Question

Explain how has globalization affected the amount of competition in the world. Add citations and references.?

Answer 1

Globalisation refers to interaction and trading business not only in domestic market but also in international market. In globalisation the purchase and sale is done not only within the country but also outside the country. Globalisation creates competition in the world. With globalisation firms can look for other countries for their trade if there exists no opportunity within is country. The firms can import for cheap labor from other country to reduce the cost of its production which might impact the employment opportunity within the country. If raw materials are available in cheap pricer than in home country, a firm would prefer importing those material from other country than buying it from home country leading to reduction in trading activity and use of foreign exchange. The firm can refer to various countries and opportunities for cheap production of its goods and look for market where it can sell goods at higher rate leading to increase in profitability for the firm. Also in technology front if there is no available technology for the firms to grow the company can import the same from other countries to produce its goods. This can lead to less trading activity and also drop in the growth rate for the company.