Arguably, globalization is taking the world by surprise. As a matter of fact, business has to prepare for globalization since it will affect various aspects such as marketing, ownership, management, as well as entire business operation. In a globally competitive market, organizations and business operation need to adopt the globalization impacts in order to0 achieve competitive advantage. The rapid changes in transportation, communication, as well as technology, coupled with a trade, and accommodating political policies, have led to unprecedented access in the global and international marketplace. The new and globalized marketplace has diverse ownership, products and management that make the entire business well complex to comprehend. It is essential to understand that globalization complicates the process of running and owning a business, as well as increase profitability. Those in the field of business having to undertake several studies, and research in order to compete in the global advanced marketplace. In addition, globalization to an extent of influencing market value of goods, and salaries of contemporary workers. In general, perspective all these effects and changes brought about by globalization require absolute preparation.
Globalization is unavoidable in business organization today. It has taken effect for many decades and it continues to accelerate in influencing the management, ownership, as well as profitability. The economy today has changed from being a national economy, with local features into a global economy full of challenges and opportunities. The competition and product markets have become global in nature, making the ownership complex. In fact, globalization is one of the main threat to business owners in the world today (Etemad and Richard 25). Organizational and business have utilized the opportunities that arise due to globalization to expand their businesses and go global earning them huge revenues and profits. The most known economies in the world have utilized the globalization changes, and are well known for its fast growing trend (Johnson & Colin 56).
There are various reasons makes an organization focus on going global. These factors include profitability and risk taking. Every business always lays down strategies that are aimed at making them leaders in the marketplace, achieving competitive advantage, as well as maximizing profits. Regardless, of globalization threats one of the main advantages of globalization of businesses is profitability. Apart from its portability aspect, globalization is a threat to ownership and business operations (Sin et al 911). Most global economies tend to focus on being part of interconnected companies that are controlled and owned by state, business groups or family. With globalization impacts in place, the means of ownership vary widely, and have continually looked complicated.
Globalization has complicated ownership in various ways. As business operation is globalized it requires a wide range of ownership mechanism that will align with global requirements. The confidence and trust among owners of businesses is threatened when businesses expand globally. Companies have to operate using various ways in order to adjust on the capital investment and risks. Owners of business, assert that going global in business will require the increment of capital to invest as well as the risk. As a matter of fact, companies that plan to globalize, must carry out tremendous research, meaning it will demand more manpower and financial resources, Therefore, to be at par with other global markets one should carry out research on the marketplace to understand the nature of the global markets, as well as the consumer needs.
In order to globalize, organizations must utilize global sourcing strategy. In this case, there are situations whereby a company on purchasing services and products from a local arena to be consumed locally. Globalization complicates the operation and ownership since it is difficult to launch foreign business operations from scratch (Etemad and Richard 55). Other strategies to be focused on entail licensing, joint ventures, importing, as well as exporting. Globalization complicates the trends of ownership and operations, but the main motivator that goes beyond this challenge is increasing the potential to increase revenue and profits in the organization.
In a global economy, the business planning to be part of it needs to prepare to face competition that comes from within and without, as well as internal and external complexities. In the global arena, businesses who want to engage nee to open themselves to new suppliers, increased capital new customers, new employees, as well as new markets. These sorts of preparedness do not eliminate complications that arise with globalization, but make the business ready to adjust and implement new business policies (Susman 68). In addition, there are opportunities that will arise, potential business with good plan will utilize the opportunities that come up to maximize its profitability and minimize operational costs.
Globalization is a continuous process and may always complicate the operations of the business due to its prompt changes. As a business organization, planning to globalize, there are various factors that should be considered in order to trim down the risks and complications of globalization. Gong global in business will entail use of different currencies. This is because there is variation of currency in various nations. Despite the fact that the Euro and the dollar dominated the global marketing and business, it is difficult to operate globally because of the persistent fluctuations of other currencies against the Euro or US Dollar (Parker 12). The fluctuations of the global currencies against the Euro or Dollar affect the prices of goods and services, as well as the initial capital outlay.
The fluctuations of currency can positively or negatively affect the business, but the issue of uncertainty complicates the operation of the business. The responsible stakeholders must be aware of the existence of this currency and the possibility of currency fluctuations. Hence, in order to dominate in the global market the operation managers must have the knowledge of the changing currencies prior to setting global markets. This will bring to attention the trends that exist and the cost of exchange rate. Globalization in this perspective complicates the entire operations of the business. Currency fluctuations in the global arena, threatens the profitability of the business, and to some extend it threatens (Etemad and Richard 125).
Globalization has always raised a lot of complication on ethical issues. As a matter of fact, carrying out business in the global arena will entail the incorporation of various cultures from different nations. Ethical issues are on its own a threat to organizations in the globe. In the global business, there is tendency to outsource labor and other services that entail production operations. The business will be forced to adjust to various operational ethics, since employees will be from different origin (Susman 34). The company to adjust to these changes has to implement diverse policies depending on the culture of the local marketplace. Globalization in the marketplace has changed the employment trends that organizations undertake. Companies have implemented policies that will enable them to employ the underage so as to cut costs. This trend threatens the face of the company.
Globalization has also complicated the operations and ownership of business through corruption. In order to develop a good base in the international business, business gets involved in illegal activities. Such business organizations indulge in bribe in order to maximize profits. In this perspective, the organizational businesses have been complicated by globalization because companies employ any means to minimize costs and maximize profit. It is ethically wrong to take advantage of poor nations by manipulating its government, people, and other responsible stakeholders in order to carry out unethical acts in business. The organizations employ poor people and provide them with low remuneration (Littrell & Marsha 87).
The increasing prevalence of globalization increases the fact that companies must deal with increase cultural diversity in the workplace. These globalization changes complicate the operation of business because the operational stakeholders should learn and understand how to deal with issues that arise with a diversity of cultures, as well as adopt guidelines and policies for its workers (Etemad 34). The difference in religious issues and work ethics are among the controversial and challenging topic in the world. The operations of the business are threatened due to the increased diversity, since more insights on cultures should be investigated before a business is launched at a global stage.
Globalization has also complicated earnings in the worldwide business. More companies have easy access to cheap labor force leading to outsourcing of remuneration changes in salary trends. In most developing nations, they struggle with the low standard of living due to poverty. Global business takes this advantage because employees from these nations can offer their services at a reduced salary rate (Johnson 289). In the long-run the standard of living within those nations will be low. This is the reason why businesses in developed nations such as United States embrace the culture of outsourcing. These trends will also mean too much profit margin for the business and decreased earning potential for many employees.
Globalization has complicated the business ownership and operation because of the need to implement new employee training. Religious, cultural and ethnic diversity in the contemporary workplace presents tremendous employee training. The business organization has the mandate to protect their employees and company reputation from discrimination (Karagiannis 89). In this case, the owners and operational managers should implement training policies and guidelines to ensure that all employees accept each other. This means an extra cost to the company; hence, globalization has complicated the business world.
Globalization has tremendously led to legal and political considerations systems that the organization must focus on. The political and legal issues have very huge impact on the globalization. The difference in the legal and political systems makes it difficult for business to operate. As a matter of fact, the existing legal systems act as a barrier to organizational development and launching an old business in foreign nations. Some of the legal issues include the taxation system, employment systems, remuneration policies, as well as investment policies. Countries with the favorable taxation system and political system encourages investment in such nations (Glass 98)
Certainly, language has become a global issue because it must be considered in carrying out business. Due to globalization, business is launching in various cities where many languages are spoken. For example, there are regions in India that US companies are operated. In this case, it is crucial to focus on issues of language. With technology, most companies use English yet there is miscommunication still. Therefore, technology has influenced the way organizations operate. In general perspective, globalization has complicated business operations and ownership, but many global businesses embrace globalization for the sake of increasing profitability.
Globalization increases business profitability through the gaining of new capital, customer market share, suppliers, as well as spreading of risks. Globalization has enabled business to make profits through utilization of cheap labor, especially in the developing nations. Companies in the global arena, has the possibility of marketing its brand name internationally. This move will attract many investors and are in a position to be part of foreign exchange trade (Glass 100). Perhaps, global businesses are in a position to adjust its way of trade and invest more on nations that have stable currencies. This move will help such businesses to make profits. In a global economy, economies of scale will enable a business to make profits. Therefore, global operation of the business will make them experience economies of scale.
In the 21st century, students in business studies must gather various information that will enable them to prepare to well compete in the global marketplace. One of the main ways of preparing for globalization for students is by undertaking various researches on global workplace diversity. This will enable them to understand the global cultures and business trends that changes in the world. In addition, students can choose to carry their studies internationally, either virtually or by attending international schools. Studying abroad and learning diverse language enables students to apply international standards in business operation, ownership and decision making. Globalization is actually a double edged sword in the world today. This is because it has complicated operations and ownership, and on the other hand, it helps global business in maximizing their profits.
Work Cited
Etemad, Hamid, and Richard Wright. Globalization and Entrepreneurship: Policy and Strategy Perspectives. Cheltenham [u.a.: Elgar, 2003. Print.
Glass, Amy. “Understanding generational differences for competitive success.” Industrial and commercial Training, 39.3 (2007): 98-103. Print.
Johnson, Debra, and Colin Turner. International business: themes and issues in the modern global economy. 2nd ed. Milton Park, Abingdon, Oxon: Routledge, 2010. Print.
Karagiannis, Nikolaos, and Zagros Madjd-Sadjadi. Modern State Intervention in the Era of Globalisation. Cheltenham, UK: Edward Elgar, 2006. Print.
Littrell, Mary A, and Marsha A. Dickson. Artisans and Fair Trade: Crafting Development. Sterling, VA: Kumarian Press, 2010. Print.
Parker, Barbara. Introduction to Globalization and Business: Relationships and Responsibilities. London [u.a.: SAGE, 2005. Print.
Sin, Leo, Tse, Alan, Yau, Oliver, Chow, Raymond, & Lee, Jenny. “Market orientation and business performance: A comparative study of firms in mainland China and Hong Kong.” European Journal of Marketing, 37.5 (2003): 910-936. Print.
Susman, Gerald I. Small and Medium-Sized Enterprises and the Global Economy. Cheltenham [u.a.: Elgar, 2007. Print.
