the business executives are of the view that globalization has increased competition which has further triggered introduction of new technologies. Thus there is an improvement in economic growth for both nations (KUEPPER, 2018). Globalization is a platform which is providing poor countries with prospects to invest in foreign technology and to develop themselves economically. Eventually all such steps will help the companies in spreading prosperity and opening chances where human rights are appreciated and democracy flourishes.

Free Trade: The supporters of globalization signifies that when free trade is encouraged then global economic growth will be clearly evident. Once free trade is provided then it makes companies more competitive, create more jobs and will also make products available at reduced prices to consumers (Collins, 2015). In free trade, the government of a country imposes no restrictions and gives people a free hand to import and exports goods and services as they please. In every type of trade both the parties get some advantages. Trade has always been the central element between nations however the scale of trade varies depending on the availability of resources. Most of the economists are of the view that globalization has proved to be advantageous for every economy around the world. The introduction of technological advancements has increased competition and has also made the market more efficient.

Response to Question 3

What are the roles of state and federal governments in dealing with globalization? What is government’s role in protecting citizens from the potential negative effects of foreign MNEs conducting business in your country? What kinds of government actions would you recommend?

There are numerous interrelated issues which arise due to globalization especially when international investment is involved. Hence state and federal government need to regulate foreign investment and introduce policies which make the economy less volatile. The role which government can play in dealing with the negative consequences arising from globalization requires institutions of governance to create infrastructure which can attract foreign investment. Once the range of services are provided by a less developed country then it can act as a facilitator in promoting foreign investment in a country. These services include basic services such as providing clean water, electricity, clean and healthy environment.

Another step which government need to take is properly monitor the financial flow and economic ups and downs of the system. Hence the ability of government to prevent themselves from facing any economic depression phase allows that country to direct cash flow towards them. The steps which can be taken by the government at state and national level is to strengthen the banking regulations, introduce policies which ensures transparency in the flow of transactions locally and internationally. Additionally it is also required to make a control authority which should continuously monitor the regulation of financial market. Some economists are of the view that the tax imposed on foreign exchange transactions should be reduced on capital inflows. Such measures create a sense of security in investors and they would not be afraid of doing either short term or long term investment (Bertucci & Alberti, 2012).

Globalization opens route for lifting of trade barriers especially in telecommunication, information technology and transportation thus it require nations to broaden their scope. There are chances that nations face loss of sovereignty thus they look for steps which can increase their social interdependence in decision making process. But on the other hand it is also perceived that cross border trade allows investment to flow in huge numbers, thus it strengthen the states by forming a more stable international environment and providing them chances to enter into the international market without any trade barriers (Chandan & Christiansen, 2019).

In the age of globalization governments are living in the era of uncertainty and ambiguity thus they are compelled to rapidly change their environment for promoting policy invention and create environment which can provide opportunities to the MNEs for their setup. The states which can dynamically adjust themselves with the changing transformations win the race and they emerge as developing nations on the globe. Thus it is required that institutions should be made strong and the rule of law must be established. Further the judicial system should be made independent and credible where effective legal framework is functional.

One recommendation for the government to taking full advantage from the opportunities of globalization is to make banking and financial sector operate in a transparent manner. Further government is also required to take steps to keep the inflation rate of the country to a minimum through a sound monetary policy. Governments should also take steps in simplifying their regulation system for new business registration and licensing of businesses.

Response to Question 4

What is the role of education in:

  • Addressing the problems raised in the roundtable,

Considering the responses of business executives it is clearly evident that globalization help in raising the standard of living and level of economy for the nations which are involved in the transaction. Hence the nations which are less developed focus their attention and resources towards education. Education is significant because it helps in achieving the level of perfection and policy levels which every country dream to attain while going global. The expansion of higher level education create an environment where skills are developed from the grass root level (AlinaCastagn & Colantoni, 2010). Another issue raised in roundtable was to have proper communication before finalizing business transactions hence education act as an intermediary tool for inducing the right set of skills in every individual for international economic transactions. Social inequality was another concern raised by the participants thus for addressing this issue education is the only resource which can create prospects for achieving social equality at all levels. Thus education will provide people with the skills and values required for thriving in economic globalization and for reducing its undesirable impacts.

2) Creating societies in which people can deal effectively with public policy issues,

The globalizing forces significantly affect the policies of nations especially in education as they should work in harmony with each other to formulate polices which promote technical and skill based education. All of the leading industrialized and developed countries have worked on diminishing their trade barriers after the end of World War II. They all work in cooperation with each other to harmonize their fiscal policies and work on patterns which encourage global economic integration. It is the government role to create societies where people work on spreading education and resolve their issues by having proper dialogue. Overall the government has to play its role in improving their investment policies and should provide flexible investment and saving opportunities to the investors which will eventually help investor to enter into the liberalization market.

3) Creating citizens who can compete effectively in the global marketplace?

Education act as a foundation for global stability as it helps in increasing multicultural awareness and it also helps the citizens of a country in integrating ideologies from different cultures. Once an individual is exposed to a diverse set of cultures and ethnic backgrounds it stimulate the need of knowing more about such cultures. Therefore education plays a vital role in inducing multicultural awareness from an early stage. Globalization and education appear directly proportional to each other when they are combined with each through mutual goals of preparing young individuals for successful futures during which their nations will grow progressively linked (Cavusgil, et al., 2013). Further it is globalization which yields an increased quantity of technically and scientifically trained persons. It must be remembered that every emerging economy is based on the pillars of education and knowledge. Thus these two elements act as a key factor for making discoveries and inventions thus every industry require employees to remain highly trained in the field of science and technology.

Conclusion

The critical review of the responses shared by various business individuals concludes that where globalizing states have succeeded in participating constructively with the global economy, which is also supported by attaining wide economic and social remunerations, there are some negative consequences also attached with this global phenomenon. Thus it is all dependent on the nations to deign policies which protect their supremacy and sovereignty while stimulating the culture of globalization. Despite of all the negative consequences of globalization there has been greater access to foreign culture in the form of music, movies, clothing, food and much more. Hence it can be asserted that the world is now open to more selection hence globalization has the most positive net effect on the economic development of the world and everyone in embracing this phenomenon.

References

Adams, G. F., 2013. Globalization, Today and Tomorrow:Routledge.

Alcántara-Pilar & Miguel, J., 2015. Analyzing the Cultural Diversity of Consumers in the Global Marketplace: IGI Global.

AlinaCastagn & Colantoni, E., 2010. Does Education play a relevant role in globalization?. Procedia - Social and Behavioral Sciences, 2(2).

Bertucci, G. & Alberti, A., 2012. Globalization and the Role of the State: Challenges and Perspectives. [Online]
Available at: https://pdfs.semanticscholar.org/9edd/97224bb2978453e6ff5c08afc56dd9e6064e.pdf
[Accessed 2019].

Cavusgil, S. T., Ghauri, ‎. & Knight, ‎., 2013. Debating the Merits of Globalization, Chapter 2: Globalization of Markets and the Internationalization of the Firm. In: International Business: Strategy, Management, and the New Realities. s.l.:s.n., pp. 83-85.

Chandan, H. C. & Christiansen, B., 2019. International Firms’ Economic Nationalism and Trade Policies in the Globalization Era. s.l.:IGI Global.

Collins, M., 2015. The Pros And Cons Of Globalization. [Online]
Available at: https://www.forbes.com/sites/mikecollins/2015/05/06/the-pros-and-cons-of-globalization/#72b7bdeccce0 [Accessed 2019].

Goldin, I. & Reinert, K., 2012. Globalization for Development: Meeting New Challenges. s.l.:Oxford University Press.

Kuepper, J., 2018. The Impact of Globalization on Economic Growth. [Online]
Available at: https://www.thebalance.com/globalization-and-its-impact-on-economic-growth-1978843 [Accessed 2019].

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