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Globalization: The Vanishing Boundaries of the WorldBY: Rohini Upreti | Category: Business and Finance | Post Date: 2008-08-19
Nations and people around the world have become more and more interconnected through trade, investments, culture and other forms of interactions. This is what globalization is all about!! This has been made possible by information and technological revolution. The invention of computers and internet facility and the phenomenal growth of information and technology sector have brought about the world economies closer to one another. It has made the global business easy, quick, savvy, competitive and profitable.
As a result of globalization, multinational corporations are making inroads into the developing countries such as China, India, Brazil and other Eastern European countries, as they are able to get cheap labor and make substantial profits. These MNCs pay less to the labors in developing countries as compared to what they would in developed countries and often work them harder and longer. Most MNCs keep offices, factories and warehouses in developing countries whereas upper level management, marketing, finance and human resource divisions are retained at their native countries. Ford Escorts was called the world car not because it was marketed all over the world, but because its parts came from suppliers around the world. Many MNCs have come to India in the recent years like IBM, Microsoft, Suzuki, Honda, Pepsi, McDonald etc. Many European and American companies have opened call centers in India and have trained Indians to get their work outsourced here. They do this as they have to pay less here as compared to what they would have to in their own countries.
Globalization has led to more and more mergers and acquisitions. Merger of Arcelor to Mittal steel to make Arcelor-Mittal number one company in steel business, America Online and Time Warner merger to form AOL Time Warner Inc., Chrysler merged with Daimler Benz to form Daimler Chrysler AG and Ford Motor Company's acquisition of Volvo's automobile line and recently Tata's acquisition of Land Rover are some of the examples. Merger has sometimes made these corporations more powerful than the governments under which they operate.
Globalization involves the removal of trade barriers and helps in the expansion of international commerce. Tariff reduction has been made possible through GATT (General Agreement on Trade &Tariffs) and through custom union such as European Union, ASEAN (Association of South East Asian Nations). The 21st century is an age of interdependence and mutual benefits. Globalization thus involves breaking down of tariff barriers and allowing free flow of raw materials and goods across borders. European Union adopted a single currency Euro to replace the national currency of European countries for international integration.
Electronic commerce or E-commerce is yet another facet of Globalization which has been made possible with rapid expansion of internet. Buyers order goods and services online over the World Wide Web. They can check the status of their orders through electronic mail or e-mail.
As a result of globalization, many nations today are multi-cultural societies. Culture crosses the national boundaries. People are becoming more and more aware of different cultures across the globe and are being influenced by it. American brand clothing, food, films and music have gained popularity through out the world.
Globalization enables an entrepreneur to raise finances anywhere in the world. This enables him to use technology, communication, management and labor anywhere in the world so as to produce goods and services, which can be sold to costumers, globally. The days of isolation are over. The path of progress and prosperity lies in globalization.
Like any other aspect, globalization too has its share of disadvantages. It widens the gap between the rich and the poor. There is a greater disparity between the developed and the developing nations. The competition between the foreign companies and the local companies is often unequal and many such companies are forced to close down. e.g. the toy industry in India is facing a stiff competition from Chinese toy industry; as such the market for Indian toys is fast disappearing. Arrival of MNCs also poses a threat to the environment in the developing nations. Corporations take advantage of the weak regulatory rules in the developing countries. There is exploitation of workers, who work for longer hours and are paid less. Cultural values are also changing due to globalization. Indian society which was considered conservative is now fast becoming liberal. As such there are changes in family structure, education pattern and job selection. There has been an increase in the flow of skilled and non-skilled job from the developed to developing countries as the corporations want cheap labor.
Despite all the negative aspects, the fact is that globalization is here to stay. It has brought the world closer together and with understanding, cooperation and healthy competition the world is fast becoming a global village!
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