Impact of Globalization on local business
- Pages: 6
- Word count: 1341
- Category: Business Globalisation Society
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Impact of Globalization on Local Business
According through the topic, in my opinion, I think that our world and many societies in our world have change from the past times. The reasons why our world has changed because of we have technology and money to be part of our life. We focus to develop the way to find the money even we know that is unethical, but we still to lie or do everything to get money. It makes effect to our world to be globalization. On the other hand, technology also affects our world to be a globalization because we emphasize to develop and compete between the companies to create a perfect technology to response the unlimited need of customers. They create and invent the technology that easy to use and look like the most moderate in the world, and then they will get the money from the customers. It affect to the customers to use the most moderate technology such as iPhone. Many customers always use smart phone to be a part of life. It affects to people that will not to talk even they are sitting in the same place. They will talk in the application or many things in the smart phone. This reason is my opinion to affect to our world to be globalization.
For the true meaning of a globalization, Globalization is the system of interaction among the countries of the world in order to develop the global economy. Globalization refers to the integration of economics and societies all over the world. Globalization involves technological, economic, political, and cultural exchanges made possible largely by advances in communication, transportation, and infrastructure. There are two types of integration—negative and positive. Negative integration is the breaking down of trade barriers or protective barriers such as tariffs and quotas. In the previous chapter, trade protectionism and its policies were discussed. You must remember that the removal of barriers can be beneficial for a country if it allows for products that are important or essential to the economy. For example, by eliminating barriers, the costs of imported raw materials will go down and the supply will increase, making it cheaper to produce the final products for export (like electronics, car parts, and clothes). Positive integration on the other hand aims at standardizing international economic laws and policies. For example, a country which has its own policies on taxation trades with a country with its own set of policies on tariffs. Likewise, these countries have their own policies on tariffs. With positive integration (and the continuing growth of the influence of globalization), these countries will work on having similar or identical policies on tariffs.
Effects of Globalization
According to economists, there are a lot of global events connected with globalization and integration. It is easy to identify the changes brought by globalization. 1. Improvement of International Trade. Because of globalization, the number of countries where products can be sold or purchased has increased dramatically. 2. Technological Progress. Because of the need to compete and be competitive globally, governments have upgraded their level of technology. 3. Increasing Influence of Multinational Companies. A company that has subsidiaries in various countries is called a multinational. Often, the head office is found in the country where the company was established. 4. Power of the WTO, IMF, and WB. According to experts, another effect of globalization is the strengthening power and influence of international institutions such as the World Trade Organization (WTO), International Monetary Fund (IMF), and World Bank (WB). 5. Greater Mobility of Human Resources across Countries. Globalization allows countries to source their manpower in countries with cheap labor.
For instance, the manpower shortages in Taiwan, South Korea, and Malaysia provide opportunities for labor exporting countries such as the Philippines to bring their human resources to those countries for employment. 6. Greater Outsourcing of Business Processes to Other Countries. China, India, and the Philippines are tremendously benefiting from this trend of global business outsourcing. Global companies in the US and Europe take advantage of the cheaper labor and highly-skilled workers that countries like India and the Philippines can offer 7. Civil Society. An important trend in globalization is the increasing influence and broadening scope of the global civil society. Civil society often refers to NGOs (nongovernment organizations). There are institutions in a country that are established and run by citizens. The family, being an institution, is part of the society. In globalization, global civil society refers to organizations that advocate
certain issue or cause.
In “The Communist Manifesto”, Karl Marx famously warned that small local businesses will inevitably be wiped out by large multinational companies in a form of imperialist capitalism. According to him, the destruction of local businesses leads to the loss of local culture, and the rise of a singular anonymous corporate culture which only varies slightly from country to country. Visiting China today, it’s hard to argue with Marx’s words. The urban landscape is littered with KFCs, Pizza Huts, McDonald’s and Starbucks. A trip to a Chinese department store is virtually identical to one in America, with the same multinational brands – Armani, Coach, Chanel, Gucci – lining the halls like an anonymous duty-free airport shop. However, at a closer glance, today’s multinational companies are a far cry from the sinister imperialists that Marx prophesised. Brands are highly localized to accommodate local tastes, and companies have forged mutually beneficial relationships with foreign countries to further their sales. Foreign governments are also quick to kick out offenders who don’t play by the rules.
While some local businesses – such as the aforementioned local grocer – have suffered, there are those which have avoided being crushed by a large, globalized company. In China, there are still plenty of successful small restaurants and coffee shops, despite the rise of the American multinational eateries. How did these restaurants survive? By providing local menu items – such as dumplings, noodles, Peking duck – that those chains lack the expertise to make. The lesson for a small business is simple – don’t keep making hamburgers when a McDonald’s comes to town. Sell something else. Entrepreneurs have to think globally to survive locally. Even the smallest “Mom-and-Pop” shop might sell products made overseas, and that shop can also sell to customers in other countries through the Internet. All this interconnectedness creates a domino effect when one country’s economy suffers. Exports might drop in that country, leaving entrepreneurs without products and raw materials they were used to buying. Entrepreneurship today means staying abreast of worldwide trends. Local Advantages International chains may set up shop in a neighborhood and capture the market with low prices. Often they accomplish this by using cheap labor overseas and selling products at low profit margins. As an entrepreneur, you can fight back, however. Locally owned stores can offer products that large chains do not. For example, a restaurant can offer local foods that large restaurant chains cannot offer. A boutique clothing shop can sell garments designed and made locally. To harness their global purchasing power, large chains cannot afford to buy and sell local specialties.
Small businesses can compete globally because they can sell locally made products through the Internet. Shipping companies routinely accommodate small businesses by offering package shipping to countries around the world. In addition, small-business owners can purchase products for resale from overseas markets, thus gaining a pricing advantage that was once reserved for global conglomerates. Small businesses also benefit from favorable foreign exchange rates when they buy in countries where the dollar is worth more than the local currency.
Speed of Adaptability
The new metric for measuring business potential is no longer size, because small companies can access global markets as easily as large companies. What matters now is speed. Small businesses can adapt quickly to local and global trends because they have a smaller bureaucracy than large corporations. A single entrepreneur can spot a trend, order products or create services, and exploit that trend before larger companies complete their meetings on the topic.