Management > International Business Management > Introduction to International Business > Globalization
Globalization is a process where businesses are dealt in markets around the world, apart from the local and national markets. It is the process of international integration arising from the interchange of world views, products, ideas and mutual sharing, and other aspects of culture. According to business terminologies, globalization is defined as ‘the worldwide trend of businesses expanding beyond their domestic boundaries’. It is the word used to describe the growing interdependence of the world’s economies, cultures, and populations brought about by cross-border trade in goods and services, technology, and flows of investment, people, and information. It is advantageous for the economy of countries because it promotes prosperity in the countries that embrace globalization. The driving forces of globalization are unprecedented growth of market forces across the globe and the convergence of Information and Communication Technology (ICT). Communication and the eases of transport shrank space and time, which changed the form of globalization both qualitatively and quantitatively.
Anthony Mc Grew says that globalization as is a multiplicity of linkages and interconnections that transcend the nation-states (and by implications the societies) that make upon the modern world systems”. He defines globalization as a process through which events, decisions, and activities in one part of the world can come to have significant consequences for individuals and communities in quite different parts of the world.
William Tabb defines globalization as a process of reducing barriers between countries and encouraging closer economic, political, and social interactions. Similarly, it is a process of interaction and integration between the people, companies, and governments of different nations, and driven by international trade and investment and aided by information technology.
Globalization is a process, which has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world.
Characteristics of Globalization:
Globalization is Initiaed by Economic Liberalization:
Liberalization is defined as laws or rules being liberalized, or relaxed, by a government. Economic liberalization is generally described as the relaxing of government regulations in a country to allow for private sector companies to operate business transactions with fewer restrictions. It also includes the opening of their economic borders to multinationals and foreign investment. It provides the freedom to the industrialist/businessman to establish industry, trade or commerce either in his country or abroad; free exchange of capital, goods, service, and technologies between countries. It helps in free trade between different countries. In the seventies, China and in the nineties, India adopted economic liberalization.
Globalization of Economic Activities:
The rise of new electronic payment systems, including e-Wallets, pre-pay and mobile pay, e-Invoices, online payments, and mobile pay apps, also facilitate increased global trade. Thus there is a coordination of economic activities between the domestic market and international market. The companies like Amazon, Alibaba, and Wall Mart have a global presence and all economic activities made digital.
Spatial Division of Labour:
To gain the economic advantage of cheap labour and cheap raw material in developing countries company adopts the policy of outsourcing and offshoring of production and support services. Thus the production supply-chains become more international. As an example, the iPhone is part of a complicated global supply chain. For example, most iPhones of Apple are assembled/manufactured in China and Taiwan by TNCs such as FoxConn.
No Territorial Boundaries Among Nations:
Globalization provides an immense opportunity for the people to interact world over in spite of geographical non-proximity. Developments in Information and Communication Technology (ICT) and transport have accelerated the pace of globalization. E-Commerce, online shopping, online payments, video conferencing help people to communicate instantaneously with each other notwithstanding vast geographical distances separating them. Globalization signifies new forms of non-territorial social activity.
Greater Interconnectedness among the Nations:
With the advent of Globalization, it has been understood that no country can be said to be totally independent, not needing anything from any other country. Hence, a culture of interdependence has been established between nations. Globalization has brought about social linkages across the existing geographical and political boundaries. Societies being connected with the world by breaking national boundaries; forging of links between one society and another, and between one country and another through the international transmission of knowledge, literature, technology, culture, and information.
A Top-Down Flow Process:
Globalization originates from developed countries and based in those countries. Technologies, capital, products, and services originate from developed countries and are transferred to developing countries. As a result, the values and norms of developed countries are gradually get rooted in developing countries.
Global Civil Society (GCS):
Globalization is broadly viewed as a contemporary process of increasing intense interconnectedness/interactions/inter-dependence/integration across borders/state and communities (local/national) in different spheres of human life – economic/financial, technological, social, cultural, and political. This process, it is stated, is leading to the emergence of ‘one world’, a global society. It needs to be noted that GCS comprises a diverse set of organizations, individuals, and ideologies. It does not take a unified/single stand on globalization.
A Multi-dimensional Process:
Economic aspect: Globalization means opening up of the national market, free trade, and commerce among nations and integration of national economies with the world economy. It has four different aspects.
Political aspect: Globalization means limited powers and functions of the state, more rights, and freedoms granted to the individual and empowerment of the private sector
Cultural aspect: Globalization means the exchange of cultural values between societies and between nations.
Ideological aspect: It means the spread of liberalism and capitalism.
Globalization is Inevitable & Irreversible:
“You can not stop the advent of an idea whose time has come”.Globalization is one such idea. There have been attempts by fundamentalist forces all over the world to oppose and stop the process of Globalization over the past quarter-century. But despite differences in political ideologies, the nations worked towards implementation of Globalization policies.
Conclusion:
With proper implementation, globalization will help us in improving our lives and productivity. We can equip ourselves to take maximum advantage of opportunities thrown open by Globalization and help our country to realize its true potential.