Globalization has proved one of the most critical influences on the course of business in the past decades. The rapid pace of integration united business entities of the whole world in a complex web of relationships. Globalization may not have reached yet every corner of the globe, but it is rapidly advancing to affect a more significant number of businesses every day. Within a few years, virtually no business can be left unchanged by globalization processes.
The Houston Institute for Culture (n.d.) defines globalization as “the worldwide spread of influence of culture, language, religion, transportation, communication, media, technology, trade, business practices, and interrelated government and corporate finance, as well as environmental and health concerns.” Economic globalization, also called corporate globalization, refers to the changing activities of companies around the world.
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More and more established businesses that formerly operated within one nation are turning into Multinational Enterprises (MNEs) with operations spanning continents. In this, they are helped by deregulation in local industries and foreign governments adopting policies aimed at welcoming foreign investment. While there is a range of MNEs leading the process, medium- and even small-size companies also received more excellent opportunities to seek partnerships with international organizations and sell their goods abroad.
Many think it a positive development as the spread of international business can help citizens of developing nations access quality products and get jobs to increase their purchasing power.
However, companies also have to face a different reality: that many people are opposed to globalization and see MNEs as irresponsible, exploitative organizations that abuse their dominant position. The increased requirements for corporate social responsibility make businesses “vulnerable to pressure from aggressive NGOs and public opinion” (Moore, 2002). That is why companies should be more concerned with impacts of their activities on the nations in which they operate.
In many cases, this means understanding and respecting different cultures. Cultural competence is an important feature of the modern-day businessman that allows one to navigate successfully among pitfalls of cross-cultural management. Knowledge of different cultures and overcoming one’s stereotypes are two ways to make a business more productive and efficient. Thinking of a different culture regarding cultural dimensions such as power distance, uncertainty avoidance, individualism versus collectivism, masculinity versus femininity allows a person to gain better insights into other cultures, vital in this global era (Akhter). Many companies recognized the challenge and began to offer their employees courses in cross-cultural management.
Cross-cultural skills become essential even for those whose business operates within one nation.
Massive flows of migrants have connected many areas, creating enormous migrant populations in many countries. It means that organization can now choose from a more diverse workforce and cater to a more varied customer base. It inspired many agencies to formulate their recruitment policies to capture this diversity. Recruiting talented individuals with different backgrounds became the norm.
On the other hand, as organizations’ membership grows less uniform, there is a higher need to promote a common corporate culture that will unite all employees regardless of their cultural backgrounds.
A large number of companies now sell their goods in areas that are far beyond their usual destinations. The figures provided by the IMF show that “over the past two decades, the growth of world trade has averaged 6% annually, twice as fast as world output” (Moore, 2002). It means that many companies have to develop strategies for entering foreign markets that would be suitable for those particular nations. Companies now have to decide whether they want a uniform or a differentiated advertising campaign, sending a unified message to people around the world or adapting the signal in each country to the local reality. Cross-cultural marketing is a vital competence that increased in value with the progress of globalization.
On the more technical side, new communication media impacted the way businesses interact with each other and facilitated contacts between those living in the most remote parts of the globe. These technological advances are drivers of globalization and allow business participants a broader scope of actions.
Outsourcing became possible because contact between employers and employees residing in different nations or perhaps on different continents is much more natural now. Businesses offering services or software products can now employ people in the remote country to slash their labor costs.
On the other hand, “with the advances in electronic media, modern globalization is experienced through consumer trends and the growth in sales of dominant name-brand products” (Houston Institute for Culture, n.d.). Improvements in communications drive the creation of a ‘global culture’ that in turn facilitates the global expansion of the business.
Thus, globalization has impacted business in a great many ways. Creating exciting opportunities, it has also posed many challenges, including cross-cultural interactions and the need to address anti-globalization pressure. Overall, doing business in today’s world requires an enhanced level of strategic thinking and ability to trace the situation in many parts of the globe to deliver practical solutions to a diverse body of customers.
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