“Globalization has changed us into a company that searches the world, not just to sell or to source, but to find intellectual capital – the world’s best talents and greatest ideas”.
Jack Welch
“Globalization is a fact of economic life”.
Carlos Salinas de Gortari
Introduction:
Globalization is the latest trend fueled by technology development and progress, giving people around the world the opportunity to buy and sell products regardless of regional or national boundaries. This includes all aspects of trade, economic or even religious as well as cultural activities. Such a development over the years has broadened the scope of human activities significantly thus giving rise to higher consumer expectations. One of the key reasons behind the sudden spurt in globalization is the range of technological innovations in the recent years, which has helped in transcending boundaries by breaking down barriers and made it possible for various businesses to take shape and reach a wider audience. The fact that technological revolutions have single handedly revolutionized the global arena has been documented by various authors and researchers alike (Langhorne, 2001).
The internet revolution which has given rise to e-Business and e-Commerce has helped in creating global virtual communities These communities are known to display a strongly developed sense of awareness and play a vital role in participating in matters such as political as well as economic discourses, thus becoming a strong dominant force in enforcing their perspectives in matters related to public policies. The development of enterprise application systems, wireless communications technology as well as a range of effective business software have enabled the businesses to cater to the large and varied requirements of their consumers, in the fastest way possible. People have now taken to shopping online and expect their orders to be shipped to them as fast as possible.
The marketing department has found a new virtual ground for aggressively advertising their products, while the company management are now aiming to sell their products virtually. Global connectivity has expanded the business hours and now provide for a new 24/7 working schedule thus, implying the intensity of competition in the global marketplace. Furthermore, technological advancement has also afforded various countries to enter into economic partnerships with each other for the provision of goods and services, thus paving way for international e-commerce (Tompkins, 2007).
Globalization also signifies the tendency of businesses to invest their funds in projects and avenues which are beyond their national boundaries and venture into international territories, thus expanding their scope to different markets worldwide. The proponents of globalization have termed such a change as a positive influence especially with respect to the developing nations, who can now avail the opportunities afforded to them, to develop faster by co-coordinating with the industrialized nations. However, the opponents of globalization on the other hand, have countered this recent development stating that it acts as a barrier for a nation’s progress, questions its sovereignty and paves way for the development of other nations by compromising / trading the local jobs for cheaper jobs off shore.
This paper on the ‘Good and bad of globalism’ seeks to assess and analyze the perspectives presented by Thomas Friedman in his book ‘The World is Flat’ and derive conclusions regarding the actual impact of globalization in contemporary times.
The World is Flat:
Thomas Friedman’s book “The World is Flat” examines and assess the various facets of globalization, and serves as a guide to those at the helm of affairs to analyze and introspect their policies and their resultant impact on the economies of their respective nations. Friedman claims there are different forces that have made the world plain. He referred to these forces as ‘ flatteners ‘. These include all elements related to advanced technology such as: work flow software, supply chaining, and the steroids. The term work flow software refers to a wide range of business related softwares which help the computers to interact smoothly and efficiently with one another in a network and thus making it possible for the companies to develop and accommodate a team of talented employees from across the world. This further ensures that the company gains a competitive advantage in the marketplace due to the talented members on board, who are dedicated to provide the best possible results for their companies, at cheaper and affordable labor rates (Daft, 2009).
The term Supply chaining on the other hand refers to the work flow software which is developed to ensure a horizontal collaboration of various ‘elements’ in the supply chain network such as the suppliers, the retailers, as well as the customers, and help the companies to proliferate deeper into into international markets, effortlessly, thus broadening their market segments and generating higher profits in the process. The steroids as described by Friedman indicate a whole new set of technological gadgets / innovations such as the wireless technology for instance, which further help in boosting the existing network and enhance the ability of companies to push harder and gather information from a larger database, thus helping them to overcome trade barriers and compete successfully in the global expanded market place (Daft, 2009).
Globalization as mentioned above, as opened up newer avenues for companies and businesses to expand their market segments and customer base and cater to a wider audience. It is on account of globalization that country specific products such as Toyota and IBM are now locally manufactured across boundaries. Toyota is now locally assembled in the U.S. while the popular American brand IBM is now assembled in China as Lenovo, and marketed worldwide. This has affected the profits of both the nations substantially. On one hand, the industrialized nations have found cheaper labor in labor intensive countries and thus given an opportunity to lower their production costs and increase their profit margins while on the other hand, it has generated larger employment in the developing countries. Thus, globalization has proved to be helpful to the developing countries in overcoming major national problems such as poverty and unemployment.
“Unlike the Cold War model, the globalization system is not static, but a complex ongoing process,” Friedman said. He further describes it as an integration of different markets, nation-states, as well as technologies to a certain degree, in a way which has never been witnessed before, thus enabling the consumers, the corporate as well as the nation-states across the globe to participate in the faster, farther, and cheaper and not to mention, global marketplace (Wong, Rae, 2011).
It is quite imperative to note and acknowledge the fact that technological revolutions over time, have made the availability of products and services, faster; cheaper and easier. Thus, people living in the U.S. might be able to access the products manufactured in China, where the labor is relatively cheaper, overnight. As cheaper products flood the markets, the consumers are bound to choose them over their much pricier counterparts manufactured in their own countries. Hence needless to add, that this trend shows no sign of slowing down anytime soon.
Friedman categorizes the globalization phenomenon into three crucial stages, which have developed over time. He further states that we are currently in the 3.0 stage of globalization whereby the development of software and other similar technological revolutions have leveled the playing field, thus giving an equal opportunity for ‘players’, across the globe to participate and compete in the global market place.
In order to substantiate this proposition, he puts forward a case study wherein he describes his meeting with an Indian software company Infosys, where the employees across the globe are given an opportunity to interact with each other via a massive conferencing system and thus collaborate for providing better services. He therefore believes that the world is flat as “clearly .. it is now possible for more people than ever to collaborate and compete in real time with more people on more different kinds of work from different corners of the globe and on a more equal footing than at any time in the world’s history-using computers, e-mail, networks, teleconferencing, and innovative new software” (Tompkins, 2007, Pp. xiii).
However, despite the various advantages that the ‘globalization’ phenomenon has to offer, it has not yet managed to achieve universal consensus. Various concerns have been raised regarding its credibility and impact on international trade; on the environment; the probable exploitation of children (as child labor in developing nations is known to be a dominant force); exploitation of workers (through establishment of low paying ‘sweat shops’) etc among others. There have been various instances in the past where global multinational giants such as Walmart, McDonalds, and the likes have been targeted by human rights groups for unethical treatment of their workers, leading to large scale nationwide protests resulting in bad press and negative publicity for the organizations in question (Haberberg, Rieple, 2008).
Furthermore, it is also argued that more and more companies are now out-sourcing their jobs overseas to developing countries where the labor is comparatively cheaper. This has led to a steady decline in the availability of jobs in the industrialized nations, leading to larger unemployment. Such a trend is viewed as highly disturbing for the industrialized nations, as they are losing their jobs at a faster rate, a trend which is likely to culminate into a larger crisis over a period of time, thus negatively affecting the economic demography of the nations in question. It has also been stated that globalization is a threat to national sovereignty.
Critics fear that the companies today are increasingly entering into international agreements, which have free-trade clauses regarding the restrictions on purchase and sale of goods in and out of the country. Such a clause is likely to restrict the ability of countries to act in their own best interests. International trade has the ability to intensify competition, where the citizens are now made to compete for a job not only in their immediate local area but globally, against international citizens. Such a trend, according to critics, is highly dangerous for the economic health of nations and may affect the economic prosperity in the long run. On the other hand, people in developing countries too face serious negative implications. Globalization increases their dependence on industrialized nations to provide them with better employment opportunities, thus hampering their own development in the process. Furthermore, there is also a rising concern that the multinational companies operating overseas may dominate the local landscape by imposing their own rules and policies, thus endangering the independence and control of the developing nations in the process. It is also stated that globalization may lead to homogenization of products, as well as companies. As more and more markets internationally participate in the growing trend, and allow multinational companies to set up shop in their areas, the developing countries are likely to find it difficult to hold on to their own values and culture and adapt to those of the industrialized nations. Although this would play a key role in uniting the two nations, and eliminate the differences it may on the other hand lead to a gradual loss of general policies aimed at the betterment of the local interests.
A major portion of the criticisms regarding the globalization phenomenon is directed towards the rate of economic growth of nations concerned. Critics argue that although globalization accelerates production, it does lead to immense negative consequences. For instance, with the growth in employment in developing nations the need for utilization of natural resources for production increases manifold, thus forcing the nations to use up their non-renewable sources of energy. Increased industrial activities gives rise to problems related to disposal of toxic wastes which are released into natural water bodies such as oceans and rivers, thus leading to air and water pollution, disturbing the natural habitat and harming the ecology in the process. Such damage to the natural environment due to globalization is irreparable and may contribute to increased global carbon footprint.
Proponents of globalization have supported the phenomenon arguing that it lowers the costs of production. Low cost of production was and still continues to be one of the major driving forces behind the growth and popularity of globalization. A significant proportion of multinational companies from across the world are now seen increasingly investing in developing nations to take advantage of the low production costs on account of abundant availability of cheap labor. However, it also gives rise to a range of human rights issues.
Various companies from developed nations are known to have exploited the labor from developing countries by making them work in atrocious conditions and unhealthy environments with little or no scope of medical assistance. Concerns such as these, is a serious issue for the government of the developing nations, who are responsible for protecting the rights of their citizens. On the other hand, it brings bad publicity for the global multinational companies, and bad press, leading to increasing questions regarding their policies, and social responsibility. Various companies have had to pay dearly for such measures, by way of lawsuits worth millions of dollars, loss of a significant proportion of customer base as well as loss of goodwill.
Conclusion:
On the basis of the above discussion and Friedman’s assessment of the globalization phenomenon, in the recent years has indeed created a world which is flatter than ever before. The present ‘globalized’ world is devoid of any national or international boundaries but is on based on a common ‘web-based’ platform, which offers an equal playing field for all the players in the global market. In this highly knowledge oriented era, which has little or nothing to do with the differences in time, distance or language barriers, and supported by technological revolutions, it is highly likely that globalization is here to stay. The creation of two new and emerging economies such as India and China, reassert the power and influence of globalization, indicating and reaffirming Friedman’s claim that billions of people are now part of a wider global marketplace without barriers, thus intensifying the competition.
Globalization today is not just a mere phenomenon but has transformed into a way of life. It signifies the positive association and integration of economic, political as well as cultural activities between various nations to create a large irresistible market place. It does entail various positive as well as negative harmful effects; however, the benefits accrued from it far outweigh the damages caused. To conclude, in the words of Friedman, “Globalization is not a phenomenon. It is not just some passing trend. Today, it is a global system that forms nearly every country’s domestic politics and foreign relations, and we need to understand it as such.” (Westerfield, Abbink, 2004, Pp. 181)
References:
- Daft, R. L., (2009). Organization theory and design, Cengage learning Publication, Pp. 211-212
- Haberberg, A., Rieple, A., (2008). Strategic Management, Oxford University Press, Pp. 598-599
- Langhorne, R., (2001). The coming of globalization, Palgrave Macmillan Publication, Pp. 2
- Tompkins, J., (2007). Bold leadership for organizational acceleration, Tompkins Press, Pp. xi-xiii
- Westerfield, R. E., Abbink, J., (2004). Current issues in globalization, Nova Publishers, Pp. 181
- Wong, K. L., Rae, S. B., (2011). Business for the common good: A Christian vision for the marketplace, InterVarsity Press, Pp. 139-141