Globalization is an emerging trend in business.

Here you will learn the definition of

globalization, examine its positive and negative effects, and be presented with real examples
of globalization in the twenty-first century. Updated: 06/09/2020

Definition of Globalization
This morning you woke up and put on a polo shirt that read 'made in China' on the inside tag.
You then went to your garage and got in a car that had parts that were manufactured in all
parts of the world. You drove that car to the grocery store where you bought grapes that were
grown in Chile, sugar from Jamaica, and curry from India. You did all of this because of
globalization. In this lesson, you will learn the meaning of globalization, some of its positive
and negative effects, and some real examples of globalization.

While flipping through your TV channels you may stop at the various business channels, and
in your brief stop at that channel you may view a panel discussing globalization in the
marketplace. Even in the news, there is always a story that discusses the economic
ramifications of globalization. Globalization is defined in a variety of ways depending on the
circumstances. In general it refers to the opening of local and nationalistic perspectives to a
broader outlook of an interconnected and inter-dependent world with the free flow of capital,
goods, and services across national frontiers. This can be interpreted as meaning the
integration of world politics, economies and cultures from one country or countries upon
another country or countries. This integration also includes and is not limited to countries'
political, cultural, educational, and perhaps religious views. In practical terms it can also refer
to the relinquishing of any trade barriers or tariffs that results in uninhibited economic
development across all countries. Globalization in this context often refers to the idea that
instead of having many different markets, all the world is one gigantic market.

Effects of Globalization
Globalization has both positive and negative effects. On an individual level, globalization
affects both the standard of life and the quality of life. On a business level, globalization
affects an organization's product life cycle and an organization's balance sheet. Globalization
also affects how governments throughout the world create policies affecting areas such as
monetary regulation and trade.

Individual Effects
On an individual level, globalization has affected the standard of life and quality of life of
individuals and families throughout the world. Standard of living is the level wealth,
comfort, material goods, and necessities available to a certain socioeconomic class in a certain
geographic area. Quality of life is the degree to which a person enjoys the important
possibilities of his or her life. In many instances, quality of life has improved for those who
live in developing nations. For many developing nations, globalization has led to an
improvement in standard of living through improved roads and transportation, improved
health care, and improved education due to the global expansion of corporations. However,
globalization has had a negative effect on individuals who live in developed nations. This is
due to the fact that corporations now have the option of establishing manufacturing operations
in nations where manufacturing and production costs are less expensive. As a result, many
manufacturing jobs leave developed nations and move to developing nations.
Corporate Effects
On a corporate level, globalization has had an effect on organizations' product or service life
cycle. Product life cycle is the period of time over which an item is developed, brought to
market and eventually removed from the world market. One such example of globalization
having a positive effect on a product's life cycle would be the Kinder Egg. Kinder Eggs are
egged-shaped chocolate candies with tiny toys inside and are very popular with children.
However, due to the fact that the tiny toys may be a choking hazard for children, the United
States banned the sale of these candies. However, due to globalization, the Kinder Egg is still
a popular candy sold in Canada and several countries throughout Europe.

However, globalization could have a negative effect on corporation's balance sheets. An

example of globalization having a negative effect on a corporation's balance sheet can be
found in the United States steel industry. For years, steel from Asian nations has come into
the United States. This steel from Asian nations is cheaper than the steel manufactured in the
United States. As a result, many corporations and organizations that need steel to manufacture
their goods purchase the Asian steel over the US steel in order to decrease their own
production cost. This is had an ongoing negative effect on the balance sheets of US steel
companies.

Additional Questions:

1. Do most countries throughout the world practice globalism in one way or another? In
answering this question, be sure to define globalization and explain why you believe
most countries do or don't practice globalism.
2. Explain why developing countries, such as Mexico, benefit more from trading with the
United States than developed countries, such as Canada do. Specifically, discuss how
developing countries are about to achieve larger increases in standards of living and
quality of life than developed countries as a result of international trade.
3. One of the primary benefits that businesses receive from globalization is an increased
product life cycle for the goods they produce. In addition to describing what a product
life cycle is, explain why globalization extends a product's life cycle.
4. Explain the impact of globalization on a country's monetary policy. In providing your
answer, be sure to define and describe the monetary policy.
5. Explain the balancing act that politicians need to play in developing a country's trade
policy between what policy is best for the country and what policy is the most popular
and will result in those politicians being re-elected. Your answer should describe the
different aspects that make up a country's trade policy.