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Company Globalisation

Essay by   •  March 26, 2011  •  Research Paper  •  1,450 Words (6 Pages)  •  1,278 Views

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Globalisation.

Globalisation is a generalised term for a complicated series of economic, technological, social, cultural and political changes, seen as the ever- increasing interdependence and integration among people and companies in different locations. Such international links have existed for many centuries, but, having broadened, intensified, and changed the nature of these links many times; the modern world economy is unlike any previous international economy. Despite being in theory, in existence for centuries, the term 'globalisation' was first used in 1944, although its prominent use by economists commenced in the 1980's. Globalization can be broken down into separate aspects: industrial globalization or transnationalization refers to the expansion and dominance of multinational organizations. Financial globalization is the emergence of worldwide financial markets and the increasing access to external financing for all levels of borrowers. Political globalization is the spread of political interests to areas of the globe formerly outside the political sphere (state and non state). Informational or communications globalization exemplifies the information flows throughout the world. Finally cultural globalization is the growth of cross-cultural contacts. Throughout this paper I will compare and contrast the many definitions of globalization, discuss whether it is inevitable and conclude whether globalization is a good thing.

Globalisation is a difficult term to define, with literally thousands if diverse definitions, this is due mainly to the fact that there are so many different aspects to it. As well as this there are multitudinous differentiated opinions as to which are the most important aspects and to weather globalisation is a good or a bad thing. As a result some writers will deal with this problem by defining it broadly, where as others will focus on specific aspects of it in their definitions to emphasize what they think is the most important aspect. Globalisation is defined in Daniels and Radebaught's 'International Business' as "the deepening relationship and broadening inter-dependence among people from different parts of the world, and especially among different countries". This definition is a particularly broad and general one, leaving it quite open to individual interpretation and not focusing on any particular aspect of the meaning. It is similar to that of Short (1999, p 1), who suggests, "Globalisation is a process that links people and places, institutions and events around the world". Again this definition is non-specific and leaves a lot to be explained.

On the other hand, many definitions see globalisation as a dominantly economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows. This can be illustrated by the definition of globalisation according to the International Monetary fund, which states that: "Globalisation is the economic interdependence of countries worldwide through the increasing volume and variety of cross- border transactions in goods and services, free international capital flows, and a more rapid and widespread diffusion of technology". This is clearly inconsistent with that of D&R's definition as it focuses primarily on the economic aspect of the term. Globalisation is undeniably an economic process, however, many writers point to a rapid increase in cross-border social, cultural and technological exchange as part of the occurrence of globalisation. While D&R's definition has clearly catered for this, and included it indirectly, they have not included these things specifically. The World Bank does however, deal with these issues directly in its definition, and describes globalisation as "the global circulation of goods, services and capital, but also of information, ideas and people". Finally, anti-globalisation groups will define the word quite differently. The International Forum for globalisation for example, defines it as " a worldwide drive towards a globalised economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments". This is again in sharp contrast with the definition of D&R, which conveys globalisation as neither a positive nor a negative thing.

As globalisation becomes increasingly more feasible as well as desirable for companies and countries, it does seem that it has become inevitable. Since the end of WW2 there have been an ever-increasing number of countries taking advantage of the free market ideology. As such the economic center of gravity is moving from the developed to the developing countries. Economic liberalization is known to promote competition, efficiency, innovation, new capital investment and faster economic growth. For this reason, the developing countries that have embraced this ideology have started catching up with advanced economies. Taiwan, Hong-Kong and Singapore, who in the 1950's were some of the world's poorest countries, now already count among the advanced economies of the world. Larger economies are also advancing, China for example, due to globalisation has sustained a better than 10% annual growth rate since 1980, and is now the third largest economy in the world. Virtually any country in the world today that seeks to grow has little choice, but to engage in globalisation and go where the growth is. For the vast majority of the worlds leading industrial corporations, such growth is very rarely in home markets.

The globalisation of technology is constantly improving communications. The cost of shipping has shrunk increasingly over the past decades. With regards computers and telecommunications, their advancements and decline in cost, have made co-ordination of far-flung operations not only more feasible, but also more reliable and efficient. The opening of borders to trade, investment and technology transfers have created very desirable market opportunities for companies. This will also, however enable competitors from abroad to enter the home market. In turn

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