Question

Define and discuss the benefits and drawbacks of Globalization.

Define and discuss the benefits and drawbacks of International Business.?

Answer 1

Globalization: The free movement of goods, technology, and people in a seamless and integrated manner across the world is known as Globalization. It came into existence to boost development of underdeveloped and developing countries, to open these economies to global market for improving standard of living in these countries. Through globalization, multinational companies starts their business in poor countries, utilize their resources and labor to manufacture goods and sells them at higher price in developed economies. Through this, they promise to provide employment to local people which further help them in improving their standard of living.

Benefits:

1. Sharing of knowledge, technology, goods etc.
2. Reduces monopoly in the market
3. More competition means lower prices to be paid for products and services
4. Employment for citizens
5. Increase in economic growth and average per capita income

Drawbacks:

1. Leads to inflation
2. Any external economic shock impacts poor countries
3. Increases income inequality and wealth gap in the country
4. causes irreversible damage to the climate and environment of the country as it causes degradation of natural resources
5. Employment uncertainty is high as the companies shift their manufacturing units to poorer countries once resources exhaust in former country

International Business:

International business includes all the activities like transfer of goods, services, knowledge, ideas, people etc. across the national boundaries. The different forms of International Business are:

• Exporting and Importing of goods from one country to another
• Contractual agreements like licensing and franchising which allows firms to operate in other countries or use products or services of other countries
• Developing Sales. marketing, R&D etc. of firms in foreign countries

Benefits:

1. Availability of goods which cannot be produced in country
2. It helps in developing peace, goodwill and friendship with other countries
3. Employment to the local people
4. Regulates price fluctuation due to shortage as the shortage can be met using imports
5. In times of famine and disasters, imports helps in overcoming shortages

Drawbacks:

1. Makes countries dependent on imports for essential needs and requirements
2. Harms the home grown industries
3. Destruction and depletion of natural resources
4. International business can cause war due to business rivalry amongst nations
5. In times of need, dependency on imports for essential products like medicines create difficulties