Impact of Globalisation on Businesses
Discuss about the Transactional and Relational Mechanisms.
The phenomenon of globalisation is considered to be the primary force that shaped the contemporary world through influencing the business and the society. In the business environment, the process of globalisation influenced near about everything. Globalisation in business context refers to the integration of the strategies, operations and the processes of a company into the variety of products, services and ideas (Boyden, 2015). Every consumer and the sippliers including the corporation all over the globe are linked with each other though means of materials, capital flows and information since the global production has become highly distributed and dispersed around different countries. The origin of globalisation is considered to be in the modern period by many researchers and scholars. However, there are also scholars who argued against this belief stating that this process has a long history describing the incidents of trade links in between the Indus Valley Civilisation and Sumerian Civilisation. Globalisation is considered to be triggered by the present period where maximum of the innovation and development took place in the fields of business connectivity with the other parts of the world with a rapid pace (Karlsson, Cornett & Wallin, 2018). This has resulted in the growth of sharing of the ideas, tradition and culture among different countries. Also, there is a great increase in the emergence of trade links among different nations which further influenced the national and international economies. This paper is going to elaborate on the identification of impacts of globalisation in current business world and on the knowledge of globalisation which international managers are supposed to possess to stay ahead of the game. Furthermore, the paper would also focus on the identification of the way the practise of outsourcing and off shoring are contributing to globalisation by using an example of a company’s case study to identify the barriers and opportunities present for its due to the increase in globalisation.
Globalisation has led to a significant increase in competition among different business corporations and is the result of more number of foreign investments flowing to the nations and de regulations as they allow the businesses to enter into the markets from which they once precluded (Kraakman & Hansmann, 2017). The extensive business growth among different companies has compelled the international brands to improve the quality of their products and services as well as the consumer benefits which are regarded to be constructively influencing many businesses in global level. There are numerous globally oriented firms that have attained the assistance of science and technologies in order to exploit the opportunities present for them in the businesses environment. For example, in present globalised world, there is a notable increase in the use of E-commerce in the businesses. Technology is the primary tool in the field of competition and the product and service quality. Globalisation has helped in increasing the speed of the technological transfer and the net technological quality (Saranga, Schotter & Mudambi, 2018). Also, this phenomenon of globalisation has created greater awareness about a company in several different nations. Customers all over the world have become very selective on essentials such as price, quality and service. Furthermore, globalisation has also aided in the increase of employment level in the world. Due to globalisation, there is an emergence of various new companies and this in turn has open up job opportunities for a wide number of people. There are numerous jobs available in the current world that attracts diverse talents. It is also to mention that it is because of globalisation that there is an increased in mergers and joint ventures all around the globe among different companies. It in turn is allowing access to bigger markets and the related cost advantages.
Impact of Globalisation on Different Nations
Globalisation is helping a lot to the developed and the developing countries but for the poorer and underdeveloped ones, the process of globalisation is considered to be a destructive one. The strong and the developed countries are exploiting the under developed nations on the name of business sharing. The process of power reallocation is taking place in the form of industrial and technological competition. Globalisation has helped the rich countries in developing technology in a fast rate and because of the advanced technological usage; labour has reduced to a significant number and the unskilled labours have lost their jobs (Stockhammer, 2017). Although using the capital intensive technology has reduced the cost of production, most of the advantages were retained like increased profit by the manufacturers. Furthermore, in order to globalise their economies, there are many countries that have opened their market for their foreign companies to enter. This is limiting the opportunities for the domestic companies to make a stand in their own nation. As the competition has increased, there is an increase in the entry of new companies in the business market. As because the domestic companies could not compete with the international firm, they tend to close their own business. With the same, there is also a fluctuation in the product prices in the market all over the world. The increased competition has forced the companies to lower down their product prices (Gilboy, 2016). For example, the Chinese companies produce their products at very low price as compared to the others and this has compelled the other companies prevailing in other nations to lower down their product prices as well so as to maintain customer loyalty and satisfaction. This has reduced the ability of the companies to sustain social welfare. Furthermore, as globalisation has increased job opportunities, the rate of job insecurity is also increased with a same pace.
It is to note that globalisation has a great emphasis on diversity and due to this it also has a great influence on the way the companies all over the world manage their employees and the workplace. Possessing proper knowledge about the impacts of globalisation on the business and its management helps the international managers to better equip their organisations for the highly global business environment (Cavusgil & Knight, 2015). Right from the early nineties, the process of globalisation has demanded immense efforts, skills and resources from the private as well as public organisation belonging from the developed and the developing nations with an objective of enabling the global managers, researchers, executives and public officers for dealing with innovation, equating challenges and new reality. In the modern business environment, the process of globalisation has greatly affected the customers and the management mind-set in profound manner. However, it is also to note that the international economy at present does not reflects the presence of political organisations which is defined as being “Nation State” (Berger, 2017). At present, there is an increase of new “Great Game” which is continuously reshaping and reconstructing the international economy around a particular collection of specific nations as well as the one with global economic institutions. It is to note that the challenges or barriers of globalisation are highly complex.
Globalisation and Diversity in Businesses
With the increase in the phenomenon of globalisation, firms, notwithstanding their sizes are now able to interact with their stakeholders and consumers belonging from different social backgrounds, cultures, and speak in different languages. When the international managers think about what could affect their roles, they usually think about worker productivity, the chain of command and their products or services. Even in small businesses, issues of globalisation and intuition could highly impact the roles of the managers. With rise in globalisation, there is also a rise in use of innovative and modern technologies in the business areas like that of cellular information, internet, or high speed air travel. This has made the businesses process across the world very easy. As said by Zander, McDougall-Covin & Rose (2015), more and more number of businesses are “born global”. Hence, expanding the business to international market is not the only option present for first world companies. In fact, small scale businesses belonging from the smaller countries are quickly reaching to the larger markets for sustaining themselves. Hence, it is very important for the international managers to gain modern and innovative perspectives as well as walk through a thin line between the efficiency and focus on every individual market. The international managers should be willing to examine the customers present in every market and to develop the services and products uniquely tailored for all their consumers. They must be adaptable, resilient and responsive to the diverse demands during delivering their services to the customers seamlessly. Managers must be dealing with every cycles of change which the phenomenon of globalisation is now-a-days bringing in and should also stay ahead of the game (Mishra, 2015). With the same, they should always try to make sure that their business executives are working well in order to stay close to the business customers. Creating a diverse and inclusive workforce in this globalised world has become very vital and it is believed to reflect the customers as well. Therefore, trying hard to develop staff knowledge, ability to service the customers and for creating learning environment have become very vital for supporting a very flexible working within the workplace.
Furthermore, the process of globalisation could have notable impacts on the decision making process of the international managers for making such complex or interrelated decisions. Hence, they try to cope up with the legacies of poor execution and try to overcome them. The phenomenon of globalisation has made sure the introduction of innovations and new ideas from sources like the countries, regions, industries and businesses (Koukious et al., 2018). If the companies need to achieve success, they need to make excessive aggressive strategic policies that would consider all levels, including the ones which are made and pushed by international subsidiaries which have the potential to make the headquarters learn the fact that local innovations could also create global opportunities for the business success.
Role of International Managers in Globalised Business Environment
The concept of off-shoring and outsourcing are now-a-days considered to be one of the critical parts of businesses’ circuits and are also highly applied in the. It was first begun within the textile industry in the seventeenth century. In today’s modern world, they are rapidly spreading among all the industries. With an increase in the process of globalisation, these concepts has become more applicable and apropos in the businesses all around the world (Reese, Rosenmann & McGarty, 2015). It is also to note that the global market has also identified a new concept of the offshore outsourcing which is coherent with its various benefits. Nevertheless, as the use and process of outsourcing in the modern business environments has become more complex than before, offshore outsourcing is fantastically making a transition concerning the business process outsourcing. Also, globalisation at present has become a language that is universal because it has conquered all the vital fields that present in human history comprising of business as well as the management. The growth in globalisation is an evident in many of the characteristics of business functions. With the same, Globalisation has also paved the path for strategic processes like that of offshore outsourcing and it has also proven its capability in InfoTech like data analysis and software management (Baum, 2015). Furthermore, offshore outsourcing is also proven to be one among the most functional products in the process of globalisation. Still, as the time has progressed, the concept of outsourcing has experienced an extraordinary speed. Offshore outsource not only provides transformation and innovation to the global market, and also has manifested its potential to connect every nations towards one development. The offshore outsourcing has resulted in linkages between the countries and has decreased the possibilities of earns among the supporting countries (Upadhyayula, Dhandapani & Karna, 2017). The process of globalisation has aided a lot in making offshore outsourcing feasible and it has also resulted in the concept of outsourcing in assisting globalisation mobility. Concept of outsourcing is helping the current businesses market by playing a vital role in globalisation mobility.
The contribution of offshore outsourcing the development and progression of globalisation is portrayed by its influence on the universal market which are signs of globalisation. It is fact that offshore outsourcing involves the exchange of services; hence, it is leading in the increase in global flow of capitals (Lanz & Maurer, 2015). They are also encouraging the speed of multiculturalism and larger people access to current diversity. Employees who belong from outsourcing companies undergo more cultural exchange as they get to work in an environment which is dissimilar from the others. Offshore outsourcing makes the development of global telecommunications infrastructure easier which in turn initiates better relation between diverse nations.
Decision Making Process of International Managers
In recent years, offshoring of the high paying service jobs to the countries like India received good attention from the media. As according to the analysis of the past three years; off-shoring has accounted 0.5 million people. Average lay-offs every year is about 250,000 or say and it is indeed much less than two percent from the rest 15 million Americans who instinctively lose their lay-offs per year (Kerkhof, 2015). It is beneficial to the current global economies.
There are several firms who have made use of this in their businesses and they are successful as well. Some of the best examples to mention include the Microsoft, UpWork, Alibaba, Groove, GitHub, Fab.com, SeatGreek, Slack and AppSumo. In case of Alibaba, a widely recognised E-commerce B2B company, too has flagged the ways for the firms looking towards outsourcing. Before outsourcing its production to China, Alibaba had initially outsourced them to a company prevailing in United States (Yang et al., 2016). During those days, development of foreign talents was still in shortage of supply and United States used to have skills that Alibaba needed for competing with ecommerce giants like eBay. Furthermore, it is also to state that the company did it all during the times when the use of internet was restricted in China. It realised the significance of outsourcing during its advance technological development.
Conclusion
To sum up the above analysis, it could be stated that the process of globalisation could be referred to as a social transformation which is increasing the unity among different countries through connecting them. This phenomenon is aiding the growth and development of this society both positive and negative manner. With the same, it is also to note that the signs of globalisation mobility are taken into consideration in the affects of the offshore outsourcing in international regions. The impacts of off-shoring and outsourcing as two of the fastest developments in the present business environment is still continuing to broaden its range of advantages. It has been also identified from the above study that the quality of management is one among the core features of growth and success. Globalisation is aiding in pushing the frontiers of management thinking. The success story of the company Alibaba has demonstrated that it is not important to opt to outsourcing to a different company in order to experience success. What is important is that a correct approach that has the potential to lead to success of the business.
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