Question

Discuss the advantages and disadvantages of globalization, quoting examples from the construction and real estate sectors.

Answer 1

The advantages of globalization for business

1. Ability to tap into a wider talent pool

When fully taking advantage of globalization, you are no longer restrained by talent that is available in your city. Today your global workforce could work from anywhere in the world with an internet connection opening you up to the brightest and best candidates the entire world has to offer.

2. New ideas due to cultural diversity

Managing an international workforce includes teams working across different locations, people traveling and moving countries for work, having a range of different work ethics and practices and even religious differences. All of these can be challenges, but overwhelmingly are a positive thing in the workplace as it brings together different ideas and insights and perspectives.

3. Larger markets

Globalization opens up new opportunities for businesses to sell their goods and services to a much larger markets, which means more potential sales and greater profits. Depending on the organization it can open up other opportunities in terms of distribution, logistics, marketing and management of these goods and services.

4. Earnings changes

With more and more companies accessing overseas outsourcing opportunities, wages have decreased for many workers in the original countries. Companies in the developing world are able to offer their services at a much reduced rate from those who live in countries with greater living standards. This means that workers in larger countries are affected.

The disadvantages of globalization for business

1. Potential for IP theft

When products are built overseas in factories on behalf of a company based in another country, there is potential that intellectual property and designs could be copied and stolen and replicated and sold for cheaper elsewhere.

2. Issues with supply chain

Businesses committed to ethical work practices may find that they cannot always account for these standards being met at every point in their supply chain and operations. For example there may be suppliers, farmers, factory workers, logistics operators who are exploited or work in unsafe conditions.

3. Corruption

Different standards apply in different countries, and many nations in the developing world are rife with corruption.

Foreign investment in residential real estate is re-emerging as a key political issue in several Anglo-sphere and Asian countries. The global real estate activities of the Four Asian Tiger countries (i.e., Hong Kong, Singapore, South Korea and Taiwan) in Anglo-sphere markets in the 1980s are well documented. The increasing foreign investor activity of new middle-class and super-rich investors from Brazil, Russia, India, China and South Africa (known collectively as the BRICS) in global real estate markets has introduced or revived some deep-seated cultural and political sensitivities (Rogers, Lee, & Yan, 2015).

Government and public responses to the latest manifestation of global real estate investment has taken different forms.

On the back of the well-reported rise in Chinese investment in local real estate in Australia, for example, in 2014, the federal government conducted a parliamentary inquiry into individual foreign investment in residential real estate.

In Canada, under mounting pressure to take action on housing affordability, the government reviewed their investment visa programme.

In London, a 300-strong group of protestors picketed against foreign real estate investment outside The World Property Market international real estate event. Meanwhile, European Union countries such as Spain, Greece, Cyprus and Turkey have introduced visa schemes targeting investors from Asia, Russia and North America in an attempt to attract global capital to their local real estate markets.