Globalization

• • Globalization is a widely used term that can be defined in a number of different ways. It refers to the reduction and removal of barriers between nations for purchasing goods, capital, services and labors. A few years back, most businessmen focused on making their business across the country. Slowly, things changed. They started to think on bigger approach. And that s how, this Globalization issue came. Globalization can be defined as an integration of economy, finance, trade and communications from a worldwide perspective, in order to establish a successful economy on global basis. “Globalization is a process which embodies a transformation in the spatial organization of social relations and transactions, expressed in transcontinental flows and networks of activity, interaction and power.”

Definition:• •

--David Held and Anthony
• “The compression of the world and the intensification of consciousness of the world as a whole concrete global interdependence and consciousness of the global whole in the twentieth century.” “Globalization is the concentration of capital and the exclusive concentration of communication systems which affects not only the lives of indigenous people, but also affects the lives of poor people of the world. !hen we speak of free trade, we are not talking about the small and middle commercial sectors of the world, but rather we are speaking of the great monopolies.”

-- R. Robertson

--Rigoberta Menchu Importance of Globalization:Globalization has been a big boon for all countries. !ut there are a few who say that it has been a curse. So take a look at both these aspects of Globalization....... Advantages: Advantages of globalization are"""" 1. Provides Wide Choices: Globalization is responsible for the wide range of choices that are available in the market today. "# years ago, foreign goods were a rarity or extremely expensive. Today, the scene has completely changed. !e see varieties of goods

%o what this does is that it gives us a wide choice to make for ourselves. )very country will gain something or the other from another country and thus. Improves &#alit$: *nother important advantage of globalization is that because there is so much choice in the market. +nemplo$ment is . . !ith this we can see global development of countries together. %o. -any foreign companies set up branches in our country because the labor is relatively cheap here as compared to their country.obs in the &T sector are especially outsourced as an important section of globalization. 2. (oosts )conom$: Globalization makes possible not only export and import goods. The Government #epublic of !angladesh is better example for this fact. -. Per Capital Income Increase: The wealth has had a trickling effect on the poor. There is more stability in global financial relations.preads /no0led!e: . Increasin! "orei!n C#rrenc$: Globalization has brought about a huge investment in poor countries in terms of labor and capitalization. *nd as for our country. The average income has increased to thrice as much because of globalization. The standard of living improves for many.ut due to important tools of globalization like the . . !hich in turn ensures that the consumers get only the best +uality products. 3. unemployment is reduced rapidly. we get a sudden burst of $obs which again is nothing but helpful for our country. that results in a direct increase in their net profit. '. %.ed#ced: 'ue to good effect of globalization. %o to be in the running. *. . and poverty removes considerably. Increase in GDP: &f the statistics are any indication.from groceries to beauty products and they have $ust made a home for themselves into our lives. it becomes important that currencies are not hiked to an extent that they remain out of maximum purchasing capacity. G'( of the developing countries have increased twice as much as before because of globalization. producers and manufacturers of goods have to keep only the best +uality products to survive.efore globalization. but it also allows for outsourcing services and $obs. . the competition increases. it would not have been possible to know about other countries and the cultures.

&t makes people tolerant of varied views from different parts of the world and thereby promotes progressive thinking and to bring about social reforms in society. and this is something that every nation should be open to since it is a highly beneficial venture for them. their knowledge expands simultaneously. *s a result. Improvement in 2#man .ise in 4olerance: 0or far too long. recipes and the likes. 1%. Promotes Pro!ressive 4hin7in!: Globalization is not merely limited to exchanging food. 0oreign direct investment 1 "DI2 helps industries and native cities grow at a rapid pace. 12. /ne of the biggest globalization benefits is the eradication of this fear and tension. they are better able to handle their primary and secondary industries. This increases immigration rates as well. . *s newer cultures and technologies are opened to a particular country. There is so much that they can gain in the process as well.ise in 5pport#nities: !ith a large number of industries and resources available. 13. thus giving people the chance to grow economically and socially. but runs deeper in the way of bringing about a chance in the attitudes and thoughts of people.ise in 4echnolo!$: *nother great globalization benefit is the rise in knowledge levels of countries. countries of the world have lived amidst tension and fear of one another. Competition on )ven Platform: The companies all around the world are competing on a single global platform. This allows better options to consumers. . &t also helps in the political field by making different governments aware of the varied ways in which governments are run. 1 . to know their culture and food habits as well. 13. . There are many more $obs available to people. This leads to improvement in human rights. .ise in Investments 6evels: /ne of the biggest globalization benefits is the rise in the level of foreign investment in a country. it is possible today to know what is happening in &ndia. *ll this is possible only due to globalization.i!hts: &ncreased media coverage draws the attention of the world to human right violations. the opportunities for people increase by a large amount. and this ultimately affects their tertiary sector in a positive manner as well. and more and more people are also exposed to the lucrative benefits of moving abroad.internet. This also inadvertently leads to a rise in education levels and the spread of culture from one part of the world to another. 1. . 11. and the sowing of seeds of cordiality between trading nations.

2. it is done at the cost of the local goods. . !hen an idea runs like 5 *ddidas brands are the best brands. &nstead. go through varied degrees of losses because their goods are not sold. . +nfair Pa$ments: /ne of the most common camplaint against globalization in business is that it leads to unfair payment of wages and salaries. Promotes Commercialism 4raits: &f we look at the teens of today. factors such as war may demand the reversal of the globalization. everyone buys them because they can. small time businessmen who do not have the resources to export their goods and only depend on the locals to buy them.eso#rces: To import and export products. *ll this is the result of globalization and there is nothing local anymore. Thus.Disadvantages: 'isadvantages of globalization are3333 1.e inter world war years. especially in developing countries. 0or example. +neven Distrib#tion of Wealth: !ealth is still concentrated in the hands of a few individuals and a common man in a developing country is yet to see any ma$or benefits of globalization. current process of globalization may $ust be impossible to reverse. &t does not leave any room for local products. . 8ffects 6ocal 9ar7ets: !hen foreign goods flood the market and people begin to buy them. 3.eversal of Globalization: &n future. like . Wasta!e of .angladesh. he4ll probably answer in the negative. %killed labor is paid differently in different countries by the same company. *. the rich company goes on becoming more rich while the labor4s skills are yet not appreciated with $ustice. i. '. %o if we ask a small time businessman is globalization good or bad for developing countries. we4ll find that most of them will be in the same type of apparel. if that same money was utilized in improving the product we could promote business for our own country and save on resources. That4s why in developing country there occurs uneven distribution of wealth. Income Gap: !ealth of developed countries continues to grow twice as much as the developing countries. a country makes use of it4s precious resources even when the product is manufactured in it4s own country. less employee retention and problems with the unions. %. %o. This leads to strikes. there is a income gap between developed countries and developing countries because of globalization.

&t increase in the pollution levels in the environment. They are disregarding their culture. 11. 1. Destro$s )thnic C#lt#re: !ith so much emphasis on being global.preadin!: %ome serious and deadly diseases are spreading by travelers to the remotest corners of the globe because of globalization.port: The term export is drive from to conceptual meaning as to ship the goods and services out of the port of a country. as this increases the investment in the country. %wine 0lu. 13. :ob Insec#rit$: )arlier people has stable. . 12. (ad 8ffects of "orei!n C#lt#re: Through globalization we are not trading only goods and services. &t won4t be long before countries lose out on their cultures and heritage. 6ow people live in constant dread of losing their $obs to competition. forests and agricultural lands are destroyed.-. )xports of commercial +uantity of goods normally re+uires involvement of the customs authorities in both the countries of export and import. *nthrax etc. &n this process. permanent $obs. Deadl$ Diseases . ethnicity and local traits in preference for foreign practices. )ffects on )nvironment: Globalization issues in business also include the effects on environment due to their expansion. *nd the negative affects of foreign culture in spreading. The seller of such goods and services is referred to as an “exporter”. Positive and ne!ative. people are forgetting what is local. *nd it4s totally misuse of technology. &n international trade exports refers to selling goods and services produced in home country to other markets. 13. &ncreased $ob competition has led to reduction in wages and conse+uently lower standards of living. *s we know culture has two sides. 9is#se of 4echnolo!$: Terrorists have access to sophisticated weapons enhancing their ability to inflict damage. Terrorists use the internet for communicating among themselves. ). !e are also trading cultures from different countries. %uch as 8&9:*&'%. The governments give permission for more -67s to be set up.

(alance of pa$ments: • • • • The difference between the inflows of money into a country and the outflows of money from that country. *nd it could be different by import +uotas. . *lthough the totals of payments and receipts are necessarily e+ual. money spent by . &mport also means the economic value of all goods and services that are imported. foreign aid and invest income are inflows. called deficits or s#rpl#sesin particular kinds of transactions.e tourism. health or safety standards. there will be ine+ualities3excesses of payments or receipts. • -ultilateral. This does not include money re3spent on foreign stock.ports>. The buyer of such goods and services is referred to an importer. The difference between what goods a country produces and how many goods it buys from abroad. &t is a good that is brought in from another country for sale. The money to pay for imports. &mport goods or services are provided to domestic consumers by foreign producers.The advent of small trades over the internet such as through *mazon and e3bay have largely by passed the involvement of customs in many countries because of the low individual values of these trades.ceed imports> or an unfavorable deficit =imports e. &mport goods normally re+uires involvement of the customs authorities in both the countries of export and import. • )xchange rate movement. • 6on3tariff barriers such as environmental.ceed e. intermediate goods and other inputs. (alance of 4rade< • • • The balance of trade is identical to the difference between a country4s output and it4s domestic demand. Import: The term import is drive from the conceptual meaning as to bring in the goods and services into the port of a country. bilateral and unilateral taxes or restrictions on trade. tariffs and trade agreements.' citizen etc are outflows. &ncome from services i.ports e. &t could be a favorable surplus =e. "actors that can affect the balance of trade: • The cost of production • The cost and availability of raw materials.

labor etc.'. They are&&&&&& 1. it means a partnership between a domestic firm and a firm in a foreign country. *ounter trading allows a nation with limited cash to participate in international trade. . %ometimes a firm can locate an exporting firm that can provide assistance in selling products to foreign countries. &t re+uires the lowest level of resources and commitment.' firm would have the right to sell <07 food products in . ). . =icensing offers advantages for both licensor and licensee. Trading companies can simplify entrance into foreign markets because they are usually favored by the foreign governments. leather. a broast chicken company. 3. *nd bartering refers to the exchange of merchandise between countries.angladesh4s exporting goods are jute. 4radin! Companies: *nother approach@way to international use or form a trading company to provide a link between buyers and sellers in different countries. Trading company is a firm that buys products in one country and sells in another without being involved in manufacturing. 6icensin!: (icensing is an agreement in which one firm allows another firm to sell its product and use it4s brand name in return for a commission or royalty. )oint ventures are often the only way a firm can purchase facilities in another country. selling domestic goods to a foreign country. . tea. garments ear. :oint ?ent#res: 0irms may also conduct international business through a )oint venture. %. like <07 might enter into a licensing agreement with a firm in .4he 0a$ of participatin! in Global (#siness: A firm that decides to enter international trade must select an approach /way. /ne ma$or drawback to international $oint ventures is that organizations may lose control of their operations. 2.ecause of government restrictions on foreign ownership of corporations.portin!: The simplest way to enter international business is e'porting. It can be done in a number of ways$ some re%uire low levels of commitment. The country wishing to trade re+uires the exporting country to purchase products from . Trading companies take title to products and move them from one country to another. The . prone.' and would pay <07 a specified percentage of the income from sales of the product. 0or example. while others re%uire much higher levels. Co#nter 4radin!: *ounter trading is bartering agreements between two or more counties.

Through direct ownership. This approach@way represents a total commitment to international business. &nfant industries.e Toyota and 7orolla. F local content re+uirements. &t adds to the cost of imported goods and is one of several trade policies that a country can enact. F voluntary export restraints. Eetaliation. Direct 50nership: * much more involved approach@way to international business is direct ownership. *. '. soft drinks i.e -icrosoft and 'ell. a firm has greater control over a foreign subsidiary. F import +uotas. computers i. 2. 8owever. they often implement policies that affect international trade. owning facilities in another country can be extremely risky? governments sometimes decide to take over certain industries or facilities. (rotecting domestic employment. B. 4ariffs and other other 4rade (arriers: &n the simplest terms. * firm that operates on a global basis. and used by multinational corporations. C. a tariff is a tax. +irect ownership re+uires a large investment in production facilities. 0or example. automobiles i. *nd a geographic are where free trade is permitted among the participating countries but imports from non3participating countries are limited. F licenses. The purchase of one or more business operations in a foreign country. cosmetics i.it before allowing it4s products to be sold there.ree trade is a situation where there are no government3imposed barriers to trade. personnel and marketing activities. "ree 4rade and "ree 4rade 8reas: . %ome of these policies areAAAAA 1. There are several types of tariffs and barriers that a govt.e . The top # reasons of tariffs used are33 ". D. . >%* gives clothes and we in return gives them sewed cloths. To achieve this goal. -ultinational company s ob$ective is to have Bone si!htA one sell aro#nd the 0orld.e 0air @ =ovely etc.ritish *irways. Tariffs are often created to protect infant industries and developing economies. (rotecting consumers. 6ational security. (roducts most suitable for this approach are airlines i. but are also used by more advanced economies with developed industries. committing assets to operations or subsidiaries in foreign countries is multinational corporation. #. 9#ltinational Corporations: %ome corporations operate as if the world were a !lobal mar7etA the entire world viewed as a large market.C Global Infl#ence: Government Involvement:*ll governments want to increase the wealth. can employ F specific tariffs. stability and standard of living of their societies.e 7oca37ola and (epsi. research.

'amaging )cosystem D. %uch as ". *nd other countries take a “laisser fair. The immediate international environment also plays a role 1in terms of partnerships23 conse+uently. Impact of Globalization on )nvironment: &mpact of globalization on environment is not +uite good. well designed rules. Eeleasing Toxic (ollutants Is Globalization Good or (ad: &t4s a matter of fact that is globalization good or bad. Globalization issues in businesses also include the effects on environment due to their expansion. if done in the right way.approach and give businesses much more freedom. . socio3economic culture in the country and engineering growth. 3. Government . 'amaging (lants #. &n this process. 7ausing Greenhouse )ffect C. Though all these globalization issues in business will continue to exist. as this increases the investment in the country. &n command economies. the government owned virtually all the businesses and dictated how much production would occur and what prices would be charged. will proper planning. In 4he )nd: • • • Globalization is potentially positive. the negative effects can be curbed to some extent. The government gives permission for more -67s to be set up. is most profitable for any kind of business.#pport of (#siness: The level of government support of business varies from country to country. &ncreasing (ollution =evels B. look for the right partnerships from a distance too. the >nited %tates has been the leader of a movement to reduce tariffs. The long3run goal is to create a world system of free trade. but needs better management. Globalization. +uotas and non tariff barriers. &t has advantage and disadvantage also. &mportant to position e3trade in a broader context of economic development. (ros and cons also. )ncroaching =ands G.%ince !orld !ar &&. forests and agricultural lands are destroyed.