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Factors for a Shared Economy

Info: 1564 words (6 pages) Essay
Published: 17th Mar 2021 in Economics

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The world is not as large as we once thought, and advances in technology are narrowing the gaps between countries of mass production and countries of mass consumption. Open lines of trade and the ideals of a “global” economy are not new concepts to trade industries and can be seen referenced in texts dating back decades, even centuries as noticed by Marx, Engels and Beer (1955, p.13) when they described that the need for constantly expanding markets for products requires those involved to settle everywhere and establish worldwide connections. Recent leaps and bounds in the advancement of technology and an increased awareness of individuals and the impacts that society can have on the world has led to the modern phenomenon that is referred to as globalisation.  This ongoing process is a combination of economics, societies and cultures integrating and entwining with one another due to a worldwide network of trade and communication (Wu, 2012, p. 292). Although the need for expanding markets has been noted and referenced in past texts and has been seen from time to time through the rise of dominant trade markets such as the East Indian or Chinese markets (Marx, Engels and Beer, 1955, p. 10), this economic system did not reach it’s full potential until technological advances enabled the rapid, high volume flow of labour, goods and services as borders are broken down and new spaces are created (Herrmann, 2010, p.256). As globalisation sweeps across industries it gives rise to a new type of identity – the global citizen, defined by Reysen and Katzarska-Miller (2013) as an individual who promotes social justice and sustainability and possesses a sense of responsibility to act in the best interests of the world at large. This extends into a larger scale with the creation of the corporate citizen, a business driven by the same ethics as a global citizen, aware of their actions and the impact that they can have, both negative and positive.

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Political factors are hard to predict but can have significant impacts on business. Trade talks and changes to tariffs can determine what a company imports, exports, where they trade and, in some cases, what a company sells. Free trade agreements between member countries have significant impact on the way that business is done. It has been indicated that free trade negotiations favour countries with a stronger political weight (Facchini, 2004, p. 9) and when countries can come to an agreement that removes quotas, tariffs and general restrictions, it allows for businesses to access products of a higher quality for a lower level of expenditure.

Shared or collaborative marketplaces are one of the largest economic shifts of the 21st century and the competitive nature of this new economic trend define how retailers operate and develop their ongoing business plans.

The stability of the economy also has a significant impact on the retail sector who rely heavily upon the spending habits of the population in order to thrive. When the economy in the country of trade is in crisis, consumers are less likely to spend money on frivolous items and instead focus only on the necessities. Countries and nations experiencing an economic boom on the other hand favour the retail trade as consumers have more disposable income and the retail industry expands, creating further jobs and contributing to the continuation of the rising economy.

Technological advances have changed the way the retail industry operates. Physical stores and foot traffic are no longer the bread and butter of any retailer with the advances and increase in popularity for online shopping and trade. Online retailers have risen in the space that’s been created, offering similar or identical items as physical stores at a reduced price. The lack of overheads such as rent and power enabling online retailers to provide discounts without compromising their profit margin. Big box stores such as Target and Kmart have engaged as best they can, making a shift to an online marketplace and offering click and collect or “pick, pack and dispatch” home shipping – taking stock from a physical store in order to package and post it same day to the customers, giving them an edge over other online retailers such as Asos who rely on a large warehouse to fulfil any orders.

In order to remain compliant, businesses must abide by the laws of the country they are located in. For the retail trade this involves a complex array of legal issues and laws that range from labour to safety, however it is becoming apparent that following the laws of the country of one area of operations may still not be acceptable to other areas.

Industries across the globe are becoming more and more aware of their impact on the environment, a change led by those who identify as global citizens. The retail trade is no different and retailers and businesses must remain aware of their environmental impact and carbon footprint and the way this is viewed by the community. Packaging standards have come under scrutiny in recent times with supermarket giant Woolworths folding under increasing levels of pressure from society to reduce the amount of plastic packaging in their fresh food section (Heath, 2018).

Free trade can impact the economic growth of member nations. Although the access to quality imports at a reduced cost can appear beneficial to companies and businesses that are able to capitalise on the profit margin available on their products, it can be argued that free trade agreements have an insignificant to negative effect on the economy of one of more of the countries involved in the agreement. Free trade is just one of many factors that can impact the economy on a global scale.

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It is interesting to note that countries defined as super powers of the world such as the United States of America are withdrawing into their own borders and presenting a more Nationalist front, whilst large exporters such as China who are predominantly anticapitalistic in their political system capitalising on a largely capitalist based economy (French, 2007, p. 38)

Major retailers such as Kmart, Target and even Coles have been caught out in the media for conditions of production factories, commonly called “sweatshops”, with issues such as low wages, unsafe working conditions and child slavery damaging the reputation of brands caught out (Four Corners, 2013).

Production and sourcing practices aren’t the only area that retailers can find themselves toeing the line of the law as labour and fair work requirements bring further legal issues to light. Big box companies such as Walmart in the United States have been caught in legal scandals and short-changing staff in regard to wages. Closer to home, conglomerate Wesfarmers have been caught out underpaying staff across brands such as Coles, Target and Bunnings, further damaging brands with a negative media presence and expensive payouts required (Derwin, 2020).

The concept of the shared economy is beginning to shape the future of business and significantly disrupting older business models.

References

  • Marx, K., Engels, F & Beer, S., 1955. The Communist manifesto, Harlan Davidson Inc., Illinois
  • French, J., 2007. Wal-Mart, retail supremacy, and the relevance of political economy: the intermestic challenge of contemporary research (academic, agitational and constructive), Labor: studies in working-class history of the Americas, vol. 4, no. 1, pp. 33-40
  • Facchini, G., 2004. The political economy of international trade and factor mobility, Journal of Economic Surveys, vol. 18, no. 1, pp. 1-32.
  • Herrmann, P., 2010. Globalisation revisited. Society and Economy, vol. 32, no. 2, pp. 255-275
  • Four Corners, 2013. Australian retailers Rivers, Coles, Target, Kmart linked to Bangladesh factory worker abuse, ABC News, 24th June, viewed 22/02/2020, <https://www.abc.net.au/news/2013-06-24/australian-retailers-linked-to-sweatshop-abuse/4773738>
  • Derwin, J., 2020. Target employees were underpaid $9 million, as Wesfarmers reveals yet another wage scandal on its books, Business Insider Australia, 19th February, viewed 22/02/2020, <https://www.businessinsider.com.au/target-australia-employees-wages-theft-wesfarmers-underpayment-2020-2>
  • Reyson, S., & Karzarska-Miller, I., 2013, A model of global citizenship: antecedents and outcomes, International Journal of Psychology, vol. 48, no. 5, pp. 858-870.
  • Wu, F., 2012. Globalisation, International Encyclopedia of Housing and Home, Elsevier Ltd, pp. 292-297.
  • Heath, N., 2018. Plastic pollution: it’s not just bags at the checkout, what about plastic clogging supermarket aisles?, ABC News, 6th May, viewed 22/02/2020 < https://www.abc.net.au/news/2018-05-06/plastic-recycling-supermarket-plastic-bags/9723780>

 

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