UNIT 18 GLOBAL BUSINESS ENVIRONMENT LO 1 ANALYSE

UNIT 18: GLOBAL BUSINESS ENVIRONMENT LO 1: ANALYSE THE KEY FACTORS WHICH DRIVE GLOBALIZATION

GLOBAL BUSINESS ENVIRONMENT P 1: ANALYSE KEY FACTORS OF COST, MARKET, ENVIRONMENT AND COMPETITION THAT DRIVE GLOBAL COMMERCE AND TRADE

OVERVIEW • Globalization is a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world. • Globalization is not new, though. For thousands of years, people—and, later, corporations—have been buying from and selling to each other in lands at great distances, such as through the famed Silk Road across Central Asia that connected China and Europe during the Middle Ages. Likewise, for centuries, people and corporations have invested in enterprises in other countries. In fact, many of the features of the current wave of globalization are similar to those prevailing before the outbreak of the First World War in 1914.

THEORY OF GLOBALISATION • Globalization is an elimination of barriers to trade, communication, and cultural exchange. The theory behind globalization is that worldwide openness will promote the inherent wealth of all nations. • While most Americans only began paying attention to globalization with the North American Free Trade Agreement (NAFTA) debates in 1993. In reality, the U. S. has been a leader in globalization since before World War II.

CULTURAL • Culture is a dynamic force for change rather than a rigid set of forms or parameters that must be strictly adhered to. The current era of globalization, with its unprecedented acceleration and intensification in the global flows of capital, labour, and information, is having a homogenizing influence on local culture. While this phenomenon promotes the integration of societies and has provided millions of people with new opportunities, it may also bring with it a loss of uniqueness of local culture, which in turn can lead to loss of identity, exclusion and even conflict. This is especially true for traditional societies and communities, which are exposed to rapid ‘modernisation’ based on models imported from outside and not adapted to their context.

CULTURAL • Balancing the benefits of integrating into a globalized world against protecting the uniqueness of local culture requires a careful approach. Placing culture at the heart of development policies does not mean to confine and fix it in a conservative way, but on the contrary to invest in the potential of local resources, knowledge, skills and materials to foster creativity and sustainable progress. Recognition and respect for the diversity of cultures also creates the conditions for mutual understanding, dialogue and peace.

CULTURAL • The globalization of the production and distribution of goods and services is a welcome development for many people in that it offers them access to products that they would not otherwise have. However, some are concerned that the changes brought about by globalization threaten the viability of locally made products and the people who produce them. For example, the new availability of foreign foods in a market—often at cheaper prices—can displace local farmers who have traditionally earned a living by working their small plots of family-owned land selling their goods locally.

CULTURAL • Globalization, of course, does more than simply increase the availability of foreign-made consumer products and disrupt traditional producers. It is also increasing international trade in cultural products and services, such as movies, music, and publications. The expansion of trade in cultural products is increasing the exposure of all societies to foreign cultures. And the exposure to foreign cultural goods frequently brings about changes in local cultures, values, and traditions. Although there is no consensus on the consequences of globalization on national cultures, many people believe that a people's exposure to foreign culture can undermine their own cultural identity.

ECONOMIC • Economic globalization is the increasing interdependence of national economies that has resulted from growing levels of trade between nations. This integration of the world's economies is possible as a result of technological advancements that allow for quicker communication around the world, as well as drastically reduced costs of shipping goods. Today, it is possible for companies to manage production of goods efficiently, even when production facilities are on opposite ends of the world.

ECONOMIC • An important result of economic globalization is the increasing level of investment by foreign nationals and corporations in economies, particularly in developing nations. This investment by foreigners has helped drive growth in many developing economies, although there is some concern that economic globalization has in fact increased the gap in wealth between developed and developing nations. Additionally, because developed economies have large sums of wealth available for investment in developing nations, there is concern that foreign direct investment may sometimes create bubble markets in these developing nations. While economic bubbles are not uncommon, their impact can be particularly acute on developing nations.

POLITICAL • Political globalization can refer to the increasing, shared, conviction that all people should be governed by their own consent and a rule of law. (Western liberal democracy). It may also refer to the increasing number of inter-governmental organizations (IGO’s) with global scope and the increasing numbers of countries that participate in those IGO’s. Or, again, to the growing uniformity of governmental organization and structure or even the growing diplomatic interdependence between countries – the number of embassies and consulates worldwide.

POLITICAL • There are many examples of political globalization, including the European and African Unions. In these examples, political integration joins multiple nations together to make decisions and establish policies. Because the nations of the world have become much more connected, there is a growing prevalence of intergovernmental agencies, like the International Monetary Fund, World Trade Organization and the United Nations. Political activity has become much more interactive on a global scale as a result. National governments interact with each other beyond diplomacy and militarized hostility in a politically globalized world.

SOCIAL DIMENSIONS • The social dimension of globalization refers to the impact of globalization on the life and work of people, on their families, and their societies. Concerns and issues are often raised about the impact of globalization on employment, working conditions, income and social protection. Beyond the world of work, the social dimension encompasses security, culture and identity, inclusion or exclusion and the cohesiveness of families and communities.

SOCIAL DIMENSIONS • Globalization brings new potentials for development and wealth creation. But there are divergent views and perceptions among people as concerns its economic and social impact, and indeed widely varying impacts on the interests and opportunities of different sectors and economic and social actors. Some argue that the present model of globalization has exacerbated problems of unemployment, inequality and poverty, while others contend that globalization helps to reduce them. Of course, these problems predated globalization, but it is clear that for globalization to be politically and economically sustainable, it must contribute to their reduction. Hence the goal of a globalization which meets the needs of all people.

REFERENCES • Globalization 101. org. (2018). What Is Globalization? | Globalization 101. [online] Available at: http: //www. globalization 101. org/what-is-globalization/ [Accessed 25 Sep. 2018]. • http: //www. unesco. org/new/en/culture/themes/culture-and-development/thefuture-we-want-the-role-of-culture/globalization-and-culture/ [Accessed 25 Sep. 2018]. • Globalization 101. org. (2018). [online] Available at: http: //www. globalization 101. org/uploads/File/Culture/cultall. pdf [Accessed 25 Sep. 2018].

REFERENCES • Thought. Co. (2018). Globalization and Its Effects on the United States. [online] Available at: https: //www. thoughtco. com/what-is-globalization 3310370 [Accessed 25 Sep. 2018]. • Reference. (2018). What Is Economic Globalization? . [online] Available at: https: //www. reference. com/world-view/economicglobalization-3 c 715 a 10 c 2794972 [Accessed 25 Sep. 2018].

REFERENCES • Mcglobalaffairs. org. (2018). Defining Political Globalization | Global Affairs. [online] Available at: http: //mcglobalaffairs. org/defining-political-globalization/ [Accessed 25 Sep. 2018]. • Understanding the Basics of Political Globalization. [online] Available at: https: //www. reference. com/government-politics/political-globalizationf 2366 d 7 b 4 d 4 e 21 c 0 [Accessed 25 Sep. 2018]. • Ilo. org. (2018). The Social Dimension of Globalization. [online] Available at: http: //www. ilo. org/public/english/wcsdg/globali. htm [Accessed 25 Sep. 2018].