Recent Global Trend In International Business Commerce Essay


Term 'Globalization' is difficult to explain because it may come with a lot of meaning but according to Griffin & Pustay (2012) 'Globalization' can be defined as "the inexorable integration of market, nation-states and technologies … in a way that is enabling individuals, corporations and nation-states to reach out the world farther, faster, deeper and cheaper than ever before" (Griffin & Pustay, 2012, p.32)

In general, Globalization certainly had many changes in the world we live in; thus, it talks more about the trend towards countries joining together economically through society, politics and education and they view themselves not only through their national identify but also as part of the world as a whole. It is to be said that, Globalization has brought all nations people closer through a common medium like the economy or internet.

In the bigger picture, Globalization refers to the growing economic interdependencies among different countries and thus it reflects the increment in business of goods and services and capital flows across the countries border. It provides advantage to companies to function across the globe in different countries and environment.

Technological Advancement & Transportation

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One silent revolution which has brought changes in international business is due to transportation & technology. Due to advancement in technology, it`s foreseeable, the amount of reduction in transportation cost in last two decades and has greatly impacted in declining communication cost as well. Across the globe; various businesses and government have adopted technology for faster communication and effective management for overseas business which stimulates fast economic, production and market globalization, resulting in rapid improvement over transportation and communication made trading easier and more over cheap to reach new market anywhere across the globe.

The heavy reduction in transportation cost has made companies to move its resources across globally at much lesser rate. However, it`s easy to predict and to say that globalization isn't short of its supporters such as General Agreement on Trade and Tariff (GATT); who is helping in cutting down more and more tariff to bring up more opportunities to increase in overseas trade activities and investment and World Trade Organization (WTO); who is the only global international organization dealing with the rules of trade between the nations. In short, technological & transportation changes in past decades has brought not only different countries together but also has given them more opportunities in doing international business. (World Trade review, 2006)

Drivers of Globalization

The obvious benefits of globalization are mostly accompanied by Multi-national Companies (MNC). Globalization has led to an unprecedented expansion of multinational companies. Thus, they have become very large and powerful. For instance, some companies are worth more than the entire Gross Domestic Product (GDP) of entire country. Mainly Multi-national companies have massive good or ill effect on country whereby they do business. (Tutor2u, 2012)

Pros and Cons of Globalization on Asia-Pacific Region

In today`s time 'Globalization' is widely used to recognize worldwide phenomena. It`s gives positive meanings to those who can advocate greater economic integration across the national borders; Resulted in rapidly growing international flows of goods, capital and investments, while it has given threats to. The following discussion is about pro and cons of globalization that has brought into Asia-Pacific region.

4.1. Pros of Globalization

Rise of Asia: One of the significant change attained in international business is the emerging of Asian countries ; India, China, Hong Kong, South Korea, Taiwan and singapore , known as global player in global business. According to International Monetory fund report, since 2001 asia has a steady GDP growth and is contrubting for more than half of world`s growth and its contributing more than USA. The graph on next page explicity shows the findings. (International Monetary Funds, 2009)

Source: International Monetary Fund

Economic Growth: 'Economic globalization' is the process of integration of the world`s economy. It refers to the reduction and removal of barriers; such as trade restrictions, quotas, tariffs and restrictions between national borders in order to import goods, services and capital from others nations. Hence, it results to reap more opportunities for a country to promote trades and brings more investments which leads to more economic growth and helps in creating more job opportunities for locals.

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Employment Opportunities: Globalization led towards developing countries world-wide, as a lot of international companies are locating their factories in developing countries like ; China, India, Vietnam, Malaysia and Thailand. Thus, it helps in creating more job opportunities for the locals especially for countries like India and China where the population cross billions, resulting in providing not only skilled workers but also a cheap source of labor which captivates certain industries to set up their factories and plants as it also helps in improving their standard of living.

More Opportunities for Consumers: Developing countries symbol of an open economy, which emphasizes more on international trade and foreign investments helps in expanding choices for Consumers ; As they can have a greater choice of products to purchase than ever before and helps in bring more funds and technologies from abroad. Thus, with increase in choices and technologies helps in raising their standard of living.

Example: A Numbers of companies in America has actually travelled to Japan to take a look on how 'Toyota' company run its factories. Not only MNC`s but also government agencies from different countries have showed some interest in knowing their methods and practices. Whereby, at the first place, Americans were the one who introduced continuous improvement concept as in today`s time, Toyota is practicing that concept. It`s just not the only example, as there are many other examples; in which one country generates idea and progressively it spreads to other part of globe. This is only possible with the concept of globalization as without it; it would have never been possible.

4.2. Cons of Globalization

Reduction in Economic Growth: Where Globalization has given a lot of opportunities across the globe in same way it has created some negative impacts over job ratio and economic growth to such countries where ratio of importing is more than exporting. It`s important for countries across the globe to maintain balance of trade, whereby when import by one country is equal to export by the other country in monetary terms - if the payments is in excess (Negative Balance) is called 'Trade Deficits' or ;'Trade Surplus' ; where there`s a positive balance. When any industry gets failed to survive in any country under intense international competition, then that country starts relying more on imports which led to imbalance of trade, resulting in net exports will decrease as well as GDP and economic growth. (Library of Economics and Liberty, 2012)

Adverse Effect on Environment: Although globalization has only become a widely recognized phenomena in the last few decades but its effect on environment is apparent. Many viewed global actions as threating not only to environment but also to culture and traditions too. Example; Proposition is fairly simple, the reason why economic growth is at upstretched is due to natural resources such as oil, timber, metal, gold etc. But it`s feasible these natural resources are finite amount of available for human consumption. More importantly, these resources are heavenly used as if n for enormous economic expansion of large developing countries such as India and china. All these facts together makes us realize that sooner or later it would result to degradation of ecological system and possibly become the single most critical threat for continuing of current globalization. (Bernhardsdottir E., 2010)

In Relating, High tech industries; computers and electronics have expanded globally, which is contributing to heavy environmental cost due to manufacturing of semiconductors which contains several chemicals that harms human health.

Widening Income Gap: The increase in trade and capital flows influenced by globalization led to raise demand of workers and push up their wages for certain skilled labors in various industries which do gives competitive advantage but on other hand, demand of unskilled workers declines, so their wages. This widens the income gap in the country.

Countries like India, China, Russia and Eastern Europe have dense workforce available, hence forcing down the wages everywhere. Companies tend to invest and locating their plant where they can acquire lowest paid workers. At the same time, due to advancement in technology in each and every sector; demand of skilled workers are increasing as well and on other hand, technology is making a lot of workers jobless.

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The result is widening an income gap is stretching across the world between highly skilled workers and unskilled workers, top one rising rapidly, the middle one rising slower and bottom one ceased or even declining. (Channel News Asia, 2012)

Pros and Cons of Globalization Over Business Organization

Technology advancement had a great impact over the workplace in past few decades. By adopting latest advancement in information and communication technology many companies tend to change the way they do business. In the following section, we are going to talk about the advantages and disadvantages of technological advancement over the business organization.

5.1 Pros of Globalization over Business Organization

Expanded Marketing: If we look from business perspective, one positive effect of globalization over companies is that of 'expanded markets' which contributes that if a business was selling its product and service locally only, can start selling its product and services overseas as a result expansion in market to take advantage of opportunity and gain a competitive advantage. Globalization has transformed the business environment into a more competitive one and has given a lot of new opportunities for expansion of organization.

E-commerce mainly consisting of distributing, buying, selling, marketing and servicing of product and service over electronic communication; internet has given a lot of boost to companies to expand their product or service across the worldwide.

Example: In today`s time, several companies doing e-commerce through the use of distribution channel like e-bay, amazon etc. are expanding up their market across the world in a faster way. One reason why marketers prefer e-commerce is due to few involvement of intermediaries in distribution channel, the advantage of this is that fewer intermediaries means fewer middleman involved which eventually allows smooth transaction between manufactures and consumers.

Another example, through which companies are able to capture their market is through the use of social networks such as Facebook, Twitter, Myspace and the list goes on. Today, companies are taking advantage of social media sites by creating their profile and posting regular updated advertisement to capture global market.

Gain to Owners: 'Globalization' permits free movement of new communication technologies such as - Use of internet, E-mail, Mobile phones and satellite broadcasting offer to people and providing them more opportunity to communicate in groups and gets access to information from both close and distant source quickly from across the world. Having information on fingertips, Multinational companies are tend to respond faster to the changing factor of wages and enables them to shift their units from high-wage country to low-wage country, which ultimately bring benefit to the owner and gain a competitive advantage over others. (International economics, 2012)

Managing Competition: It`s feasible to say that international business faces more competition than other businesses, as a company on other part of the world may be producing same level of product, information technology provides company speed of communication which enables them to stay ahead of their competitors. (Ehow, 2012)

Example: Software like Skype, Voice over instant protocol; allows workers to perform their job from any location via these software which can be access with internet connection. Hence, it removes the barrier and enables companies to communicate anywhere in the world and moreover in today`s time it`s one of the cheapest medium or we can its cost efficient.

5.2 Cons of Globalization over Business Organization

Dependency: Today`s society are more advanced and relies more on technology, this means more companies are depending on technology like computers and other form of technology for accomplishing their day-to-day activity. So anyhow if any of their machines breaks or computer gets crashes, their work halts for the time until the problem is solved. Hence, this kind of dependency put people at distinct disadvantage. (Belcher L. M., 2012)

Low Value of Human Workforce: As the business is more relying on technological advancement, at the same time - human workforce holds low value which is quite a disadvantage because machines are tends to do automate processes and do the work of approximately 10 people with just one computer, Due to this reason companies indulges themselves as if n they don't need to hire as many people to accomplish the job. As machines and computers are taking advancement and working more efficiently, this will continue to grow as a bigger threat for human workforce hence it would be an issue for global impact.


In concluding this debate on globalization, it's important to note as if n our needs to view globalization as it offers both opportunities and threats, and able to recognize that country has strength and weaknesses engaging with it.

Opportunity: The opportunities arise from the fact that most of companies has expanded their market by associated with a technology revolution. Through e-commerce then can actually distribute, sell, buy products and it provides convenient and fastest way to connect with their customers across the globe.

In the essay, we have also included how this global trend has provided benefits to the company's owner as they can expand their industry and setup their unit overseas whereby they can access to low cost labor and cheap resources.

Threat: The threat comes from the fact that globalization has increased competition pressure in the industry as well in the workforce. As due to the technological advancement more technology is being deployed which is cutting down the manpower in the industry hence, it has become disadvantage in some form.