Define globalisation and the impact it has on the way businesses operate.

Introduction:

The term globalisation is difficult to define as it is an ongoing process that integrates,

interlinks and manipulates many facets of trade and industry, economically, socially,

and politically (PIIE 2018). Globalisation is an event that is happening on an

international scale, affecting every individual and institution. An attempt at defining

globalisation would be that is the transaction of goods, service, resources, food,

medicine, weapons, culture, religion, practically anything, on an international level. It

is the expansion of trade and industry forcing investors to become more

interdependent and interlinked. Consequently relying on each other’s technology,

knowledge and economic ability, to grow.

The Impact of Globalisation:

According to Szabó (2021) the use of the word Globalisation is more of a description

rather than a definition. According to him one of the characteristics of globalisation is

that it is an ideology. Which implies that anything that does not agree with

globalisation will be disregarded. He also states that “geographical interconnection,

that is, integration, interpretable on both global and regional level, is voluntary”

(Szabó, 2021:33). An opposing argument would be that the interconnection and

integration is enforced by globalisation. Not all nations are self-sufficient, so they are

forced to exchange food, fuel and technology.

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This drive for globalisation has forced industries and nations to produce better goods

at a faster rate in the global stumble to stay ahead of competition. Industries have

become more efficient in production, targeting niche markets, outsourcing jobs, and

sharing knowledge and technology. The optimum goal for organisations is

expansion, global domination and increased profitability. Globalisation is an event

that is continuously unfolding for which there is no consensus as to its cause, effects

or limitations if any (Business Reference Guide 2014). However, the benefits don’t

always outweigh the cost.

Historically, globalisation relied on physical trade and travel. An example would be

The Silk Road which relied on camel caravans. The journey would be long and

treacherous lasting days and even months. The road formed the artery between the

East and West for thousands of years integrating cultures and region whilst

facilitating the trade of silk, gold and silver amongst other products. As well as

transactions between the nations, interlinked connections also influenced social,

economic and political decision making (UNESCO 1998).

Unfortunately, the Silk Road also allowed the spread of diseases like small pox,

measles and the Plague. The Black Death carried by fleas in 14th Century CE.

Causing the death of millions, nearly fifty percent of the population of Europe (Lawler

2016).

In modern history, as technology improved and became more affordable and widely

available. Commercial travel was established in the 1950s. The Four Tigers, South

Korea, Taiwan, Hong Kong and Singapore utilised their labour market and allowed

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investment from Europe, America and Japan to take advantage of their

manufacturing and low cost labour force (Rabinovitch and Cox 2019).

They went from making textiles locally to manufacturing technology, internationally.

They became world leaders in manufacturing consumer goods like electronics, toys

and textiles resulting in accelerated economic growth. As growing nations with an

abundance of resources they excelled in global domination for exporting goods, for a

while.

Over the last fifty years, more so in the last twenty, technological advances have

increased and globalisation has bolted at an exponential rate. Businesses have had

to adapt and innovate to keep up with global demand. The movement of free trade

has also given industries the opportunity to access cheaper labour resulting in

increased profits. Corporations have managed to avoid local taxes, paid out lower

salaries to the developing country work force and have had to deal with fewer

workplace restrictions. The impact of outsourcing falls on the domestic market where

unemployment rates increase, creating a domino effect on nonwage related factors

such as employment discrimination, job security, child labour and cash in hand

employment where the worker has practically no rights (Robertson et al 2009).

The impact of low-cost foreign competition and saturated markets, domestic

businesses have had to lower their prices in order to stay competitive and take lower

profits. Although, businesses do have the option of buying larger volumes of raw

materials at lower cost to make up for this.

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The affordability of technology and manufacturing has also played a huge part in

helping businesses stay afloat of competition. The sharing of knowledge and

information has allowed businesses to move into new markets and industries to

compete on a global level. However not all have succeeded in establishing a niche in

the new market. Blockbuster failed to get online as Netflix and online streaming took

advantage of the internet. Blackberry also failed against Apples iPhone touch screen

technology. An entire cottage industry of successful businesses operates on Amazon

(Global) sourcing goods via Alibaba (China), supplanting existing businesses in the

local high street who can no longer compete.

“The Digital Silk Road” (Winter 2002) has also allowed the individual to trade on the

same platforms as the larger companies driving down prices even further. With Covid

19 and the easy access to technology many individuals and local businesses were

forced to go digital. It makes sense to cut out over heads and taxes with the rising

cost of fuel and resources. Online courses are another example of how businesses

can adapt. Students can gain knowledge online without having the cost of having to

travel and live abroad.

Conclusion:

There are many factors interlinked with the advantages and disadvantages of

globalisation. Globalisation has been a positive impact on industries when there was

a necessity to meet demand. Conversely, the negative impacts arise when there is

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excess demand or a disproportionate impact to a business or sector which has failed

to adapt. Leading to wider detrimental socioeconomic consequences.

Globalisation cannot be slowed or stalled, unless there is a global disaster that

effects the whole globe (Covid 19 pandemic). Countries or industries can only opt

out of the interlinked connections which can be devastating to their economy. An

example would be the UK exiting the EU, which has led to dire consequences for

many businesses operating in the UK. The only way to reduce its effects is to close

borders, reduce international trade and improve economic self-reliance. An option

that is not possible for most service-based countries.

The impact on business is that they must embrace the change and continuously

adapt in keeping up with globalisation through new innovations and technology. They

must do these using methods that will not damage the environment further.

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