Discussion
Businesses particularly large and medium organizations find the elevated basis of the commercial platform beyond home territories. This can be largely attributed to the motivating factor of business globalization that has been happening continuously in a bid to espouse the global perspective in business operations. Commercially viable business operations commensurate with strategic fit can get the desired outcome for the business enterprises (Cantwell, Dunning, and Lundan, 2010). Globalization is a much talked about topic which creates opportunities for many firms however, the complexities and challenges inherent in such a course cannot be totally negated. Businesses, influenced by globalization experience varied implications which are either bad or good and these implications have been highlighted in this essay.
Globalization is a term which relates to a process of business operation on an international scale. This is also known as the adoption of a broad outlook in business for transferring of goods by means of sales across international borders. In the present times, more often than not, globalization acts as an important factor for businesses to increase sales since business is facilitated to move products and services across more than one country. Firms often consider the aspect of globalization helpful to expedite sales based on an easy as well as efficient process. But in several occasions outcomes in the form of inequality often overrides helpful facets of international exposure, exploration of innovation and technological expertise, talent, and skill nurturing among the workforce and better economy of home and host country (Hill and Hernández-Requejo, 2008).
Since the advent of globalization, besides fruitful commercial outcomes from a business perspective, industry and political arenas are concerned about the unexpected implications that arise out of the process. Inequality is largely feared from the commercial perspective because of the involvement of several stakeholders at various levels. From the point-of-view of a country the involvement of GDP and trade performance as indicators of individual economic well-being can throw substantial light on the issue of inequality. In developed economies of US, France, Germany, and the UK, inequality has emerged as a seemingly political concern. GDP and trade are always considered important pointers of globalization and their dependence on each other reflects the volume of globalization-backed business performances (Hill, 2008). From the year 1980, this metric has been on the rise but interrelation among inequality and trade cannot be properly inferred from this relationship between GDP and trade. The trade and GDP relationship remains a conundrum for many in the industry. Since the time when globalization was on its high and was not positively anticipated, the percentage of trade to GDP ratio slipped to 56 percent in the year 2016 after reaching its peak on 2008 which was recorded at 61 percent.
The year 1980 was the starting period of inequality from when it glided upwards till the turn of the century. Economic growth of a country supports the requirement of per capita income which becomes adequately full or to some extent supportive in raising the stature of equality in the Global map in consideration of the individual economic position (Cuervo?Cazurra, 2011). China and India are developing nations and with their success in improving per capita income, inequality was shackled and diminished while not every other country could ensure an inequality free outcome on the basis of trade and globalization (Trompenaars and Hampden-Turner, 2011). This situation is pointed out by Xavier Sala-i-Martin of Columbia. If empirical information is relied upon in respect of inequality then World Inequality Report 2018 confers a picture that shows the extent of inequality even in a country like the US. Top one percent of the population in the country claimed an increase in income to the extent of 20 percent in 2014 from only 11 percent in 1980. This stands in contrast when it comes to income of 13 percent of the bottom half of the population in the country. Income of people in this segment rose to only 14 percent. Countries such as Germany, UK, and France have the almost same or less highlighted trend (Popescu, 2013). However, inequality is avoidable and it is possible on the basis of the facility of education, and high savings, that factors in as a resistance and the improved performance of India and China was possible depending on these factors. The remarkable performance of the country in terms of economic success depends on trade and GDP which remain vital determinants and assist the per capita income to stay bloated. Therefore, if seen geographically then the success of the Asian economy has made others aware about the significance of per capita income with due consideration that individual earnings will help to control inequality in a social and commercial context. This acts as a point of convergence between developed and developing countries, still, differences regarding the volume of inequality are comprehensive.
Most importantly developed economies consider trade as GDP booster if the inequality volume is considered while countries like China and India take a view of income and GDP driver based on consideration about the trade. The effort of trade and GDP improving the performance achieve a justifiable basis when a reduction in inequality is possible irrespective of the country’s status as a developing or a developed nation. If the success of Asia is believed to be catalyzed by the contribution of US then the mercantilist theory is better understood which prevailed three centuries ago. The dependence of Asia if is perceived to be dependent on the contribution of US then the zero-sum game as the important feature of the mentioned theory becomes perceptible (Thomas, 2008). However, comparative advantage is the important ground that was proclaimed by David Ricardo and Adam Smith for the benefits achievable from trade if it exists in the countries of business operation. If this view is taken into consideration then the existence of inequality in different countries of a developed and developed economy is perceptible in the presence of an enhanced awareness pertaining to focus on developing per capita income for removing inequalities in developed nations in contrast to developing countries. Statistical inference based on World Inequality Report 2018 highlights the presence of inequality in the countries having a developed economic situation. Contrasted views based on the citizen and country wise concept split into national GDP and per capita income that often creates confusion about overall inequality and individual perspective towards equality assurance (Morrison, 2011).
Theory framed by Smith-Ricardo is unable to spot difference among citizens of a country when it comes to earnings distribution. Thus perplexity in relation to income distribution is still unaddressed by the framed hypothesis supported by them. But this does not alter the income inequalities in the countries setting aside the concept of individual and country wise income and per capita earnings. Trades are initiated by employers or owners of financial resources and human capital and in this context individual income is the result of improved GDP that influences income and expenditure capacity among the individuals (Ferraro and Briody, 2013). This notion is upheld by Heckscher-Ohlin-Stolper-Samuelson model and this asserts that workers and owners are different in terms of different positions. In developed countries, global trade benefits the several factors of production. Employees or workers always are able to achieve high compensation if organizations are competent to achieve the production target. Concepts of increasing returns to scale and imperfect competition were introduced by Paul Krugman and Elhanan Helpman however when this situation is put under control, market monopoly gives rise to inequality since trade influences the account of business people with the power to control. Shifting of resources from low productivity to high productivity firms are meant for better use of resources for achieving operational excellence (Unit, 2009). This is theoretically influenced by Marc Melitz and with the intervention of this concept inequality is expected to remain under control. These new theories of economics have been embraced by several critics who are opponents of globalization.
Free-trade situations in developed countries were believed to remain detrimental to the interest of common people who are economically subservient. Another reason for this was a perception which makes people believe that inequality is somewhat connected to free market conditions in several countries. The emergence of trade and commerce with low consideration of workers in rich countries leads to inequality. The Heckscher-Ohlin-Stolper-Samuelson trade theory’s prediction which states about low-income potential for low skill people can be felt (Hough and Neuland, 2008). The increase in income inequality in the developed countries denotes the rationale of the prediction based on the theory. This theory also stands as an exception to a better-controlled inequality in some countries which are comparatively less developed and have many unskilled workers. These countries are in a better position in terms of controlling inequality. From the given case study it is clear that China and India are both developing nations and have relatively controlled inequality in comparison to the US and other developed nations such as Germany, France and United Kingdom (Colfax, Rivera and Perez, 2010). The reasons for this are several such as high demands of services by the unskilled workers in the internationally shaped business sector and industry including many organizations that are active participants in trade and commerce. Income inequalities are present in many developing countries and as workers are low-skilled with high volume of inequality in income they are worse affected (Savrul, Incekara, and Sener, 2014).
Observation of BrankoMilanovi? and Lyn Squire asserts that income inequalities are also caused by a reduction in tariffs in many poor nations where workers are skilled but are not paid justifiably and also in countries where workers suffer from low levels of skills and education. Pinelopi Goldberg and Nina Pavcnik reported in 2007 that expectation soared high due to the high demand of unskilled workers in an integrated market in global platform where trade is likely to reduce inequalities (Gecevska et al, 2010). BRICS countries have not achieved significant development in terms of achievement of equality. Conditions like inequality somewhat worsened even after ten years in emerging countries under BRICS (Louhiala-Salminen and Kankaanranta, 2011). Several developing countries which have better performed earlier could not resist inequality. In Brazil, the top one percent consists of 25 percent of national income. In Russia income of the top one percent surged to 20 percent in 2015 as compared to 4 percent in the year 1980. In a country like India, this figure increased to 22 percent in 2013 in comparison to 6 percent in the year 1980. In China, this increased up to 14 percent in 2015 in comparison of 8 percent in 1978. The trend in South Africa was almost similar and it increased to 19 percent in 2012 from 9 percent in 1987 (Peng, 2016). Technological progress has created demands of technological implementation in many countries no matter how developed and underdeveloped they are. Accordingly, demand for skilled workers becomes high and unskilled workers find less opportunity of achieving better compensation.
In the event of inadequacy of supply of skilled workers to meet the knowledge and skill requirements to support technology-based jobs, the situation of inequality becomes more prevalent with less focus on low skilled or unskilled workers (Tarique and Schuler, 2010). This situation in many countries aggravates with an increased level of outcomes in favor of advantaged individuals from business and political intervention. In a country such as US redistribution via tax is not adequate and accordingly does not suffice to improve the situation. More specifically, the prevalence of inequality cannot be negated in comparison to the other countries in Europe. The crisis of inequality as has been highlighted in the course of this discussion can be effectively addressed by governmental interventions as well as through the cooperation of international traders. Globalization cannot be blamed fully since policy inadequacy is the cause of ineffective practices in globalized platform resulting from globalization. Therefore, globalization cannot be possibly resisted ever since furtherance of economic development is dependent on it (Okoro, 2012). The only needed approach is policy framing and harmonized practices of government and business firms to establish the practice of equality for the benefit of working people as well as individual citizens of the country.
Conclusion
Inequality as an issue merits attention from the government through initiatives along with consideration from industry level. Globalization has become an important concept of business performances in the global arena which often takes a complex form. Inequality has become a problem largely comprehensible from the situation in US, UK, Germany, and France. Even conditions in developing countries and countries under BRICS are unimpressive with regard to the issue. Technological demand, demand and supply of skilled and unskilled workers are also an important determinant. In this essay, several theories have been presented for better understanding of the implication of globalization. Moreover, the examples of inequalities from the given case study depict inequality as an effect of globalization.
References
Cantwell, J., Dunning, J.H. and Lundan, S.M., 2010. An evolutionary approach to understanding international business activity: The co-evolution of MNEs and the institutional environment. Journal of International Business Studies, 41(4), pp.567-586.
Colfax, R.S., Rivera, J.J. and Perez, K.T., 2010. Applying emotional intelligence (EQ-I) in the workplace: Vital to global business success. Journal of International Business Research, 9, p.89.
Cuervo?Cazurra, A., 2011. Global strategy and global business environment: the direct and indirect influences of the home country on a firm’s global strategy. Global Strategy Journal, 1(3?4), pp.382-386.
Ferraro, G.P. and Briody, E.K., 2013. The cultural dimension of global business. Upper Saddle River: Pearson.
Gecevska, V., Chiabert, P., Anisic, Z., Lombardi, F. and Cus, F., 2010. Product lifecycle management through innovative and competitive business environment. Journal of Industrial Engineering and Management, 3(2), pp.323-336.
Hill, C., 2008. International business: Competing in the global market place. Strategic Direction, 24(9).
Hill, C.W. and Hernández-Requejo, W., 2008. Global business today. New York: McGraw-Hill Irwin.
Hough, J. and Neuland, E. eds., 2008. Global Business: Environments and Strategies: Managing for Global Competitive Advantage. Oxford University Press Southern Africa.
Louhiala-Salminen, L. and Kankaanranta, A., 2011. Professional communication in a global business context: The notion of global communicative competence. IEEE Transactions on professional communication, 54(3), pp.244-262.
Morrison, J., 2011. The global business environment: Meeting the challenges. Macmillan International Higher Education.
Okoro, E., 2012. Cross-cultural etiquette and communication in global business: Toward a strategic framework for managing corporate expansion. International journal of business and management, 7(16), p.130.
Peng, M.W., 2016. Global business. Cengage Learning.
Popescu, G.H., 2013. Macroeconomics, effective leadership, and the global business environment. Contemporary Readings in Law and Social Justice, 5(2), p.170.
Savrul, M., Incekara, A. and Sener, S., 2014. The potential of e-commerce for SMEs in a globalizing business environment. Procedia-Social and Behavioral Sciences, 150, pp.35-45.
Tarique, I. and Schuler, R.S., 2010. Global talent management: Literature review, integrative framework, and suggestions for further research. Journal of world business, 45(2), pp.122-133.
Thomas, D., 2008. Cultural Intelligence: People Skills for Global Business: Easyread Super Large 20pt Edition. ReadHowYouWant. com.
Trompenaars, F. and Hampden-Turner, C., 2011. Riding the waves of culture: Understanding diversity in global business. Nicholas Brealey International.
Unit, E.I., 2009. Global microscope on the microfinance business environment. a pilot index and study by the Economist Intelligence Unit, Economist Intelligence Unit Limited.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
