Opportunities and challenges of globalization
Introduction to Globalization
The global climate at the end of 20th century has been characterized by a shift from social diversity to globalization. More and more in the fields of trade and finance, industry, and environmental laws, the international community is looking for networks and solutions, and global policies, in place of individual state control. Consequently, the integration of national economies brings forth both dangers and opportunities for the developing and industrialized nations of the world. According to Lynch, development of globalization has been influenced by the international business communities (2003). Additionally, the opportunities tend to give reasons how and why the moves towards globalization started, while the dangers explain the challenges to a modern economist, politicians, sociologist, and environmentalist.
The following piece of research will give a detailed definition of what globalization as a global term entails. Additionally, the essay will discuss three main drivers of globalizations and their influences. Globalization is over advertised; yet it is a poorly understood subject (Marmolejo, 2012). It will be of great importance to note that the paper will further give a comprehensive research on the challenges and opportunities associated with globalization and later on explain two commonly business strategies are multinational companies can employ to ensure success in the global market-place.
According to Bill Clinton (American 42nd US President (1993-2001)), globalization is something that one cannot turn off or hold off. To him, it is the economic equivalent of a force of nature, for instance, wind or water. The first part of this research paper as noted earlier will define what globalization is. Therefore, globalization is the worldwide movement toward financial, economic, communication trends, and trade. But according to Marmolejo, globalization is an inevitable process that tends to occur in spite of us (2012). However, globalization does not necessarily, entails unhindered movement of work-force as argued by some economists. Such an argument can hurt fragile or smaller economies if it is applied indiscriminately. Based on the definition, it is evident that the first role of globalization is free trade and the resultant impacts on the global market. It is still debatable that the future of man-kind solely depends on the integration being set by globalization process (Marmolejo, 2012). According to economists, free trade entails more trade which eventually results to an increment in financial flows. Consequently, as argued by Adam Smith, a renowned economist, as financial and trade flows increase capital tend to redistribute literally, the redistributed capital help in pulling the impoverish states to top. From the above description, it is vividly seen that globalization is a worldwide term used in the international market and it has got it, own, drivers as it shall be seen in the next part of our discussion.
Drivers of globalization
Globalization, to most people, is not a new phenomenon. Some trade and communication took place amongst distant civilians back in the olden days. From the times of Marco Polo’s travels globalization particularly through factors movement, communication, and trade of economically useful technology and information has been experiencing tremendous rise. However, this globalization process in the economic field has not progressed easily. Neither has it always benefited those it has affected. Consequently, despite interruptions, for instance, the fall of the Roman Empire, the integration of different communities across the world, has been on a high increase.
Indeed, in the past half-century, the pace of growth of globalization has been on a high note. With an exceptional of human migration, globalization currently is greater than it has ever been and it has a higher probability of deepening a time goes. At this juncture, it is crucial to discuss, three fundamentals that have been driving globalization and their important dimensions. In particular, this part discusses three drives of globalization, to be specific; technological drivers, political drivers, and lastly, market drivers. Before turning into this agenda, it is significant to note that a key theme will be evident in the subsequent discussion; the three factors that drive globalization not only exert independent influence but also but also tend to interact in complex and useful ways.
(1). Technological drivers; technology set and shaped the foundation for the modern day globalization. Innovations and inventions in the transportation technology have greatly revolutionized the industry. Some of the most useful developments among these are the concept of containerization in the late 1980s and 1990s and commercial jet aircrafts. Additionally, inventions in the fields of telecommunications and microprocessors caused a highly efficient communication and computing at a lower price. Eventually, the rapid growth of the internet stands as the newest technological driver that has positively enhanced global e-commerce and e-business.
(2). The political drivers; deregulated and liberalized rules allow foreign direct investments and hence lead to lowered tariffs across the globe. The institutions such as; WTO (World Trade Organizations) and GATT (General Agreement on Tariffs and Trade), as well as, the privatization and opening in Eastern Europe, are just but a few example of political drivers of globalization. However, these institutions have occasionally been targeted at their annual meetings by the demonstrators who object to their aims to liberalize global trade (Bagavati, 2004).
(3). Market drivers; the domestic market becomes more saturated daily, the opportunities for growth become limited. Hence global expansion is the only way most organizations opt to overcome such a situation. The opportunities to use global marketing channels, common customer needs, and the transfer marketing are also necessary incentives to choose globalization.
Challenges and opportunities associated with globalization
The impacts and the process of globalization on most of the development issues of nations in transition make the international organizations like UNIDO re-evaluate their policies and industrial policies and redesign their service module and services to sail quickly in the many challenges associated with globalization. Globalization is affected by the significant level of uncertainty and risk (Lynch, 2003). After the demonstrations that accompanied the Third Ministerial Meeting of the WTO in Seattle, the World Economic Forum meeting in Davos, and the 10th UN Conference on Trade and Development. More questions are rising on the course which the globalization is taking and both the developed and developing states are calling for abolitions and reforms of WTO, which to date has become the significant symbol of globalization.
This part hopes to provide three challenges and opportunities associated with this phenomenon.
Opportunities
It is debatable that globalization underpinned by technological advancement and liberalization of economic policies carries the following opportunities; increased competition, and efficient resource allocation, and hence broader options for consumers, exposure to new ideas, products and technologies, the ability to reach to international capital market. For instance, for the private sectors internationalization means that economic agents have to face many opportunities and so much intense than before. Economic globalization is the sole aim of many of the international companies, (Baghwati, 2004). As far as globalization is concerned, numerous studies show a substantial empirical evidence supporting the assumption that globalization brings forth many opportunities. However, to achieve some of these opportunities, internationalization requires drastic improvised roles of the respective governments.
Challenges
Despite the traditional arguments of neo-liberals in the area of globalization that it brings forth a lot of opportunities, there are still some challenges that come hand in hand with globalization. Interestingly, globalization is a highly uneven process, surprisingly; numerous facts indeed can show this. According to Abbas et el, globalization has diversified implications on both the developed and developing countries (2016).For instance, a growing trade does not necessarily result in a more equitable distribution of underlying comparative merits. Under capital regime and open trade growth, investment will be stronger. However, there is little claim to support this as it is evident that the world GDP growth rates in the 1990s and early 2000s have decreased drastically. Moreover, the share of investment in GDP has fallen depicting less willingness to carry long-term investment globally.
Survival strategies for multinational companies in the global market-place
In this part, the main aim is to discuss two main survival strategies that help some of the global firms to succeed in the highly competitive marketplace. Currently, we face many hurdles, from the universal, challenging and unpredictable business worldwide. For survival, such enterprises ought to achieve productivity by employing active and new survival strategies. The effects of globalization are controversial, particularly on the income of distribution of rich and poor states (Milanovic, 2004). Today’s global organizational environment is different from that of the past. As pointed out above, the multinational companies need to employ strategies to help them maneuver in such conditions. Additionally, corporations, mainly, in Europe, North America, and Japan, know that globalization remains the most critical challenge they encounter today. The following are two of survival strategies to employ;
(1). Ambiguity toleration of integration of multiple perspectives. Companies that operate globally meet contradictions. Some of the marketing strategies existing in one state may differ in another country. Therefore, multinational corporations should adopt balancing strategies to ensure differences in culture do not lead to business hurdles.
(2). Value the expression of global diversity. The multinational companies ought to understand that diversity is crucial for the business. Therefore, it is of great importance to convert this belief into action. By such, the market can survive in the international market-place. From the above discussion, it is evident that the danger of globalization is minimizable in various ways. In conclusion, as per our review, indeed, globalization is a worldwide phenomenon, which has got it own challenges and opportunities and once checked thoroughly, it can bring forth a global economic, communication, financial and trade integration.
References
Marmolejo, M. (2012). Globalization: Opportunities and implications : the ABCs to a global social revolution.
Lynch, K. (2003). The forces of economic globalization: Challenges to the regime of international commercial arbitration. The Hague [u.a.: Kluwer Law Internat
Jagadīśa, B. (2004). In defense of globalization. New York, N.Y., [etc.: Oxford University Press.
Milanovic, B. (2002). Can we discern the effect of globalization on income distribution
Globalization Challenges and Opportunities: An Empirical Analysis of Pakistan
Abbas, Shujaat; Muhammad, Sulaiman D; Ali, Shoaib. Pakistan Journal of Commerce and Social Sciences; Lahore Vol. 10, Iss. 1, (2016): 192-199.
