The Global Business Environment for Globalization- MyAssignmenthelp

Question: Discuss about theGlobal Business Environment for Globalization. Answer: Introduction Economic globalization can be described as the process of increasing economic integration and interdependency across two or more countries. During this era of globalization, the volume of interdependency has greatly increased (Chan and Scarrit 2005, p. 60). As several countries increase their acceptance of globalization, the picture of international trade has recorded significant changes over the recent years. It can be argued that the pace of change of globalization is outpacing the ability of governments across the world to manage the international economy. It has become more important to multinational business and a lot of efforts have been committed by the national governments to ensure that they create an enabling environment. A lot of benefits have been achieved from companies and nations embracing globalization and internationalization. However, there are still some challenges resulting from differences in policies, the level of economic growth across the countries, and other factors. The purpose of this paper is to explore the state of the globalized economy and the challenges that exist. Trade the Role of Governments Eds. Ritzer and Dean (2015, p. 174) maintains that at the peak of globalization is the aspect of international trade. Its also more concerned with the production networks and the commodity flows. They also stated that there are some key players in the international trade who play key role in the art of globalization; the financial markets, corporations and the consumption also plays a major role. The main objective of engaging in globalization and internationalization has been in order to trade in goods. Countries are very much concerned with the trade deficits as the balance of trade relies heavily on a balance between exports and imports. They therefore feel that its essential to have interconnections; economic chains and networks as Ritzer and Dean (2015, p. 174) calls it. When it comes to the global business environment, the governments play a central role. Sassen (1996, p. 24) argued Many governments now see their responsibilities as going beyond traditional foreign policy and e xtending to world trade, the global environment, and global economic stability. In order to create a trading environment for attaining economic globalization, the governments use a number of tools. This involves structuring economic policies, industrial policies, increasing the development of the sectors at national level. The tools the governments use include tax incentives, subsidies, export processing zone, fair trade, patent protection laws, state guarantees and loans, and economic research and development. The other tools as identified by Gleckman, (2012) may include market encouragement tools such as consumer safety policies, tax policies, safety standards, among others. Also, developing political stability, infrastructure and ensuring security is prevalent in a state are other responsibilities the government plays in encouraging economic globalization. Theoretical Framework for Analyzing Globalization Romana et al. (2005, p. 114) the holistic theoretical framework for globalization can be found in the increased integration of markets can be based on the findings of Yip for the globalization drivers. Yip had identified four main globalization drivers; market drivers, cost drivers, competitive drivers and government drivers. These drivers are arguably what drivers the international economic environment. Companies that engage in globalization rely heavily on these drivers in that in order for there to be a favorable trading environment, there should be some level of degree of uniformity across the countries. Another very important theory is that advanced by Dunning; eclectic paradigm. According to this theoretical framework, the institutions in internationalization attempt to achieve some competitive advantages over others. The second is the establishing of location advantages whereby the political factors pay a key role. Theres involves the evaluation of the alternations that can en able a multinational business attain internationalization competencies. These two theoretical frameworks are very key in the internationalization of economies. Arguably, the changes in foreign trading policies seek to achieve these factors. Another framework Romana et al. (2005, p. 115) advocated for is that of contemporary economic geography. Under this scenario, the world is described as experiencing differences in competitive levels, consumption levels, and the economical, social, political, technological and cultural differences. Economies also compete to achieve higher competitive advantage as the theory of Clusters advocated by Porter maintains. Benefits of International Trade The main reason for globalization as Thompson (2007) argued is for nations to achieve specialization whereby countries would engage in trading what they have for what they do not have. One of the greatest benefits of international trade is that it increases the purchasing power of the individual households as the wage rate increase. Multinational businesses take advantage of this in that they enter into markets where they can obtain cheaper labor and ready market for the products they produce. Globalization has also increased employment levels, reduced the level of poverty as the GDP increases. Kuepper (2017) adds that globalization has benefited global economies through increased competition, increased market efficiency and competition, accelerated equitable distribution of wealth, and increased peace and stability. Challenges of Globalization Globalization exposes a business even to more competition and greater risks. The greatest challenge as Leonard (2015) founded is the economic restrictions. One can argue that theres an economic warfare. Some countries sanction against another and manipulate the foreign policies for their own advantage. Some countries are more powerful (sovereignty and military power) facilitating ease to manipulate foreign trading policies even in an alliance. There is also the cost of protectionism. The Brexit in particular was motivated by what the British believed was formulation of policies that are favoring a country in the expense of another. The second challenge is that of politicization of international economic talks. One of the greatest challenges has been difficulties in arriving at an agreement. Some governments do not agree at all. When these disagreements persist, the businesses already operating in certain countries that do not agree to the negotiations may suffer a lot. For instance, if a country votes for a regional bloc, a multinational business may suffer the consequences arising from a country being excluded from the bloc. The other challenge is that of competition for market share and resources. When a business decides to enter a global market economy, it needs to consider the level of existing competition and the cost of factors of production such as labor. In some countries, especially the developed markets, the cost may be higher than in emerging markets. Thats why outsourcing and off-shoring becomes another option in globalization. Another big challenge as Gries et al, (2015) founded is technological limitations. Its very challenging to invest in a country with technological limitation, insufficient skilled experts and other factors. Global businesses have to evaluate these aspects as the cost of transferring technologies can be quite expensive if the national governments especially in developing companies have acquired some technologies yet. Other challenges include the language barriers, the currency fluctuations and interest rate, the decline in oil prices, economic downturns like the great recession, among others. Speaking of language barrier, Neeley (2012) held that multinational businesses face the challenge of language as English as an international language may not be the business language in certain countries. This may increase the competitive pressure as marketing may become complex. It also results in globalization of tasks and the human resources. Conclusion Globalization in the current era has registered tremendous changes which have impacted greatly on the foreign trade policies. The national governments play a major role and the future of globalization still needs the importance of government involvement. The international businesses face greater challenges as they expand globally, however, not as much as the domestic businesses. The governments strive to protect the domestic businesses against high global competition. Even though globalization is a modern tool, there are still some traditional approaches that greatly affect this concept. References Chan, S., Scarrit, R.J 2005, Coping with globalization: Cross-national patterns on domestic governance and policy performance, Routledge, Abingdon, England. Gleckman, H 2012, Global redesign initiative: from traditional governance to global governance through the eyes of GRI, University of Massachusetts Boston, Massachusetts, Boston. Gries, T., Grundmann, R., Palnau, I., Redlin, M 2015, Does technological change drive inclusive industrialization: A review of major concepts and findings, UNU-MERIT, Maastricht, Netherlands. Kuepper, J 2017, Globalization and its impact on economic growth, viewed on 28 May 2017, https://www.thebalance.com/globalization-and-its-impact-on-economic-growth-1978843 Leonard, M. 2015, Geo-economics; Seven challenges to globalization, World Economic Forum, Geneva, Switzerland. Neeley, T 2012, Global business speaks English, viewed on 28 May 2017, https://hbr.org/2012/05/global-business-speaks-english Ritzer, G., Dean, P (eds.) 2015, Globalization; A basic text. 2nd edn, John Wiley Sons, Chichester, UK. Romana, K.V., ?an?er, V., Bobek, V 2005, Globalization measurement as a management Tool, Managing the Process of Globalization in New and Upcoming EU Members.vol. 6, pp. 113-122. Sassen, S 1996, Losing control: Sovereignty in the age of globalization, Columbia University Press, New York, U.S.A. Thompson, L.T, 2007, Globalization and the benefits of trade, The Federal Reserve Bank of Chicago, Chicago, U.S.A.