Question

Give a few examples of how economic globalization has positively affected transportation and correspondence.

Answer 1

Globalization in short, points to the whole effort towards making the world global community as a one village. Goods that were only found in western countries can now be found across the globe. Now under developed areas can enjoy the benefits of scientific advances and industrial progress available in developed countries for the improvement and growth of their areas.

Because of globalization the economies of the world are being increasingly integrated, example mobile phones and internet have brought people closer. The world is becoming a smaller place. Work can be outsourced to any part of the world that has an internet connection because of improvements in traffic infrastructure one is able to reach one’s destination in a short time.

Globalization can also be defined as an ongoing process by which regional economies, societies and cultures have become integrated through a globe-spanning network of communication and trade. The process of globalization includes a number of factors which are rapid technology developments that make global communications possible, political developments such as the fall of communism, and transportation developments that make traveling faster and more frequent. These produce greater development opportunities for companies with the opening up of additional markets, allow greater customer harmonization as a result of the increase in shared cultural values, and provide a superior competitive position with lower operating costs in other countries and access to new raw materials, resources, and investment opportunities.

Globalisation and international transport activity The 21st century has seen the continued internationalisation of the world’s economy. There is also evidence of greater globalisation of cultures and politics. Economically, globalisation helps to facilitate the greater division of labour, and to exploit its comparative advantage more completely. In the longer term, globalisation also stimulates technology and labour transfers, and allows the dynamism that accompanies entrepreneurial activities to stimulate the development of new technologies and processes that lead to global welfare improvements.

Shipping- Increasing globalisation has led to a strong increase in international shipping activity. Trade and shipping are closely linked, although some disagreement remains about the degree to which energy use in shipping is coupled with the movement of waterborne commerce. The estimates depend i.a. on the number of at-sea or inport days that are assumed in the analysis. The available evidence largely indicates that world marine fleet energy demand is the sum of international fuel sales, plus domestically assigned fuel sales. Some debate continues about the best estimates of global fuel usage, but the major elements of activity-based inventories are widely accepted. Considering the range of current estimates using activity-based input parameters, ocean-going ships now consume about 2% to 3% – and perhaps even as much as 4% – of world fossil fuels.

Aviation- Air transport has also played a key part in fostering globalisation. However, airlines (and to an even greater degree, air transport infrastructure) have had to respond to changing demands for their services. These demands come from the requirements for high-quality, fast and reliable international transport. Globalisation, almost by definition, means demands for greater mobility and access, but these demands are increasingly different for different types of passengers and cargoes, to different places, and over different distances, than was previously the norm. Many structural changes have taken place in the aviation sector as a result of globalisation. Air markets have been liberalised, the networks that airline companies operate have changed (often to hub-and-spoke networks), many new (often low-cost) companies have entered the market, and many (low-cost and other) airline companies have gone out of business or merged (most of the remaining airlines have already united into three major alliances)

Road and rail- With new developments to remove bottlenecks, combined with operational improvements, there is scope for considerable improvement in the efficiency of international road and rail freight in many regions. Of course, it is not simply a question of transit time and reliability, it is also a question of cost. In a comparison of total door-to-door transport costs and transit times for a range of transport solutions carrying cargo from Asia to Europe, air transport had the highest cost, but very short transit times. Sea transport provided the lowest cost, but had long transit times. Road freight fell between air and sea, both in terms of cost and transit time. Rail transport exhibited a very wide range of costs and transit times, and showed major differences between the officially scheduled transit times and the actual transit times achieved. Within the next 15 years, there seem to be limited opportunities to dramatically increase the speed of either ships or aircraft. Indeed, concern about CO2 emissions could lead to changes in the role of air freight within the supply chain. There have even been calls for sea freight transport to operate at slower speeds, in order to save fuel. Given these uncertainties, it is interesting to note the particular potential for rail movement to offer opportunities for shorter transit times, and possibly, reduced costs. Road freight times may not have the scope to be reduced to the same extent. For both road and rail freight transport, border crossings represent an important barrier to trade. Safety for drivers and cargo is a major issue, especially for road transport. A major increase in road and rail transport from eastern parts of Asia to Europe would require major infrastructure investments, in particular for road transport.

POSITIVE EFFECTS

It would be rather difficult to discuss the extent of the positives that globalization has had on the world at large. But still, here are some of the positive effects of globalization and the positive impacts they have had on so many demographic segments of society.

Global market.

Most successful emerging markets in developed countries are a result of privatization of state owned industries. In order for these industries to increase consumer demand many of them are attempting to expand and extend their value chain to an international level. The impact of globalization on business management is seen by the sudden increase of number of transactions across the borders. In protecting yields and maintaining competitiveness, businesses are continuing to develop a wide range of their footprint as it lowers cost and enjoys economies of scale (Shah A.,2009)

Multinational corporations is a result of globalization. They occupy a central role within the process of globalization as evidenced through global foreign direct investment inflows. Their concentrations within Europe in western economies has led to size constraints, therefore there is a need for new geographical areas to operate whereby they will face a lot of competition in the market. Through this they will enlarge their market and enjoy economies of scale as globalization facilitates time space compression, economies compete at all levels including that of attracting investors (Smith V.A and Omar M.,2005).

Cross-cultural management

Globalization tend to be the realm of elite because in many parts of the world they are the only people who are affluent enough to buy many of the products available in the global marketplace. Highly educated and wealthy people from different backgrounds interact within a westernized milieu. Western styles, since are symbols of affluence and power, the elite often embraces western styles of products and pattern of behavior in order to impress others. Today Western culture and patterns of behavior and language are staples of international business (Asgary N. and Walle A.H.,2002).

United states seems to have powerful impact upon many other countries and societies. The world today has a popular cultural force. The popular consumer culture of the economically dominant West is relentlessly and inevitably transforming other regions, cultures, nations and societies. In addition, such perspective imply that technological change, mass media, and consumer oriented marketing campaigns work in tandem to remake whatever they touch in their own image. Even attitudes and ideas about society, religion and technology are transformed by cultural diffusion brought by globalization. Example, in America McDonalds represent fast, cheap and convenient food while it is not the same worldwide. It’s of high price in other countries like China and Russia where it involves cultural experience (Walle A.H, 2002)

Foreign trade

Globalization has created and expanded foreign trade in the world. Things that were only found in developed countries can now be found in other countries across the world. People can now get whatever they want and from any country. Through this developed countries can export their goods to other countries. Countries do business through international trade, whereby they import and export goods across the global. These countries which export goods get comparative advantages. Organizations have been established with a view to control and regulate the trade activities of the countries in the world so to have fair trade. World trade organizations emerged as a powerful international organization capable effectively influencing individual governments to follow international trade rules, copyrights, policies on subsidies, taxes and tariffs. Nations can not break rules without facing economic consequences (Piaseck R. and Wolnicki M., 2004) .

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The number of nations that are dependent on trade, foreign capital, and the world financial markets increased greatly. Countries engaged in foreign trade enjoy comparative advantage. The post Recardian trade theories predicted that specialization in labor and capital intensive goods would bridge enormous wage gaps between the poor and the rich countries, that is the developing and developed countries, sparing the latter from massive labor immigration (Gerber J., 2002).

Resource Imperative

Developed countries need natural and human resources of the developing countries while developing countries need capital, technology and brainpower of the wealthier countries. Developed countries’ economies are increasingly dependent on the natural and human resources of the developing nations. Growing interdependence of nations and their activities on one another fostered by the depletion of natural resources; as well as overpopulation (Harris P.R.,2002).

Foreign investment

One of the most visible positive effects of globalization in India is the flow of foreign capital. A lot of companies have directly invested in India, by starting production units in India, but what we also need to see is the amount of Foreign Investment Inflow that flows into the developing countries. Indian companies which have been performing well, both in India and off the shores, will attract a lot of foreign investment, and thus pushes up the reserve of foreign exchange available in India. This is also one of the positive effects of globalization in US and other developed countries as developing countries give them a good investment proposition.

Managers’ objectives might not be the same with those of stockholders in some situations. The more complex the corporation the more difficult it is for shareholders to monitor management’s actions whereby it provides the managers more freedom to act in their own self interest at the expense of shareholders. Multinational firms are more complex than national firms. Managers might favor international diversification because it reduces firm specific risk or adds to their prestige. These goals might be of little interest to shareholders. This divergence of interests between shareholders and managers, might reduce the value of multinationals relative to domestic firms (Saudagaran S.M.,2002)

Competition

One of the most visible positive effects of globalization is the improved quality of products due to globe competition. Customer service and the ‘customer is the king’ approaches to production have led to improved quality of products and services. As the domestic companies have to fight out foreign competition, they are compelled to raise their standards and customer satisfaction levels in order to survive in the market. Besides, when a global brand enters a new country, it comes in riding on some goodwill, which it has to live up to. This creates competition in the market and a survival of the fittest situation.

Culture

The positive effects of globalization on culture are many! Not all good practices were born in one civilization. The world that we live in today is a result of several cultures coming together. People of one culture, if receptive, tend to see the flaws in their culture and pick up the culture which is more correct or in tune with the times. Societies have become larger as they have welcomed people of other civilizations and backgrounds and created a whole new culture of their own. Cooking styles, languages and customs have spread all due to globalization. The same can be said about movies, musical styles and other art forms. They too have moved from one country to another, leaving an impression on a culture which has adopted them.

Legal Effects

Increased media coverage draws the attention of the world to human rights violations. This leads to improvement in human rights. Global economic growth does not necessarily make people happier, worldwide free trade, should also benefit humanity as well as protect nature, not just reward managers and stockholders. Those who would be authentic leaders need to address inequalities. Globalization should promote openness and information along with exchange with greater democracy and prosperity (Harris P.R., 2002).

Gone are the days where the limited jurisdiction became a hindrance in the prosecution of criminals. These days due to international courts of justice, these criminals can no longer seek asylum in a foreign country, but will be brought forward and there will be justice. Due to globalization, there is also an understanding between the security agencies and the police of two or more different countries who will come together to curbglobal terrorism. Hence, it is now possible to catch the perpetrators of crime irrespective of which country they choose to hide in. This is undoubtedly one of the greatest positive effects of globalization on society.

NEGATIVE EFFECTS

Globalization also have its side effects to the developed nations. These include some factors which are jobs insecurity, fluctuation in prices, terrorism, fluctuation in currency, capital flows and so on.

JOBS INSECURITY.

In developed countries people have jobs insecurity. People are losing their jobs. Developed nations have outsourced manufacturing and white collar jobs. That means less jobs for their people. This is because the manufacturing work is outsourced to countries where the costs of manufacturing goods and wages are lower than in their countries. They have outsourced to developing countries like China and India. Most people like accountants, programmers, editors and scientists have lost jobs due to outsourcing to cheaper locations like India.

Globalization has led to exploitation of labor. Safety standards are ignored to produce cheap goods. “In practice, however, the recent experience in Latin America has been that many such open-handed multinationals moved their operations to, for example, China or South East Asia because of cost and market considerations”(Piasecki R. and Wolnicki M., 2004).

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FLUCTUATION IN PRICES.

Globalization has led to fluctuation in price. Due to increase in competition, developed countries are forced to lower down their prices for their products, this is because other countries like China produce goods at a lower cost that makes goods to be cheaper than the ones produced in developed countries. So, in order for the developed countries to maintain their customers they are forced to reduce prices of their goods. This is a disadvantage to them because it reduces the ability to sustain social welfare in their countries.

EFFECTS OF GLOBALIZATION ON BUSINESS MANAGEMENT IN DEVELOPING COUNTRIES.

POSITIVE EFFECTS.

“I know that globalization has also created many negative effects, but I believe it’s always better to look to the future with optimism and hope. Tomorrow, hopefully, we will be able to minimize or even eradicate the evil forces that give globalization a bad name. Thus we will be able to move forward with peace and harmony

Poverty alleviation

As far as poverty reduction is concerned, globalization played a role in poverty reduction in developing countries. In deed most developed countries experienced reduction in poverty in the proportion of their living below the poverty line, including fast developing countries like China, India, Vietnam. While other countries like Sub-Saharan Africa registered an opposite trend

Employment situation.

Through globalization, people from different countries are provided with jobs opportunities within the global. It has created the concept of outsourcing. Developed countries prefer to provide work to developing countries where costs are cheap. Work such as customer support, software development, accounting, marketing and insurance are given to developing countries like India. Therefore the country that is given the work enjoys by getting jobs.

It has given an opportunity to invest in the emerging markets and tap up the talent which is available there. In developing countries, there is often a lack of capital which hinders the growth of domestic companies and hence, employment. In such cases, due to global nature of the businesses, people of developing countries too can obtain gainful employment opportunities

Technology

This is a powerful force that drives the world toward a converging commonality. It has proletarianized communication, transport, and travel. People from different places everywhere wants all the things they have heard about, seen, or experienced through technology. Organizations through its managements can obtain knowledge from different places in the world that can be used in the organization.

Television and medias played a big role in influencing the perception of the world, from a relatively small national unity and reality, into a global market and international concerns. As multinationals establish subsidiaries in new locations, they transfer know how from the parent to the local operation. Knowledge flows from one unit to another as a whole organization benefits from development activity. One of the ways that organizations use in knowledge transfer is the movement of personnel, which takes place within multinationals. This build up a bank of knowledge about working in different situations with people from different cultures and this represents a stock of knowledge that could be developed and used to benefit the organization

Education.

Globalization from the point of view has positive effects as well as negative effects. It has increased the access of higher education example universities and reducing the knowledge gap in developing countries, it equally has negative aspects which can seriously threaten universities in those countries. From point of view it has brought more positive effects to developing countries through increasing access to higher learning institutions. Today you can move in the search of the best educational facilities in the world including developing countries without any hindrance. This is due to increased output from secondary schools, greater participation of women in higher education, a growing private sector demand for graduates, and the exorbitant costs of acquiring education in foreign countries, especially those in the north

Foreign trade

Despite having negative effects of globalization, it has a good side too. One of the most significant effect it has brought to developing countries is Trade. Before people used to exchange goods for goods or services for services but now people can trade goods for money. This is mostly through International trade whereby people exports and imports goods within countries. Globalization has led to reduction of costs in trade within the globe. It has led to reduction of tax of importation of goods.

According to economic theory, foreign trade is in principle, beneficial to any country engaged. The international division of labor allocates the resources more efficient whereby it increases the economic welfare of all countries engaged in foreign trade in long run

Foreign investment

Foreign investment is a direct result of globalization. Foreign investment is always welcomed as it provides resources, capital and technology to a country that will support economic development of the host country. This improves employment as in direct and indirectly. Increases exports to a country and thereby improves the current account and therefore will help to the repayment of foreign debt. This however has some criticisms for leading to too much foreign

Developing countries can use general or specific industrial and trade policies to be more or less welcoming to foreign direct investments, capital and foreign tourist services. They can directly and indirectly shape their participation in the economic activities in the globe