The Effect of Globalization on Business term paper
Globalization has impacted business in a number of ways. Today, businesses are able to expand their reach and their markets because of globalization. The entire world is now open for business thanks to advancements in communications technology, travel, accommodations, international trade, and international partnerships. Globalization has not helped make the world more united in terms of interaction and dealings, it has also helped open up cultures and societies to new ideas, new consumers, and new exchanges. Businesses are profiting from globalization by marketing their products and services to consumers in new markets that decades earlier were much harder to penetrate. Now, in the wake of globalization, businesses can research the backgrounds and heritages of new markets in different areas of the world, find out how to market themselves to the citizens there, and produce a product or service that will appeal to these consumers. Globalization is in fact changing the way businesses do business.
This is true in more sense than one. Not only are businesses adapting to new markets by producing new and different products and providing new and different services, they are also changing the nature of the way in which they do business. Many retailers have found that they can reach a larger audience and market by using online or ecommerce solutions. For example, Amazon and Netflix have taken retail shopping and video viewing to new levels never before achieved — and that is thanks to globalization, itself effected by the rapid advancement of communications technology — i.e., the Internet and the power to connect one end of the planet with another.
Producers, organizations, businesses and merchants have all found that online business is the new way to market to consumers who live beyond one’s national or local borders. Globalization allows access to these consumers — and the Internet is one of the easiest ways for this access to be achieved. The interdependency of economies upon the global health of the whole is also tied into the effect of globalization. In today’s world, what happens in China, Japan or Europe affects other economies. The recent bankruptcy of Hanjin shipping has already caused worry for the upcoming shopping season, as Hanjin was responsible for shipping 8% of the world’s commerce. Because of globalization, what happens in Asia does not stay in Asia: it has ripple effects throughout the world.
Thus, globalization has its positive benefits (a wider market) and its negative effects (a closer relationship means a greater possibility of being impacted by hiccups on one end of the relationship chain that would otherwise be thought unrelated to one’s business). In a globalized world, everything affects everything — and while a bankruptcy by an Asian shipping company might not impact a business directly, it will surely impact it indirectly. Bankruptcies mean lay-offs, lay-offs mean less money being made, less money being made means less buying and a weaker economy, and a weaker economy means businesses suffer. At some point, the world comes to a stop — there are no more borders to be entered, no more emerging markets, no more consumers.
Therefore, globalization can be thought of as merely the last great extension of trade. Once markets become saturated and production and innovation halt, the endpoint is reached. Globalization is, in this sense, a two-sided coin: on the one side, it is an exciting opportunity for businesses the world over; on the other side, it is also the beginning of the end of business as we know it — when saturation is hit and innovation stalls, the end is nigh.
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