ATHE

Business Globalization
Assignment

Prepared By
Jipsa Jose ATHE Student Number: 483389

June, 2011

Table of Contents

Table of contents........................................................................................................................2

Introduction................................................................................................................................3

Reasons for the growth of globalisation.............................................................................................3 Advantages of globalization.......................................................................................................4 Cultural social and economic changes of globalization.............................................................4 Effect of globalization on employees and global workforce......................................................5

Conclusion..................................................................................................................................6 References..................................................................................................................................7

Introduction
The global economy is in the middle of a radical transformation, with far-reaching and fundamental changes in technology, production, and trading patterns. Rapid information flows and falling transport costs are breaking down geographical barriers to economic activity. The boundary between what can and cannot be traded is being deteriorated, and the global market is encompassing ever-greater numbers of goods and services. Globalization is the system of correlation between different countries of the world in order to develop the global economy. It refers to the integration of economics and societies all over the world. It includes technological, economic, political and cultural exchanges made possible largely by advances to communication, transportation and infrastructure. According to the United Nations Economic and Global Commission for Western Asia (UNESCWAS 1985) Globalization is widely used term that can be defined in a number of different ways. When used in an economic context, it refers to the reduction and removal of barriers between national boarders in order to facilitate the flow of goods, capital services and labour. Although considerable barriers remain to the flow of labour globalization is not a new phenomenon it began towards the end of the 19th century, but it slowed down during the period from the start of the first world war until the third quarter of the 19th century. This slowdown can be attributed to the inward-looking policies pursued by a number of countries in order to protect the respective industries. However, the pace of globalization picked up rapidly during the fourth quarter of the twentieth century.

Reasons for the growth of globalization

Growth of globalisation refers increased integration of world economies. It has been the main mechanism of growth and economic prosperity in many countries in the past 30 years. Economic growth in the last 50 years has been faster than it was in earlier centuries. The main reason is that international market has greatly facilitated faster growth. It is due to the degree of reliance on comparative advantage and division of labour. Comparative advantage exists when a country has a margin of superiority in the production of a good or services or in other words when the opportunity cost of production is lower. Division of labour relates to the specialisation of the labour force. Specifically, breaking down of the large jobs into many tiny components. It increases the efficiency of production. Rapid growth of world trade is the other reason. It happened due to the support facilities available from other trading nations like communication, wholesalers, finance and insurance these are expensive in third world countries. In addition to this technology played a significant role in the process of economic and social globalisation. Aeroplanes, computers and satellite-based communication make possible and ever- expanding degree of information exchange, commodity trade and individual contact across the globe. It helps to reduce the cost of communication and transportation.
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After the Second World War, globalisation received a boost from the dramatic lowering of trade barriers among major industrialised nations. This has been encouraged through organisations such as WTO. Moreover, there are trading blocks, many agreements amongst the countries to increase trade and cooperation. Increase capital mobility helps to raise finance from other countries. There are less restriction on the flows of capital. For instance, china transfers a lot of its trade surplus to countries like US. International monetary fund and World Bank granted loans with the condition of borrowing country will reduce the states role in the economy, lower barriers to imports, remove restrictions on foreign investment, eliminates subsidies for local industries, reduce spending for social welfare, cut wages, devalue the currency and emphasize production for export rather than for local consumption. These conditions are the basic foundation to open economies to steer the mechanism of economic integration giving birth to the World Trade Organisation.

Advantages of globalization
The following are the major advantages of globalisation: Increased free trade between nations Increased liquidity of capital allowing investors in developed nations to invest in developing nations. Corporations have greater flexibility to operate across the borders Global mass media ties the world together Flow of communication allows vital information to be shared among individuals and corporations around the world Smooth transportation for goods and people Reduction of cultural barriers upwards the global village effect. Reduce the possibility of war between developed countries Increases the environmental protection in developed countries. Increase the transmission of democratic ideals.

Cultural social and economic changes of globalization

The term culture means a combination of language, art and science, thought, spirituality, social activity and interaction. Cultural changes involves growth of cross-cultural contacts, advent of new categories of consciousness and identities which embodies cultural diffusion, the desire to increase ones standard of living and enjoy foreign products and ideas, adopt new technology and practice and also participation of world culture. In addition to this, globalization lead to multiculturalism everyone shifts into new lifestyles in terms of music, cloth and also other aspects. Appetizing culture has become extensively globalised. For instance, Japan noodles, Swedish meatballs, Indian curry and French cheese have become popular outsider their countries of origin. The famous two American companies McDonald and Starbucks are other examples of globalization. Furthermore, another common practice brought by globalization is the usage of Chinese tattoos among the youth. The internet breaks down the cultural boundaries across the world through enabling easy, near-immediate
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communication facilities between people anywhere in a variety of digital forms and media. Internet brought a cultural globalization because it allows interaction and communication between people with very different lifestyles and also very different cultures. The social dimensions of globalization involve the impact of globalization on the life and work of people, on their families, and their societies. Moreover it includes impact of globalization on employment, working conditions, income and social protection. Apart from this, the social dimension comprises security, culture and identity, inclusion or exclusion and the cohesiveness of families and communities. According to Jag dish Bhaghawati, a famous advisor of UN on globalization is a very positive force that removes countries out of poverty. He suggested that it causes a virtuous economic cycle associated with faster economic growth. In addition to this, globalization has been associated with many other changes such as technological progress, liberalization and deregulation. Economic impacts of globalization involve globalization on efficiency, growth and distribution. Globalization promotes efficiency achieve in number of ways. Static gains acquires whenever market distortions are reduced or eliminated. Globalization reduces the barriers to the movement of goods, service and factors of production. The replacement of state enterprises into Private Corporation has in many resulted in efficiency gains. But in contrast, the coincidence of globalization with economic crisis and stagnation has meant that in most countries the efficiency gains due to improved resource allocation appear to have highlighted the problems of poverty, unemployment and inequality.

Effect of globalization on employees and global workforce

Globalisation creates a multi-national and multi-cultural management. It is a major challenge to businesses and their managers. A multi-national business environment is more complex with many variables and also more difficult to manage. A multi- cultural employment policies leads to the employees of different nationalities, languages, religious and cultures in different offices across the globe. These employees react quite different ways to incentives to motivation and it is very hard to find managers who are sensitive to all these different factors. It is very easy to give unwittingly give offence and demotivate workers. For instance, the Japanese were initially very disappointed with their Thai employees who didnt respond well to Japanese methods of building up corporate loyalty and motivation. Once they turned production targets into a game the Thai worked extremely well. One of the important effect negative effects of globalisation is competition among the employees. For example, employees in low job security. Pillai(2008) indicates that people live in a fear of losing their job due to the high competition but in the past people had stable jobs. Nowadays increasing job competition has caused reduction in wages and hence lower standards of living. Moreover globalisation reduces the demand on unskilled labour. As a result of this, foreign direct investment does not want unskilled workers and they search only for high skilled workers. In addition to this, another important negative effect of globalisation is low labour standards. These standards are creating exploitation of labours, miserable working conditions and exploitation of the people. A major impact of globalization with its greater accessibility to cheaper labour markets is the increasing movement of multinational corporations to countries where lower labour costs
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provide a competitive advantage. Many of the multinational companies cutting jobs more heavily in Western Europe than in other regions. There is a direct competition between workers from the developed countries and emerging and developing countries in global labour market. The past two decades, political changes and economic reforms happened in china, India and former communist countries so that their workforce is also included in the global economy. Competition on the global labour market is mainly on three channels: trade in final goods, off shoring of the production of intermediate goods and migration. Among the three channels trade is the main goal, migration is very restricted, while off shoring is still quite limited. In addition to this, now global workforce is more efficient than in past decades due to rapid technological progress, especially information and communication technology. Apart from this, replacement of skilled labour in the place of unskilled workforce also significant impact of globalization.

Conclusion
In general, globalization has progressed; it significantly increased the standard of living of the people in all countries. However, the strongest gain has been occurred in many of the advanced countries. But in contrast, the income gap between high income and low income countries has grown wider. Apart from this, deep poverty is the outcome of globalisation.

References

1. Managing a global workforce: challenges and opportunities in international human resource management Charles m Vance and yon sun Paik 2. http://tutor2u.net/economics/revision-notes/a2-macro-globalisation-introduction.html 3. http://hubpages.com/hub/Definition-of-Globalization 4. http://www.imf.org/external/np/speeches/2002/092602a.htm 5. http://www.trcb.com/finance/economics/globalization-causes-benefits-andconsequences-419.htm 6. http://www.iie.com/publications/papers/paper.cfm?ResearchID=330 7. http://www.buzzle.com/articles/advantages-of-globalization.html 8. http://www.ilo.org/public/english/wcsdg/globali/globali.htm 9. http://www.pogar.org/publications/other/unrisd/econ-glob-97e.pdf 10. http://www.mrglobalization.com/migration/111-workers-are-globalizing 11. http://en.wikipedia.org/wiki/Globalization 12. http://rw303.wetpaint.com/page/McDonald's,+globalization+and+culture. 13. http://www.villaggiomondiale.it/conclusion.htm