The Future of Globalisation Essay Example

test these various forms of resistance to the West. ”

Jamsen believed that the large western economies (mainly the U. S. ) dominate a drive to encapture the world market, by doing so they use the resources offered by smaller local economies while not observing social responsibility of taking advantage of the benefits of expanding to the less developed countries and in turn destroying local cultures and any chance of these countries being able to compete naturally with these larger economies.

It seems that in terms of business that it can be agreed that globalisation regardless of opinion of good and bad can be broadly defined as the process of the development of global links in trade and production in worldwide markets creating a network for ease of travel, communication and trade. Historical Routes Like the debate for the definition of Globalisation, the history of globalisation is equally debated with some believing that it stretches far into the past.

There have been different theorists that believe that Globalization developed in history through periods of development. The esteemed Journalist for the New York Times Thomas Loren Friedman believes that Globalization expanded over three periods of human history. Period 1 began in (1492 -1800). Through the dominance of some nations, by using the means of shipping, a worldwide market opened with trading occurring between countries.

An example can be that of the colonisation by the British and Portuguese where natural resources and other items were traded for condiments and finished goods, the British trading herbs and spices that were obtained from India and other Asian and African colonies with condiments from the U. S. and other colonised nations. Friedman sees period

2 (1800-1921) as the development of Business and the dominance that sprung up thanks to the Cultural Revolution creating a land of opportunity in the U. S. his was the raw beginnings of capitalism which in later years would prove to be dominant in creating wealth for individuals but would be challenged and criticised for its lack of ability for equality and fair distribution of wealth to all.

Perhaps Globalization would have developed sooner if it were not for the two world wars, the great depression and the cold war era which created massive tensions when trading internationally. Period 3 in the development of Globalisation can be sourced to the fall of the iron curtain and the end of the cold war era in 1989.

With the rise of capitalism in the west, it had a major challenger in communism and other socialist movements which sought to create an equal society with no opportunity for large corporations to manoeuvre themselves to becoming the cornerstone of foreign markets to benefit them. Friedman believed that the fall of the Berlin wall created a gateway to worldwide markets, with the fall of communism, capitalism began to spread worldwide and the ideologies caught on to create wealth and prosperity and this began to feed the growth of globalisation.

The above ideologies were adapted from Friedman, Thomas. (2000). The formation of the European Economic Community in 1952 (later to be the European Union) by the 6 parent countries created a network between themselves which formed a small scale version of what globalisation was to become. Between Belgium, France, West Germany, Italy, Luxemburg and Netherlands based on the Schuman plan, six countries signed a

treaty to run their heavy industries – coal and steel – under a common management. In this way, none could on its own make the weapons of war to turn against the other, as in the past.

Later when the name was changed to the European Union and the member states grew, the trade links were intensified between countries as agreements were signed to create free movement of trade, goods and people between member states which lowered barriers and costs of trade allowing large companies to form different branches in countries to provide materials and to lower the cost of exporting. Seeing the low trade barriers between member states in the European Union the American corporations recognised an opportunity to develop there own links in the market.

They began to build company branches in different countries which were co dependant on one another i. e. a company in Ireland may create a part of a product from materials sourced from Germany and ship it to Spain for final assembly only to be sold in Italy while the overall profit is sent to the parent company in the U. S. This is a very simplified example of globalization but for the purposes of explaining the origins of Globalization worldwide it is credible.

While the U. S. annot be solely held responsible for the spread of Globalisation they can be sourced as a major driving force along with the invention of the internet, from the end of the cold war era in 1991 they remained as the only superpower in the world with large corporations that were anxious to dominate worldwide markets that were no longer dangerous to there capitalist

ideologies. They began to expand into not just developed countries like those of the E. U. but also into less developed markets such as South America, Africa and Asia and Indonesia.

This was the true beginning of a global network of markets. The Internet The World Wide Web that we know today was invented in 1989, but it wasn’t until the mid 1990’s that it was easily deployable and in operation by all companies in the U. S. and the bigger companies in the E. U. The commercialisation of the web to local users didn’t happen until a few years later but the business to business adaption had been created which allowed companies worldwide to communicate with each other, providing up to date eports, instant messaging through email and easy transactions for goods and services, this ease of communication created links which made expansion inevitable and aided in the adaption of globalisation to all markets.

Influences The Influence of Oil Can the processing of oil and its prices be related to Globalisation? I believe so; Globalisation is the process of creating links of trade and production in or between differing countries, because the production process can be located away from the market place then transportation costs are a huge factor in globalisation.

This is where the oil price fluctuations (“shocks”) in the market can have a negative impact in globalisation making all the connecting links to create a product more expensive than perhaps producing in one place and simply exporting the final product. Of course this is a hypothetical situation where the oil market would experience a serious increase in price but this is at the very least

a conceivable concept if not something that is being experienced in the current market.

Interestingly a study by A. T. Kearney (2001) suggests that a lack of standards and definitions for globalisation has led to difference of opinion on its impacts throughout the world. For instance how does one accurately measure how interdependently the links between social, economic or political are and which of these is most impacted by Globalisation.

As Kearney’s study suggests “Without the means to quantify the extent of Globalisation, any meaningful revolution of its effects will remain elusive” A. T. Kearney (2001) Before the recent recession oil prices were reaching $150 a barrel which created a huge strain on consumers, transporters, airlines, and corporations. Basically the price of oil was creating a hole in everyone’s pocket. With the recession the price of oil has reduced but as the bigger economies emerge from the recession it will see a rise in the oil prices once again which is widely believed to become a hurdle that globalisation will not be able to get over easily.

Jeff Rubin Economist and author wrote: “That triple-digit oil prices will reverse globalization and bring about the re-emergence of local economies. In the kind of world that we'll soon be facing, distance costs money. In many cases, not in every case, moving your production to China and then importing those goods back to Western Europe or North America will be foolish. In other words, what you will save on labour costs you will more than lose on transport costs. ” (Jeff Rubin 2009)

If we are to believe Jeff Rubin’s critical analysis then Globalisation will indeed suffer from rising oil prices and the westernised

dominance of a globalised network coupled with a dependence on an unstable middle eastern provider of oil could create a problem for existing countries who are not as developed as there western counterparts. Countries in Asia such as Thailand, Taiwan, India and China that all provide cheaper labour and favourable tax incentives to investing companies from the west could soon face a backlash as investors pull out due to higher transportation caused by the increases in oil prices.

The increased oil price is likely to get even higher as the current troubles in middle eastern countries such as Libya, Saudi Arabia and Egypt create more tension internationally on the surrounding oil industry, Since the troubles in Libya began the cost of oil has risen by 11%, as the tensions rise so too does the risk to supply and this will allow a premium for oil exports by these countries which in turn effects the cost of running any business worldwide, which will reduce the benefits experienced by globalisation.

The Influence of Labour Low cost labour is a major pull factor for companies to invest internationally and to locate their manufacturing plants in the historically cheaper labour countries located in eastern Asia. Ireland is known world wide as providing a high quality educated workforce, but with this comes a high labour cost, on the current cost of one graduate programmer for a year in Ireland which would range from €30,000 to €40,000 a company could get ten programmers in India. It is the cost discrepancy such as this that causes companies to outsource production and other low skill level work to the cheaper labour countries.

While keeping the higher skilled

work such as research and development in more developed and educated nations. Apple, one of the world’s largest corporations, employs low skilled labour through a strategic partnership with a company called Foxcon in China. It was revealed that this company who assembles hardware parts for Apple was paying its assembly line workers just fifty one cent an hour who have to work for sixty hours a week. Comparing this to Apples research and development branch located in Silicon Valley, which last year alone spent $4. billion and has employees who earn in the region of one hundred thousand dollars per year.

This really outlines the negatives of globalisation and seeking cheaper labour and its impact on the local population. In this Foxcon factory, it has gained a reputation for its assembly line workers committing suicide by jumping off the roof due to poor quality of life which is in direct correlation to their pay. But Apple, who are aware of this fact have not chosen to ignore the problem but instead insist that without them the Chinese workers wouldn’t have any food.

This article sums up all of the negatives of globalisation and the lack of social responsibility conveyed by large multinationals and this is only one production link, these multinationals have numerous links worldwide, one can only imagine the quality of life that is experienced by some of these workers. (ZDnet. com) Local market conditions In terms of a globalized product, before a company enters a foreign market research should be performed indicating a need for their product and sustainability to supply this market.

Usually Globalisation creates a standardised product that isn’t altered from market to market

but this can be a huge mistake when you consider the difference in cultures and personal habits that occur between countries. For example Wal-Mart entered Mexico in 1991 and at first they struggled as they were stocking under the assumption that the Mexicans had them same interests as the American market, but they quickly saw that there was no room for ride along mowers and fishing equipment so they pulled them from the Mexican stores.

This lack of localisation caused a loss for Wal-Mart due to high inventories of these goods. The success of McDonald’s An example of globalisation mixed with localisation can be seen in the case of McDonald’s. McDonald's, the world's leading fast-food retailer with 30,000 restaurants in 119 countries, has successfully maintained its global brand identity by standardising its principles and service quality but customising its offerings across the globe.

The highlight of McDonald's localisation strategy has been its foray into Asia where it has survived and has repeatedly proved itself in comparison with other big food retailers who have failed due to their inability to adapt to Asia's diverse cultures, tastes and temperaments. (Kisholoy, Sumit Kumar Chaudhuri, 2006) McDonalds realised that different markets while having the same general tastes and interests as the American culture also had local tastes that were demanded in each country.

None more so than France, in 2010 for the first time ever McDonalds made the larger bulk of its net income ($1. 2 billion) outside of the U. S. and a large part of this success is the popularity of the chain in France. At first introduction in 1978 McDonalds didn’t seem to take to the French but a revised

strategy and analysis of the local trends led to huge increase in popularity. While the American giant tries to keep to its American culture where possible it also gives a very French appeal by offering beer and the "Croque McDo" which is a toasted cheese sandwich. McDonalds has shown the world that it is possible to have a successful Globalisation strategy which also accounts for some localisation to attract different markets. (Timesonline. co. uk)