Question

What are the features, characteristics, and consequences of globalization on business?

Answer 1

Globalization refers to market integration in the global economy , leading to the increasing interconnectivity of national economies. Markets where globalization is especially relevant include financial markets such as stock markets, money and credit markets, and insurance markets , commodity markets like oil, cocoa, silver, and gold markets, and product markets such as motor vehicle markets and consumer electronics markets. Sport and entertainment globalisation, too, is a characteristic of the late 20th and early 21st centuries.

IT, transport and communications advances have increased the speed of globalisation over the past 40 years. The Internet has enabled global communication quickly and 24/7, and the use of containerization has enabled vast quantities of goods and commodities to be shipped worldwide at extremely low cost.
More recently, the emergence of social media means that national borders have become obsolete in several ways, as companies use modern methods of communication and marketing to reach foreign customers, like micro-marketing. The growing use of smartphones has also allowed global shoppers to enter the global 'virtual' markets with ease.

Greater trade in goods and services, nationally and regionally
An rise in capital flows including expansion of foreign direct investment (FDI) by transnational corporations (TNCs) and increased presence of sovereign wealth funds
Developing global brands to target higher- and lower-income markets
Spatial division of labor – e.g. outsourcing and off shoring of production and support services as supply chains of production have become more international.

In the manufacturing sector, jobs can be lost and generated in the service sector over the long term, causing structural unemployment which could expand the income gap within countries. The net effect of the employment impact depends on the speed of labor market adjustment which depends on mobility and flexibility itself. It may be necessary to improve labour productivity to close the productivity gap.

Both import and export levels are expected to increase, with trade representing an increasing proportion of GDP. The balance of payments impact is unpredictable and depends on relative levels of growth, inflation, competition, and exchange rate.