International Business
Business Globalization
Business globalization is the ever-increasing process of integration of local
and regional markets into one unitary market of products, services and
capital. The main results of this process have been an increase in the
interdependence of traditionally national markets on the macroeconomic level and
the internationalization of corporate processes, especially production, distribution,
and marketing, as well as the adoption of international business strategies on the
microeconomic level.
Economists recognize the early signs of globalization in historical phenomena,
such as the increased economic activity in the Age of Discovery in the 16th and
17th centuries, which led to the founding of the British and Dutch east India
companies; and the new economic opportunities enabled by the scientific
discoveries of the 18th and 19th centuries, followed by the 20th century's
breaking ground on the Information Age.
The World Bank identifies three waves or phases of globalization, which
happened between 1870 and the 21st century. The origins of the process are
attributed to the falling costs of transport and the lowering of the politically driven
trade barriers.
In the first phase, trade in commodities developed into trade in manufactured
goods. Initially land intensive production became labor intensive. Mass
migrations for work became an everyday phenomenon, traveling becoming
easier with the development of the more advanced transport technologies.
The telegraph allowed more distant countries to benefit from the capital available
on the stock exchanges, as stock exchange institutions were brought to new
locations, contributing to the growth of financial markets. Two world wars blocked
international trade as individual countries turned protectionist.
The situation persisted up till the 1980s, by which time the international exchange
between the developed countries was largely freed from the barriers. Here
the second phase begins leaving the developing world outside of the free
trade market. It was during this second phase of globalization, when the
countries started to specialize in production and the businesses started to
function around agglomerations and clusters that economies of scale started
to matter. A discussion on the wealth inequality and the rising poverty in the
developing countries started, resulting in the postulates to allow all the nations to
participate in the benefit of a free trade. The inequalities of the early globalization
era in the 19th century were largely related to the ownership of the land, crucial
both for the commodity trade and for the manufactures. However, the inequalities
during the second phase of globalization showed a more systemic nature, being
driven by the protectionist policies of the developed world.
The third phase of globalization brings the "death of distance" in a traditional
geographical sense. It does not matter anymore whether the whole business
process is situated at the same location, as the service and non-core
functions, thanks to communication technologies, can be successfully
performed even on different continents.
1
, This third phase of globalization created offshoring locations in central and
Eastern Europe and the new, previously developing, economic empires of
India and China.
Although some of the former developing countries broke their way to the free
market and compete successfully for the investments, others remained
marginalized and are becoming even more excluded from the benefits of the world
economic growth than ever before. One of the most striking examples of poverty
levels and inequality are in the region of sub-Saharan Africa.
The relationship between economic, social, political and cultural aspects of
globalization is visible in the main determinants of globalization, which can be
attributed to various spheres of human activity.
They include but are not limited to 1) digitization, which enables easy distribution
of data, information and knowledge paired with a parallel advancement and
accessibility of communication channels, especially the Internet; 2) development
and internationalization of mass media, which creates certain convergence of
consumer patterns (e.g., mass accessibility of TV such as MTV makes the icons of
contemporary pop culture such as McDonald's or Barbie the symbols of capitalist
world, which developing societies demand, aspiring to the Western style of life);
moreover increasing capital consolidation in the sector of media enables the
formation of media empires, like Rupert Murdoch's, which allow a relatively small
group of opinion-makers to influence whole societies; 3) increasing cross-border
and overseas migration trends, caused by people's urge to improve their lives
and economic standing; 4) longing for freedom in those countries, which suffer
internal oppression either from the ruling class or from any other form of political or
economic regime; the democratization of political systems and in consequence 5)
the introduction of economic liberalization and popularization of the free
market philosophy (e.g., the spectacular transformation of central and eastern
Europe countries from centrally planned economies to the free market); 6)
advancing skills of global management allowing entrepreneurs to operate in the
wider geographical scale (a new category of companies, called transnational
corporations, is both a consequence of globalization processes and a response to
increasingly tighter competition, stimulating global dispersion of corporate
influence, management methods, production patterns and technologies); 7)
technological advancement and dynamics of innovations with their net effects
such as a quicker use up of limited Earth resources; this in consequence creates
new organizational behavior patterns (i.e., business sustainability, where business
models are created on the basis of energy savings and social responsibility); 8)
standardization of production and services being a consequence of adopting
certain strategies on the global market (a classical example of such standardization
is presented by the quality measurement norms-series ISO-certified by
independent bodies such as TUV; getting a certificate, which is determined by
adopting standard procedures in the organization, often determines whether the
company can obtain good contracts as the big companies with large international
networks of suppliers and distributors often select partners for co-operation on the
basis of quality certificates possessed);9) less restrictive trade
tariffs;10)strategies adopted by transnational corporations, which aim at
2
Business Globalization
Business globalization is the ever-increasing process of integration of local
and regional markets into one unitary market of products, services and
capital. The main results of this process have been an increase in the
interdependence of traditionally national markets on the macroeconomic level and
the internationalization of corporate processes, especially production, distribution,
and marketing, as well as the adoption of international business strategies on the
microeconomic level.
Economists recognize the early signs of globalization in historical phenomena,
such as the increased economic activity in the Age of Discovery in the 16th and
17th centuries, which led to the founding of the British and Dutch east India
companies; and the new economic opportunities enabled by the scientific
discoveries of the 18th and 19th centuries, followed by the 20th century's
breaking ground on the Information Age.
The World Bank identifies three waves or phases of globalization, which
happened between 1870 and the 21st century. The origins of the process are
attributed to the falling costs of transport and the lowering of the politically driven
trade barriers.
In the first phase, trade in commodities developed into trade in manufactured
goods. Initially land intensive production became labor intensive. Mass
migrations for work became an everyday phenomenon, traveling becoming
easier with the development of the more advanced transport technologies.
The telegraph allowed more distant countries to benefit from the capital available
on the stock exchanges, as stock exchange institutions were brought to new
locations, contributing to the growth of financial markets. Two world wars blocked
international trade as individual countries turned protectionist.
The situation persisted up till the 1980s, by which time the international exchange
between the developed countries was largely freed from the barriers. Here
the second phase begins leaving the developing world outside of the free
trade market. It was during this second phase of globalization, when the
countries started to specialize in production and the businesses started to
function around agglomerations and clusters that economies of scale started
to matter. A discussion on the wealth inequality and the rising poverty in the
developing countries started, resulting in the postulates to allow all the nations to
participate in the benefit of a free trade. The inequalities of the early globalization
era in the 19th century were largely related to the ownership of the land, crucial
both for the commodity trade and for the manufactures. However, the inequalities
during the second phase of globalization showed a more systemic nature, being
driven by the protectionist policies of the developed world.
The third phase of globalization brings the "death of distance" in a traditional
geographical sense. It does not matter anymore whether the whole business
process is situated at the same location, as the service and non-core
functions, thanks to communication technologies, can be successfully
performed even on different continents.
1
, This third phase of globalization created offshoring locations in central and
Eastern Europe and the new, previously developing, economic empires of
India and China.
Although some of the former developing countries broke their way to the free
market and compete successfully for the investments, others remained
marginalized and are becoming even more excluded from the benefits of the world
economic growth than ever before. One of the most striking examples of poverty
levels and inequality are in the region of sub-Saharan Africa.
The relationship between economic, social, political and cultural aspects of
globalization is visible in the main determinants of globalization, which can be
attributed to various spheres of human activity.
They include but are not limited to 1) digitization, which enables easy distribution
of data, information and knowledge paired with a parallel advancement and
accessibility of communication channels, especially the Internet; 2) development
and internationalization of mass media, which creates certain convergence of
consumer patterns (e.g., mass accessibility of TV such as MTV makes the icons of
contemporary pop culture such as McDonald's or Barbie the symbols of capitalist
world, which developing societies demand, aspiring to the Western style of life);
moreover increasing capital consolidation in the sector of media enables the
formation of media empires, like Rupert Murdoch's, which allow a relatively small
group of opinion-makers to influence whole societies; 3) increasing cross-border
and overseas migration trends, caused by people's urge to improve their lives
and economic standing; 4) longing for freedom in those countries, which suffer
internal oppression either from the ruling class or from any other form of political or
economic regime; the democratization of political systems and in consequence 5)
the introduction of economic liberalization and popularization of the free
market philosophy (e.g., the spectacular transformation of central and eastern
Europe countries from centrally planned economies to the free market); 6)
advancing skills of global management allowing entrepreneurs to operate in the
wider geographical scale (a new category of companies, called transnational
corporations, is both a consequence of globalization processes and a response to
increasingly tighter competition, stimulating global dispersion of corporate
influence, management methods, production patterns and technologies); 7)
technological advancement and dynamics of innovations with their net effects
such as a quicker use up of limited Earth resources; this in consequence creates
new organizational behavior patterns (i.e., business sustainability, where business
models are created on the basis of energy savings and social responsibility); 8)
standardization of production and services being a consequence of adopting
certain strategies on the global market (a classical example of such standardization
is presented by the quality measurement norms-series ISO-certified by
independent bodies such as TUV; getting a certificate, which is determined by
adopting standard procedures in the organization, often determines whether the
company can obtain good contracts as the big companies with large international
networks of suppliers and distributors often select partners for co-operation on the
basis of quality certificates possessed);9) less restrictive trade
tariffs;10)strategies adopted by transnational corporations, which aim at
2
