Globalization

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Global society is the integration of people belonging to different ethnicities, religions, political systems, economic systems and social systems into one society. The aim is to facilitate cross-cultural interaction and also have the access to global markets and resources in order to remain competitive.

Today, the buzz word is diversification which opens the door for corporations to globalize and the world has become borderless. This has happened due to the advancement of technology which has made communication and travel cheaper and faster. So, flow of human capital from one state to another is not a hindrance to the personal goals or the organizational goals anymore.

World population is rising very sharply and has reached 6.8 billion according to the statistics of August 2009 there is no way that it will come to a halt or decline in the near future. This creates the need for an effective system which can distribute the limited world resources on equity according to the relative value addition to the society. Around 3.5 billion of worlds population lives under 2 per day so it is the need of time to have a global society where the issues are taken global level and solved after collective effort. Income inequality, lack of educational facilities and debauched health facilities in third world countries are a big concern for the world.

BOP is a very large portion of worlds population interested in the fast moving consumer goods, telecommunications and other services. There is wide opportunity for MNCs and TNCs to target these segments by making global marketing strategies especially for China and India. Furthermore, going globally has increased the sales profits of the companies worldwide but there is a necessity to have effective management system and avoid the involvement in any wrong doings. There have been examples where TNCs have exploited the labor and caused environmental degradation. This raises the alarm in people who want Globalization to actually make world a better place for living and give everyone a better environment to live. It is the innate right of every person to have a good society where he can progress and feel secured. The weak states have to be given military and economic assistance to feel immune to the threats by coercing countries.

Globalization has played a significant role in improving life standards and making lives easier for people. Today, technology has enabled everyone to process documents in the world due to word processing programs, but this would not have been possible without the global distribution. On the contrary, computer viruses are a nuisance to the productivity and the efficiency of the companies and households. So, its not the technology itself that is harming the world population but the way people use it to influence the society.

Global research and development efforts have made lives easier and better in many scenarios. Billions of dollars are spent on RD to develop new products and services from innovative ideas. Creativity and innovation are the main forces behind the successful global organizations. The borderless world has opened the access to the potential markets and the competition has increased causing the quality to improve and the prices to be competitive. Human resource is the biggest assets of any organization and today the global talent is screened to hire the people with best skills and abilities. The MNCs have a common practice of hiring the local staff for operations in foreign countries which strengthens the notion that globalization has increased the employment opportunities worldwide. This also gives the local people a chance to have experience of working for global popular brands and visit other countries where they get to interact with people of different cultural backgrounds. Understanding of various cultures is very important now days, it includes differences in social norms, values and the languages. For example one brand failure was Toyotas Fiera in Puerto Rica where fiera means ugly olden woman.
Globalization has also changed the way businesses were carried out some decades earlier, today companies have their production facilities spread across the world in order to utilize the tax laws and tariffs in their favor. The supply chain is a system of inter related technologies, people, raw materials and activities involved in transferring a product or the service from the supplier to the consumer. Global organization are using global resources, supplier, technologies (acquired or transferred) and people to operate. This has inter-linked many countries in the supply chain, for example DELL may have production facilities in China, suppliers worldwide and technology developed in USA. The income becomes the bread and butter for many geographically dispersed people. However, during recession the production volume goes down and all the players of supply chain are affected due to their dependence on each other. People have different opinions on this inter-dependence some economists say that this is good for the recovery of the industry as the costs remain lower as compared to producing goods locally in one place and ignoring the opportunity costs. Global Supply chain is also in line with the utilitarianism principle which states that an action is justified if the outcome favorably influences a wide population. So, sharing of the technologies and the information is helping in equitable distribution of the income and resources.

Nowadays, terrorism is the greatest threat to globalization of businesses. Terrorism threatens the productivity and efficiency of organizations that are going global and raises uncertainty of global ventures. The differences between the west and the Islamic countries have widened due to ideological differences and some miscommunication as none of the parties are willing to negotiate. There are elements in the Islamic states that are against globalization and want to eliminate the non-muslims from their Muslim states. Suicide bombings have become a common tool used to sabotage globalization efforts.

The volatility of the worlds economic and political situation also threatens the world population. The impact of any anomaly reaches every corner of the world. A good example is sub-prime loan crisis in USA that impacted the global banking sector and various financial institutions worldwide slowing down the economic activity.

Global society should focus on sustainable growth which aims to achieve goals for today keeping in mind the need of future generations. Global organization should try to provide product and services keeping in mind the long term strategies of environmental and ecology protection. The distribution of limited resources of the world should be based on the utilitarianism. Efforts should be made to discover new resources and develop alternative sources of energy which can meet the needs of the next generations. Worlds population is in need of basic utilities like water, food and shelter so global bodies like UN and other human right organizations should work to ease their pain. Similarly, the developed countries should continue to provide Aid packages to the developing countries. It will require strong collective effort from the governments, MNCs and the global bodies like UN to overcome the rising issues of world population.

Adam Smith came up with the notion that the market should be allowed to work freely without interference from the governments as the competitive forces, self-interest and the supply and demand will ensure the effective allocation of the resources by the market. He was against the protection of the local businesses as it decreases the competition. Since then it has become a common practice to promote competition. In fact the concept of globalization is based on the principal of competitive advantage which states that a country or a firm should produce those goods or services that have lower opportunity cost than others. This also results in effective allocation of worlds limited resources.
The diversity and separation of the worlds populations based on differences in religion, culture, language, national, ethnic and tribal loyalties, class, gender and race impedes unified world government. However, some success has been achieved by formation of bodies like European Union (EU) which has bonded 27 member countries for regional economic development they have developed a common currency and have free flow of people, capital, goods and services.

Today, the market structures are on a continuum between completely regulated markets and un-regulated markets. The markets have matured and realized the significance of the liberty from government rules and regulations to remain competitive and profitable. The interferences by governments are often regarded as inefficiencies in the system and threatens the globalization which has an agenda to create a free-trade world where the tariffs, subsidies and taxes not a hindrance to the global trade. However, the WTO has failed to live up to its objectives since the less developed countries (LDCs) saw it as favorable to the developed countries that have exploited the labor laws, environmental laws and trade laws in the past themselves. The level of mistrust is the main reason for the failure to establish a completely free trade world without government regulations.

I believe it is the need of the time to have partially regulated market since this will circumvent the exploitation of the labor, irreparable damage to ecology and environment by companies in race for global recognition. The government should set price ceilings for the prices of the necessary items used by people and have price flooring for the labor to avoid possible exploitation. The exploitation of the labor and influence over the political leaders in third developing countries by MNCs to amass wealth has caused the governments to become active in monitoring the market agents. The governments should not interfere with the demand and supply forces of the market but should make laws to facilitate the globalization of the markets in order to allow free flow of goods, services and people keeping the workable standards of living. The Jehadis and the MacWorld systems should not be allowed to violate the human rights. Jehadis is against modernization, science and colonialism whereas Macworld takes advantage of people and supports authoritarian ruler in countries, main beneficiary of this system are TNCs. Both of these systems are against the democracy which is the most successful, widely adopted form of government.

The role of the global organizations is to become a facilitator in the global market system by becoming competitive in price and quality. The revenues will increase due to wider customer base despite the fewer prices. They should not forget their moral and ethical obligations to the global societies e.g. analyze the cultural, political and religious differences before carrying out business in any country. The unequal distribution of income, education and the health facilities to people results in civil chaos that can lead to the resistance of global business efforts so it is important to fulfill corporate social responsibility. Similarly, developing global strategies to penetrate the markets and having a clear vision is very important for success globally.

The perfect competition market structure is the ideal structure for any state as there are rare entry barriers and none of the players is able to influence demand or supply. It can contain monopolistic, oligopolistic and monopolist players but generally the market is competitive and the consumer needs are the focus of attention. This reduces the pressures on the governments to interfere with the market forces but still some legal regulations are imposed to protect the people. All the mature and potential growing markets have become competitive and support the free trade via free trade agreements (FTA) with specific countries to raise volume of exports and lower the import bills, this ultimately helps in attaining a competitive advantage over other regions in terms of trade. For example, United States has NAFTA with Canada and Mexico to boost trade, environmental and agricultural cooperation. The objective of FTA is to eliminate tariffs and other taxes which create inefficiencies in the market system. Some countries also give the Most Favored Nation (MFN) status to other countries in order to increase the trade volume and have the same benefits in return however exceptions can be there in case of developing countries that are given support. 

United States along with its allies started liberal economic system after the WWII and also established financial institutions like IMF and WB to control global market systems. Since then the economic activity has increased manifolds, the new markets like Asian tigers (Taiwan, South Korea, Malaysia, and Singapore) and recently BRICs (Brazil, Russia, India and China) have emerged that have great potential for growth. 

However, some people oppose global market systems as they believe that armed conflicts exist around the globe and they can turn into a large scale conflict due to volatility of the international relationships. Ultimately, in such scenario countries will cease all the trade and other relationships which will fail the endeavors to make a global market system. This argumentative social and economic consequence of the global market integration prompts the search for an alternative to global market system. Halliday is also against the global market system as he thinks firstly, the global production and growth cycles are short-lived. Secondly, there has been increase in unemployment and under-employment in times of high growth but increased desire to accumulate wealth. Thirdly, the financial and currency markets have become instable. Fourthly, technology has replaced human capital which has increased unemployment.
Despite the opposition to global market systems, I think global market systems are important to spur competition amongst the countries and firms. MNCs are using global supply and distribution channels to improve their performances and the global business activity is also creating employment in related industries like Banking and Insurance. BRICs are big markets for us and our focus should be to develop products and services according to their needs however balance of trade must favor us in order to have advantage of global market system.

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