Globalization, a word which is used in common parlance, and a word which is omnipresent due to the boundaries of the world becoming blurred. Globalization is the process through which the organizations or the businesses are able to initiate operations on international scale or are able to develop international influence. It is the economic process of integration with cultural and social aspects, and also includes diplomacy and conflicts. The policies of the government are designed in a manner that the economies open up internationally, and this helps in boosting development and in raising the standard of living of the individuals (Osterhammel and Petersson, 2009). The companies are able to attain competitive advantages by accessing new raw material, new markets, and lowering their costs. Globalization is not a concept which was born in the modern time; even in the ancient times, the traders use to travel distances for purchasing rare items, like gold, salt and spices, and these would be then sold off in their home nations (Stearns, 2016). Globalization again coming in boom over the last twenty years, particularly due to the technological advancements, which has eased up the integration of businesses and that of economies. Globalization impacts not only the big businesses, but also the lives of the individuals (Steger, 2017). This discussion is focused on highlighting the manner in which globalization impacts the daily lives of the individuals. Along with this, the manner in which globalization worked wonders for Wal-Mart would be discussed. In doing so, the costs of globalization and the external factors impacting it, would also be elucidated.
For an individual, to get the products and services which they need in their daily lives, in a cost effective manner is the most beneficial point. Globalization enables this due to high competition which is present, when the businesses are not constrained by geographical boundaries. It also allows for resource sharing, where not only the raw materials, but talent from one nation can be transferred or shared with another nation. This means that the individuals not only get better quality products and services, but also get the chance of earning better, thereby raising their standard of living. This also brings with it the different facilities, in terms of better infrastructure, enhanced facilities like that of healthcare, and even better laws, in terms of employee rights as are present in the developed economies (Cohen, 2013). Even the developed economies can learn from the other developed economies, particularly to solve the issues being faced by them. The individuals thus get access to global markets, which would otherwise have not been possible, had globalization not existed (Boudreaux, 2008).
It brings wealth equality, particularly through job creation, and by increasing the access to housing, to clean water and to medicine. Due to the partnerships established between the companies and the nations, partnerships are built. It thus brings friends with benefits, which helps both the parties. This allows in bringing security and stability for the nations, and the companies using the resources of the nation, thus helping every party involved (Gemma, 2014). Globalization brings with it foreign investment, which is a key booster in the economy of any nation. It also integrates the cultures of different nations, which brings cultural diversity in the home nations. This helps the individuals in learning how cross cultural management has to be undertaken.
Even though globalization has helped the individuals in a huge manner, and does positively impact their lives, but every coin has two sides. Globalization is accompanied by its costs, for the individuals. Even though the competition is a good thing, but it does mean that someone has to lose their share of profits. In cases of globalization, it is the domestic or the local sellers, who bear the costs of globalization. This is because the big firms which come from out of nation, have the benefit of economies of scale and are able to provide better products to the local people. This means that the domestic sellers lose their share of market, and ultimately have to bear losses, if not run out of business. The biggest example of this is the Chinese products, which have flooded nearly every nation, and have impacted the local producers (Agarwal and Ray, 2007).
There is also the issue of harm caused to the environment, particularly when the companies come from other nations and rampantly use the products of the company. The environment ultimately affects the individuals, as they have to bear the results of global warming, contaminated water bodies, lesser forest, and the damage to the ecosystem of such nation (Ritzer, 2011). Along with the job insecurity brought with globalization, there is also a constant possibility of fluctuations in the prices. As a result of the increased competition, the nations are forced to bring down the prices for the local products. The local markets thus have to reduce their prices constantly. Again, when the companies from the other nations attain a standing in the market, by raising the prices, they can manipulate with the prices. This particularly hurts because the domestic sellers have to constantly update their prices, and face losses due to such fluctuations (Ekins, 2012).
When it comes to the companies, globalization comes with a lot of advantages and as is the case for the individuals, it is also coupled with its costs. The most important benefit derived from globalization for the companies is technology. Technology is a very powerful force, which pushes the world towards converging commonality. It enables travel, transport, communication and also facilitates business through different modes. Every individual has experienced some or other form of technology, and it has eased up the lives of not only individuals, but has eased up operations of the businesses. From carrying on the basic tasks sending letters, to maintaining the entire logistics database, technology has enabled the companies to speed up their work, where the quality is maintained. Globalization enhances the exchange of technology, which is also helpful for the domestic companies, who can simply use the technology of other nations, which has been made possible through blurred geographical boundaries. Globalization not only enables exchange of technology, but also enables processes to be undertaken between two places which are far away, through the use of technology. The biggest example of this is in the form of outsourcing, which has been enabled due to globalization and technological advancements (Narula, 2014).
As highlighted earlier, globalization helps in increasing the competition and helps the companies tap in such markets, which not only have huge resources, but also high consumer base. It helps the companies in lowering costs, getting to target markets, adapting technological advancements, learning culture of different nations, and growing overall. With technological improvements and technology transfer, the consumers get better products, which results in companies establishing their brand name, not just in home nation, but across the globe. Information is deemed as the most expensive and also the most valuable factor of product in the present environment. Globalization has enabled transfer and exchange of information across nations. This information can be used to analyse the needs, behaviours, perceptions and attitudes of the individuals, and also of the possible problems which can be raised due to possible changes in the laws, regulations or polices of the government. The quick transfer of knowledge enables the businesses to establish business plans for new markets, leading markets, or the already established markets (Bookboon, 2011). Globalization has also enabled in the subsidies and tariffs being brought down and some being out rightly abolished. It allows for new opportunities in terms of financing the businesses.
In particular context of the company in which the writer is interested in, i.e., Wal-Mart, globalization has acted as a huge growth stimulator. Wal-Mart is a leading US based retail chain and the sheer size of the company is difficult to grasp for the majority. The impact of the company is quite far reaching and has contributed to globalization as much as globalization has affected the company (Anderson, 2006). As per one of the estimates, the company has been able to save $263 billion for its consumers back in 2004 (Global Insight, 2005). This was possible due to the fact that the company had efficient supply chain, low employee wages and benefits, and low supplier costs. Wal-Mart started its business in US and is truly a global company, owing to its presence in different nations like UK, India, Canada, Mexico, Brazil, China, etc (Wal-Mart, 2018). The company is famous for offering lower prices and at the same time has been criticized for having a negative impact on the small scale local businesses, which are not able to match up the economies of scale offered by Wal-Mart. The benefits of globalization and the entire definition of globalization can be truly presented through the company.
Being global is not possible just by having a grand design. It is an explicit and systematic process which is followed by companies like Wal-Mart. The company began its operations in 1991 and has presence in key nations. The workforce of the company is one of its kinds due to the high number of human resource employed by the company. The company aggressively purses globalization since the time it first moved out of the border. Just 1% of stores of the company in 1993 were out of US; by 1998, this figure grew to 18%. All this was possible due to the successful business model developed by the company, which not only worked in US, but also in the international arena. Also, this worked in a manner that the company not only survived, but excelled. In its global expansion, the company had the capacity of leveraging two key resources which were initially developed in US. The company exploited on its major buying power for procuring goods in a cost effective manner from the stores out of US. By going out of US, the company got the option of entering markets of Asia, Europe and Wester nations (Govindarajan and Gupta, 2002). Even though the retail industry of Europe was more mature in comparison to other areas, Wal-Mart emerged as a key benefiter and even gave stiff competition to Tesco.
Doing business for a company like Wal-Mart in different parts of the globe is not as easy as it seems on paper. A lot of thought and considerations go into this and a key role is played by the external environmental factors like the socio cultural factors, the political factors, the legal factors, the ecological factors, the financial factors and the technological factors. The technological factor has already been discussed. A key factor which the companies have to focus on while they want to be truly global and earn the benefits of globalization is learning about the legal system of the nation. The companies have to gain a clear understanding on the laws of the nation in which they want to conduct business. This includes the rules, regulations, permissions, licenses and the other legal requirements for the businesses. There is also a need to look into the regulations surrounding the foreign investment and the routes through which a company can enter a nation (Huxley-Binns, Martin and Frost, 2017). Before entering with any prospective business in any nation, the companies have to check if the nation permits such business, the regulatory requirements, the environment related legislations, the human rights and employment related legislations, and the other civil and criminal laws, which can be infringed due to the operations of the company. For instance, a company like Wal-Mart, when has to enter into UK, they would not only have to follow the statutory legislations of the nation, but also the common law and the law of European Union (Wilson et al, 2014).
The political factors also have a major role in the company being able to go global or not. The political environment of nations like US, UK and Canada are quite stable. As a result of this, the companies seldom face political factor as hindrance. However, when it comes to a nation with bad political situations, globalization would not be possible, for instance Maldives, where a huge turmoil is going in owing to the clash between the executive and judiciary branches (McKirdy, 2018). Another example of this is North Korea, where nothing can be done till the ruler of the nation permits something to be done (Beauchamp, 2017). Till the time a nation has political stability, companies are not likely to enter there. Even when they do initiate business there, the purpose of globalization and the very theme of it, would not be met, owing to the constant hurdles posed by the political environment of the nation.
Again the socio cultural factors faced in any nation also play a crucial role in the nation being part of the global culture. The policies of the companies are shaped based on the culture and the social factors faced in the nation. The culture shapes the choices of any nation and thus, the success of the businesses depend on the companies gaining a clear understanding on such factors. For instance, India is predominantly a Hindu nation and as cow is deemed as a religious symbol under the Hindu mythology, eating beef is banned (Mangaldas, 2017). So, where a company offers such products which are beef based, the business is bound to fail for such company in the nation. However, the same product would be successful in nations like Australia, UK and US. There is also a need to consider the ecological factors, where the regulations related to the environment and the environmental factor of the nation has to be considered. This involves the consideration of climate, the changes in climate, pollution, weather and availability of the different resources. Often the natural resources are crucial for the businesses and their availability thus becomes an important factor as the non-availability can become a key problem for business.
Thus, in the previous segments, a detailed analysis on globalization and its impact on both individuals and on businesses like Wal-Mart. This discussion also highlighted the different factors which have to be considered by the companies, when they want to expand or conduct their business in the international market. The discussion began with highlighting the meaning of globalization and how it has been present since the ancient times. The discussion then moved on to highlight the different advantages offered by globalization to the individuals, which was in terms of increased job opportunities, improved standards of living, equality in wealth, and an overall growth for the nation. The businesses are able to gain technological advantages, access to resources, and an overall growth in their business. The prime example of this is Wal-Mart. Even though a number of benefits are attained owing to the globalization coming in focus at the present time, it does come with its costs. This is in terms of the local sellers having to bear the brunt, as they are not able to replicate the extent of business capabilities which the giants like Wal-Mart have. There is also the impact on environment and the fluctuations in the prices.
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