Globalization and World Trade
Globalization and World Trade
According to Professor Theodore levitt, the concept of globalization entails all the aspects and processes of integrating people and nations. Theodore argued that; globalization leads to a complex and unified human community in the various aspects of politics, culture and economy. Generally, the concept of globalization entails the whole globe rather than revolving on single nations. Significantly, the process of integrating people and nations has been warmly welcomed due to the major changes and developments it has brought to human life. Despite the many benefits and developments of globalization; it has led to many social, cultural and economic dislocations. Precisely globalization has led to significant changes in trade, whereby business have been given wider opportunities to trade in the global market. This paper will discuss the concept of globalization as well as its impact on trade (Stiglitz, 2002).
Basically, developments in transport and communication alongside other technological developments have led to a massive flow of people in and out of different nations. In addition, the liberalization of markets and opening of borders have also facilitated easy movement and interaction of people from various nations. In respect to this scenario, people, NGOs, businesses, and nations are brought closer together thus leading to creation of new and broader networks. A point of consideration is that, the existing barriers of ignorance, distance and negative ethnicity have been successfully encountered through the adoption of modern technology thus leading to global recognition. On the other hand, issues of high population and poverty in less developed countries have triggered immense immigration to developed countries thus increasing human interaction (Milward, 2003).
There are many improvements and developments which have come along with globalization thus improving human life. Firstly, globalization has led to harmonization and convergence of different human societies and groups. In this perspective, unity and peace among human life have been reinforced since a sense of understanding is instilled among people of varied origins. Secondly, the aspect of growth and efficiency has widely been enhanced through the integration of people and nations. Based on this aspect, individual ideas are brought together thus facilitating the entire process of production, science and technology. Additionally, globalization has led to homogenization and democratization of human society thus leading to harmony and peace among people (Stiglitz, 2002).
On the contrary, several evils have risen following the integration of nations and people into a unified global community. Firstly, immense social and economic dislocations have cropped up thus raising public concern regarding job security. In relation with this, the issue of volatility of nations, families and communities has faced mixed reactions as well as the controversy on the distribution and allocation of economic resources. More significantly, a major concern has been raised regarding environmental degradation, loss of indigenous cultures, loss of sovereignty as well as deliberation of economic power. In addition, many social evils including terrorism have been widely brought up by globalization thus putting human life at jeopardy. The aspect of global politics is also a major threat to national and international stability due to the diversity of people's ideologies (Milward, 2003).
Despite the controversies surrounding the concept of globalization to the general aspect of human life, it has had a significant benefit to trade. Based on the recent developments in human interactions within the global spectrum, a lot of improvements in the business world have been witnessed. Globalization has led to widening of the potential market for many businesses in that business can be able to sell their products to the global community. It is of great importance to note, globalization has led to increased interaction between nations. Borders have been opened thus enabling free movement of goods. Based on this phenomenon, it has been a great development to many businesses which are given a chance of trading their products in the global market (Wolf, 2004).
Significantly, the concept of globalization has had a very significant influence in trade in modern days in that it has led to global standardization of products. The aspect of free movement of goods and services in the global market has influenced the quality of services and products. New products and services are easily moved across the globe thus ensuring that the quality is made homogenous. Unlike previous years, the quality of different products and services is in the present homogenous across a;; corners of the globe. This phenomenon has been made possible by the advancements and sharing of technology. With the concept of globalization, businesses are given a chance to share technology thus influencing the methods of production alongside other business processes (Greenaway, 2009).
A point worth of consideration is that, globalization has led to harmonization of the business regulations of nearly all nations. In relation to this phenomenon, governments have been able to borrow the economic and business policies practiced by other countries. With this in mind, there has been a significant improvement in the manner which business is being conducted in the global spectrum. The concept of open economies and liberalization of markets has been influenced by globalization. In this regard, business operations have been enhanced, thus increasing trade. With the advancements and realization of a global market, nations have been forced to alter their trade policies so as to meet the global expectations. In this regard, both domestic and foreign business entities have been affected(Cateora, 2008).
With this regard, business has been moved from the local or domestic market to all corners of the globe. With the realization of globalization, local or domestic businesses have been able to target the global market. There has been an increased market for domestic products and services in the global market. Domestic companies or business have significantly benefited from the aspect of globalization in that, their services and products aimed at meeting a wider market. Based on this situation, the levels of productions for domestic firms have been significantly increased. With increased demand of local products in the foreign markets, the issue of profitability has also been enhanced. Businesses are in the present performing better with the realization of globalization as compared to earlier days. The establishment of wider market has been the main factor of success (Wolf, 2004).
A point worth of consideration is that, globalization has led to the fulfillment of the expectations of business entities. Every business has the dream of expanding its operations, performance and profitability through all the available opportunities. With the current effects of globalization and market liberation, there is every need for business units to encroach the international market. Business across the globe are seeking to increase their clients, widen their investment, as well as expanding their markets. The present trends in trade have been highly enhanced by the increased interactions by people. Businesses are able to get a ready market for their products outside the country of production. Importantly, advancements in technology has been a key factor enhancing the movement of goods and people in the global spectrum thus enhancing business operations (Cateora, 2008).
Globalization is really a key explanation of the present trends in trade. Basically, globalization has been a key factor in international trade whereby businesses have been brought together and provided with new opportunities. The key motives of entering the international market by many domestic businesses have been justified by the concept of globalization. For instance, the urge for many businesses to increase sales and establish new markets have been answered through globalization. For instance many companies that are operating in single nations are in the present expanding their operations in foreign countries thus expanding their markets. It has been a great development and advancement for many domestic companies in that they have been able to reach foreign markets. The sales volumes and profitability of many domestic firms have been doubled. In this regard, it globalization can be attributed the many developments being realized by businesses in recent days (Milward, 2003).
The enormous expansion of many corporations and companies in recent days can be related to the aspect of globalization. Many businesses have in the recent grown to magnificent levels due to optimum utilization of the global market. Multinational corporations have in the recent been in the increase due to the aspect of increased international interactions and cooperation of nations and people. International understanding has been established thus leading to the abolishment of the tensions and conflicts existing between nations. With these insights, it's evident that globalization has led to growth of trade. This is on the basis that the domestic market is never enough for business expansion thus need to search international markets (Greenaway, 2009).
Globalization has answered the quest for entrepreneurship and adventures to start younger generation businesses. Due to the stiff competition offered by fully established businesses, new businesses have no option other than moving to foreign markets. New entrepreneurs have been given new opportunities in the foreign countries. This would not have been the case without the globalization since each nation was operating independently. Globalization has led to integration of world cultures and a common understanding among different societies. In this regard, new entrepreneurs are able to seek business opportunities outside their nation or culture. It is worth noting that; globalization has led to cultural integration of goods thus leading to opening of new business opportunities(Albaum, 2008).
The gap in the life cycle of products has also been catered though the realization of globalization. Globalization has enhanced international trade thus ensuring completion of product life cycle; which is in this case attributed to products or good which pass many stages of manufacture and process. A good example is the automobile industry where the products are manufactured in different parts and assembled at the point of destination. With this in mind, the cost of production has been significantly reduced (Dearlove, 2003).
Globalization has also led to increase in sales and gaining of consumer trust, whereby it's business have been made potential of adapting products either culturally or physically in the foreign market. In this phenomenon, the main aim of the business is to develop products which are resonant with the target market. This concept will assure sustainability of the market in the long run as well as enriching the customer's lives. In the process of adapting a product in the foreign market, there is every need to conduct an intensive market research to understand the unique cultural practices and subtle nuances. In the course of cultural adaptation, the business should seek to understand all the cultural practices and perception of the product. The profitability of businesses has been doubled through the aspect of targeting foreign cultures and adapting products to meet the expectations of those cultures (Albaum, 2008).
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