Globalization and How it has Changed the Game of Business

By Ian O.

       "Globalization is not a monolithic force but an evolving set of consequences - some good, some            bad and some unintended. It is the new reality." 
                                                                                                                          - John B. Larson

      This quote, given by US House of Representatives member John Larson, defines the new phenomenon known as Globalization, or the process of interaction and integration among the people, companies, and governments of different nations. This process, while it seems rather straight forward at first glance, is what has essentially turned the business world on it's head in recent years. While certainly not a new idea, the recent acceleration has caused it to expand much larger. This mass expanse of not only communication but business opportunity has made it so that the current business world is in a mass state of transition, with no clear end or consistency in sight.

What caused globalization to happen?

     Multiple factors went into the creation of globalization, but many experts, specifically those at economicshelp.org, credit 3 factors specifically, those being improved trade, increased labor, and improved technology. The first one is improved trade, which has been a consistently improving factor sense the beginning of the 20th century. With cargo planes and ships becoming more efficient and effective, countries were given more opportunities to buy and sell what they needed from all over the world. This also allowed companies the opportunity to ship their products to new locations, gaining whole new markets to sell to and thus making greater profits. What was relatively new for companies, however, was the second reason for the increase in globalization, which was improved labor. Before things like outsourcing, which is the idea of using labor from outside your country in order to have cheaper labor, were common ground, companies were restricted to their current companies labor and labor laws. With the improved transportation from above, however, companies could now effectively use the labor from outside their countries of origin. While this could have originally cause confusion, with the third factor, improved technology, companies and countries could now communicate from across the globe much more easily and negate most negatives from using outsourcing as a tool to pay little for labor.

                                                                            How Does Globalization Change Business?
     There are multiple things that it changes, both positively and negatively. One of the most notable differences is how international trade has effected the economies of many different types of countries. It has essentially turned it into a situation where the wealthy countries get more wealthy while the poor countries stay the same, which is problematic in terms of development. This also applies to companies, where smaller companies are much less likely to succeed and larger companies given more opportunists to succeed due to their ability to go international.On the more positive note, countries who do not have much of a military presence, such as Switzerland and Sweden, have gained immense amounts of power by using smart international business idea like tariffs, or taxation on imports and exports. Globalization has also created more competition in markets, which helps the consumer significantly by keeping the company prices in check due to the threat of lower prices by competitors. Thing biggest thing that changes business is that companies can now take advantage of other countries laws and regulations. If a country like, say, the United States has to high of a minimum wage for your company to be efficient, you can relocate to China and utilize lower minimum wage laws. This can be both positive and negative. The positive being that products are much cheaper for consumers and bring in much more profit for companies. The negatives are mostly revolved around the ethical issue of not only taking jobs away from the country of origin, but utilizing what many see as unethical labor laws in foreign countries. Things like lack of pollution regulation and wage regulation are some of the most notable.

Why Does This Matter?

     As mentioned in the beginning quote, this is the new reality. It would be near impossible as well as illogical to try and backtrack to what business was before globalization boomed in the 1990's. This means that not only future business professionals, but all future professionals should learn and understand why the business world is in it's current state. Many of the scandals and problems that have arisen in recent business history are because of companies or individual taking advantage of the current confusion that comes with massive amounts of change. The only way to counter act this mass confusion is to understand the root of it, that being globalization. Once we understand what it is and why it happened, we can then set the proper rules and regulations in order to contain it, not only to help all businesses economically, but to help individuals ethically as well. We are at a point of communication and trade that has never been witnessed before, and therefor it is our help make it stable and consistent, opposed to chaotic and unethical as it is seen by many today.

   
Sources-
Article:

 Pettinger, Tejvan. "What Caused Globalisation?" Economics Help. 6 Apr. 2013. Web. 29 Feb. 2016. 

Pictures:
1st one:
Horn, Jeremy. International Product Management - The Challenge of Globalization. Digital image. Http://www.slideshare.net/. 12 Jan. 2016. Web. 28 Feb. 2016.

 

2nd one: 

Court Orders EPA to Redo Air-Pollution Limits in 13 States. Digital image. Http://altoday.com/. Associated Press, 28 July 2015. Web. 27 Feb. 2016. <http://altoday.com/archives/4999-court-orders-epa-to-redo-air-pollution-limits-in-13-states>.