Globalization Essay: Pros & Cons For a Company
Question
Task: Critically analyse the benefits that a company might obtain and the drawbacks that they may experience from the globalisation of markets. Use company and country examples in support of your discussion.
Answer
Introduction
The purpose of the globalization essay is to examine the beneficial effect of globalization on companies as well as the drawbacks it causes. Globalization is defined as a process in which where markets around the world integrate in regards to goods, services and capital and eliminates all kinds of boundaries. The process of globalization allow the economies around the world to open up different areas to the global businesses such as trade, advancement of technologies, internationalization of financial markets, population migration and others (Sampson 2013). As discussed within this globalization essay, companies around the world is seen to be disappointed with sales in the global market because with time the local and old markets gets saturated and emerging markets serves as new opportunities. With opening of market to the global sphere many well managed companies are able to move their emphasis to offer standardized products to the glob that are functional, advanced and reliable. Globalization has helped the companies to attain long term success due to openness (Palovaara 2017). However, globalization has also exerted various challenges to the companies as the international market is opening and converging towards commonality.
The globalization essay critically analyzes the benefits that a company obtains from globalization of the markets and the drawbacks they receive from it with some examples of companies and countries.
Discussion on the theme of globalization essay
Companies in today’s world exist in a complex business environment both internally and externally due to rise of globalization. This means that in order to survive in such an environment companies in today’s world needs to adapt to constantly changing and diverse market conditions globally. With such changing and complex environment it becomes important for the companies to set a suitable organizational culture that help in serving the need of the organization and allow them to operate in a global or open market. Further, Freshwater et al. (2006) states with regards to the case scenario of globalization essay that globalizationrefers to the emergence of international network and widening and opening of global interconnection. As market is being globalized the companies are able to reach to international demands and needs and using them for their own advantage and expansion strategies.Globalization helps the companies to create new demandsand new growth opportunities as they enter new areas. Further, the evidence of globalization can also be seen from the increased trade, capital flows and migration. Moreover, globalization has also helped the company to increase their communication network over the world by expanding the boundaries of human interaction across spatial, temporal and cognitive space. Herein globalization essay, we will see Muhammad et al. (2010) pointed out that globalization helps in giving promise of new and brighter future with better earning opportunities, demands and joint learning. This is because it helps create international collaboration and exploit their ability to fulfill the needs of new markets.
The most important aspect of globalization that helps the companies to reap the benefits is their effectiveness of collaboration and increased information management. Globalization has seen the development of information technology and communication systems such as internet. This has created new opportunities for the companies to exchange extensive information about global world and expertise and ideas across international communities. Such collaboration has help create new structures and new relationships and influence the business decisions and actions (Mago et al. 2013). Moreover, as new technologies are developing with globalization it is reducing the cost of information and capability of the business to participate in global market.
As per the investigation on globalization essay, enterprises has benefited from the rise of globalization due to several key success factors such as sound management capabilities, business culture, better financial management, continuous opportunities to expand, reduced cost and strong marketing network. Globalization has helped the organizations to take advantage of increased supply of labor at low cost and reduced dependence on human capital. Labor has become increasingly surplus due to access to global labor market based on openness to new labor supplies. For example, new labor supplies are being faced by developing countries such as China and India due to globalization. This has reduced the worker’s wages across the globe due to increased inclusion and marginalization (Gurría 2007). Globalization has helped in reducing dependence on human capital and widespread use of ICTs such as internet. This has helped businesses to take advantage of wider information and form beneficial strategies. For example, with globalization England saw 10 percent of houses using internet access by 2009 (Core 2020). This helped the companies across the world to take advantage of the information available from the consumers and use it during expansion strategy development in UK. This is because global technologies such as internet are being used to reach local end needs and form product and services by the business that meet local demands.
In this section of globalization essay, Mahmutovi? et al. (2017) has further stated that globalization has helped business across the globe to take advantage of the benefit of a society by creating web of closed link. Technology that is considered as one of the most profound driver of globalization has helped business to form a small cybernetic village. In this aspect the companies in one country can take the advantages of the technology development of other countries. For example, the nations in the West and Africa are seen to take advantages of technology development of China due to globalization and openness. According to COSTELLO (2001)it is noted in this section of globalization essay that globalization has helped the companies to look beyond their boundaries for business strategic level, management and leadership strategies. They now have to look at the size of the international market along with domestic market. While forming strategies the companies now look beyond borders so that they can gain success all over the world. For example, textile companies in Zimbabwean is facing huge competition from United Kingdom and Asian nations and they form strategies based on this competitive pressure and form differentiation that help raise their competitive advantage. Moreover, Gerritsen and Høj (2013) pointed out that globalization has helped the businesses to revise their ethics policy with the aim to comply with world standards. The readings provided in the globalization essay signify that it becomes important for businesses to be ethical and this allows them to gain better advantage from the market. Through these advantages of strategy development and ethics companies are able to create opportunities to expand their revenue streams increase their brand equity.
For example, globalization has raised the success rate of McDonalds over the years with better global expansion and reach to other parts of the world. With globalization McDonalds is able to move overseas easily by forming global strategies such as strategies on menu based on local tastes such as Big Mac and French Fries. The study on globalization essay mentions that this is possible due to the rise of ICT such as internet where they get benefit of researching global tastes and preferences related to pricing, marketing and others (Ft 2020). For example, the food menu of McDonalds in India is very different from that of food menu of US because Indians prefer spicy food compared to less spicy and health conscious food preference of Americans. This was possible due to internet and access to wide amount of information. Moreover, it is seen in the globalization essaythat globalization strategies of McDonald’s is to locate their restaurants overseas and make their presence in 119 countries and serve more than 50 million customers everyday globally (Bowler 2020). With globalization McDonalds is able to form their market beyond US such as China, India, Japan, Russia, Europe and Latin America.
Globalization has helped McDonalds to be adaptable to changing cultures and make change evitable and easily application in the business. The key success for McDonalds mentioned in this globalization essay is due to two factures such as adaptation and innovation. With globalization it is seen that McDonalds is able to come up with variety of services and products in order to align with consumer needs across diverse cultures and economies. Companies are able to adapt to different cultures and expand their business strategies to wider areas that add to their success. For example, McDonalds came up with innovative products such as healthy drinks and coffee, competing with local cafes of different area with expansion of globalization (Bowler 2020). Moreover, it was McDonalds that bough American way of living to several Asian countries by mixing with local entrepreneurs. They mixed with local social setting in every country by entering via franchising to local entrepreneurs. These are the benefits that globalization has helped companies like McDonalds to achieve over time and made them the largest global food chain. Moreover, as seen globalization help companies to be more ethical over time, similarly it has helped McDonalds to become ethical by investing in training and maintaining diverse cultural workforce. They pay great attention to wellbeing of the employees and make their business environment highly ethical.
Along with benefits it is also seen in this globalization essay that globalization also exerts lot of drawbacks and challenges for the companies. Gerritsen and Høj (2013) has pointed out that globalization along with undisputed benefits also has complex moral drawbacks for the business leaders. The leaders of the business cannot ignore these drawbacks in order to be successful globally. Some of the moral drawbacks that globalization adds to the businesses mentioned in the globalization essay are legal disputes regarding climate change, intellectual property rights, economic inequity and human rights. Different regions along the globe have different moral requirements and companies find it difficult to adapt to such diverse moral views. Nations has different environmental needs and regulations as well that companies needs to adapt to in order to be successful on global grounds (Thompson 2010). This shows that globalization increases legal issues for the global businesses if they fail to comply by required regulations regarding new products, techniques, environment and others. According to Forbes (2020) it is seen that lack of support from government is yet another important drawback that globalization adds to the companies that plans to go global. Thus, with lack of government support a business faces huge issue in the new international market. This is because government is several areas has concerns with the national environment and needs and plans to prioritize entry of companies that will help benefit the economy.
For example, with globalization it is seen that McDonalds is facing drawbacks from increased government regulations. The company is facing huge challenge from food safety concern in China and this undermines the brand. McDonalds was hit hard in China due to their expire meat that created huge safety concerns and this made the brand come under pressure. The globalization essay examines thatsuch failure to meet national regulation in one country effects their business in other nations as well such as in Asia-Pacific, Middle East and Africa. This is because consumers lost trust on the brand and the company faced the effects of the scandal. Moreover, in India as well the legal dispute eats away early advantage of McDonalds. This shows that globalization also comes with legal disputes that are the biggest drawbacks (Mujtaba and Patel 2007). McDonalds also faced mass shutdown in Russia due to sanitary regulations from the consumer protection bureau.
In addition to this, companies that are adapting to globalization are also seen to struggle with changing consumer tastes over the long run. This is because preferences of the consumers are changing fast across global and adapting strategies to meet all changes is a complex aspect to implement. For example, McDonalds faces shift in dining habits of consumers in global market along with its home market. There are some economies that prefer healthier and fresh food, while others prefer spicy food ingredients. This becomes a huge drawback that globalization causes to the companies, as they expanding to different regions. Before the company was only limited to consistency of its products with less needs of variations. Over time the company has to think about expanding to more customizable products and this becomes a challenge for them (Mujtaba and Patel 2007). This shows that even though globalization benefits the companies with increased chances of profit, yet there are drawbacks of ever need for strategic changes to meet evolving global environment.
According to the findings of Muhammad et al. (2010) considered herein globalization essay it is seen that globalization increases competitive pressure for the companies more than what they face in their home market. The competitive pressure comes from local companies in new international market as well as known brands existing globally. This is because globalization opens new avenues for companies to enter and every competitor tries to achieve maximum benefit in the new market. This is yet another drawback outlined in this segment of globalization essay that globalization brings to the consumer along with the ability to increase revenue. For example, McDonalds is facing huge competitive pressure from fast casual restaurants and quick service chains in their global outlets because they are now exposed to large customer base as well as large number of other brands selling similar products. The consumers look at alternative options for eating fast food according to their preferences (Sampson 2013). In China it is seen that McDonalds faces huge pressure from KFC and this is the result of rising globalization. With global expansion and openness it is seen that companies also face hug drawback from threats and issues in external environment. There are instances when the company falls under problem due to external challenges facing the economy such as political instability, economic recession, trade relations and others. For example, McDonalds was caught up in geopolitics in Russia due to deteriorating relations between Moscow and US. As a result of this relationship issue it is seen that McDonalds came under the consumer protection agency of Russia due to their health safety standards (Ft2020). This is yet another issue that globalization has added to the operations and brand reputation of McDonalds due to expansion in other nations.
From the drawbacks that globalization poses to companies it is seen in this context of globalization essay that globalization kills the soul of the company due to extensive changes, diversity and others. For example McDonalds lost its soul or image and has reached the point of no return. They sold their sole with the intension to go global because they focus on franchisee more than customer satisfaction failure (Forbes 2020). With continuous changes in strategies to expand globally the organization lost their actual image and value in the market slowly. Thus, the business faces benefits as well as issues when they plan to move globally in the outward environment.
Conclusion
From the above analysis on globalization essay it can be concluded that globalization of market is a complex phenomenon to be implemented and it helps the organization to face huge issue even if it is adopted with the intension to gain advantages. Globalization is becoming a common concept in the economy where markets are opening to global sphere with increased trade. This is making the companies adapt to increased environmental needs while entering new markets and reaping the benefits of emerging markets. Moreover, globalization also helps in making the company receive cost benefits and profit over the years. However, such benefits also come with number of drawbacks that the company faces. It is seen in this globalization essay that there are issues such as huge competitive pressure, regulation issues in other economy and others that company faces. Such issues and benefits from globalization is seen to be faced by the McDonalds over the years where the brand has reap benefits of increased expansion and market share and has also faced issues from rising competition and regulation in other countries. From globalization essay it is seen that McDonalds actually lost its soul to their franchisee as their major focus was only on expansion and not on customer satisfaction.
References
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