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Globalization is the expansion of business around the world due to advances in technology and transportation.
Globalization includes an increase in the flow of:
- goods and services
- capital
- people
- international ideas
Trade is not a new concept, but businesses can have a presence in more parts of the world than ever before. But how did this happen? And which industries are experiencing globalization? Keep reading to find out everything you need to know about globalization.
Related: have globalization Did it benefit our entrepreneur?
history of globalization
The rich history of globalization began long before giant conglomerates like Amazon and Google existed. There are timelines of discovery, protectionism, liberalization, financial crises and economic development, all of which can be traced back to pre-Christian times when the phenomenon of international trade developed.
Silk road
The Silk Road is a cultural phenomenon that made luxury goods accessible across borders from the 1st century BC to the 14th century AD. Silk was exported from China to Rome. That is, many other countries were involved along the route.
However, as access to the route was altered by numerous wars and conquests and the collapse of empires, the Silk Road became unable to withstand turmoil and trade barriers, and eventually collapsed despite export efforts.
spice root
The spice route prospered because it was associated with the spread of Islam. Prophet Muhammad was not only the founder of Islam but also a trader of spices while preaching across the country.
This spread lasted from the 7th century to the 15th century, beginning in central Arabia and expanding to places like Spain, India, Indonesia, and Europe.
age of discovery
From the 15th to the 18th centuries, explorers ventured into new lands and began to integrate the resources of those new lands into their economies through trade.
Countries began establishing global trade supply chains from new lands to their own country and to other countries, expanding the global economy.
first wave
At the turn of the 19th century, the highest form of globalization began. The British Empire continued to expand its reach and the Industrial Revolution was in full swing.
Advances in technology enabled Britain to manufacture commodities such as textiles and iron that were in demand in new parts of the world. Globalization grew exponentially over the next century and continued its rapid expansion until World War II.
World war
World War I and World War II brought globalization to a halt. War boosted the economy, but it destroyed the trade cycle. By the end of World War II, gross domestic product had fallen to 5% of his, the lowest percentage in 100 years.
second wave
The end of World War II brought more peace and more trade. The second wave of the Industrial Revolution produced more cars and planes than ever before.
Increased access to transport and new free trade agreements have made economic globalization faster than ever.
Related: How close is the recession? International Monetary Fund It says the economy is facing its “biggest test” since World War II.
third wave
The third wave of globalization followed the collapse of the Soviet Union and the creation of the World Trade Organization (WTO).
The Internet began to take shape, transportation and communication technologies became more manageable and accessible, and globalization seemed to make the world much smaller.
age of technology
America and China are leading the way in globalization in the cyber age. E-commerce has grown tremendously over the years and shows no signs of slowing down.
Manufacturing happens faster as operations become more extensive and streamlined. Delivery can be done overnight and the trade seems to have no boundaries. Watch how economists predict the impact of globalization in the coming years.
Related: 2 years since trading with China, tariff not working American business
Global business type
An international business operates by selling or producing goods and services in multiple countries. There are several different types of global businesses, each with their own way of operating.
Multi national company
This type of international company has offices in multiple countries, with each location responsible for different organizational units.
So one location might be more focused on marketing, another on research, and another on distribution. Each site works independently on a specific service and works towards a single company goal.
Multi national company
This type of international company also has offices in multiple countries. However, each location seems to be a scaled-down version of headquarters, with all departments in all locations.
Related: 5 tips for building a successful multicultural company
For example, Nike’s headquarters are in Beaverton, Oregon, and it has various departments ranging from marketing to finance to market analysis. However, Nike also has full-service corporate locations in the Netherlands, Mexico City, and Los Angeles.
Related: brexit Another problem European entrepreneurs have to deal with
Considerations for global companies
Whenever a company migrates to a new environment, there are cultural nuances and national economic factors that must be considered.
politics, policy, law
Businesses operating on domestic routes should be aware of the legal requirements of the countries in which they operate. As national laws and trade policies change, companies must be aware of them and adhere to them in order to remain compliant.
Two key areas of focus are human rights and labor laws, which vary from country to country. In addition, businesses must keep up with current events and diplomatic issues in order to maintain business activity and peace with their country.
Related: compliance European Union Law by Online Business
Environment issues
When a company decides to move or open an office in an international location, it needs to research the environmental issues of the new country.
Countries around the world have different operational requirements to protect the environment, so advocating for sustainability is key to respecting new nations and climate change.
Economy
Companies expanding into other countries need to be aware of the economic activity of the new territory. Companies should research and monitor international economic trends before making any relocation decisions.
Notable economic data include:
- Exchange rate
- Degree of income inequality
- inflation rate
- Unemployment rate
- gross domestic product (GDP)
Difference in culture
Other cultures have many differences and procedures that must be followed in order to maintain positive working relationships with citizens.
For example, in some countries it may be customary to exchange greetings before entering into a business meeting. In addition, businesses need employees who speak the language or translators readily available to respect the culture.
Pros and Cons of Business Globalization
Weighing the pros and cons to make an informed decision is essential when making business decisions. Take a look at the pros and cons of globalizing your business and form your own opinion.
business pros Globalization:
Business and its economic advantages include:
- Boosting economic growth: Technological advances, international exchange of goods, and other valuable information can improve a country’s income, living standards, and overall financial health.
- More Affordable Production: As more products become available, a wider price range becomes available, making products more accessible to consumers.
- Promote international cooperation: Countries that trade goods and services form relationships and rely on each other for business ventures.
- Promoting Job Opportunities: Expanding into new countries means new jobs. Companies often move to countries where they can find cheaper labor. This will help strengthen the workforce in poorer countries.
business cons Globalization:
Some of the negative effects of globalization on businesses and their economies include:
-
- inequality economic growth and labor exploitation: The old adage “the rich get richer and the poor stay poor” applies to the globalization of business. Wealthy countries and multinational corporations migrate to developing countries for cheap labor and lax workplace rules, paying incredibly low wages and making a profit while providing dangerous workplaces. conditions.
- Declining number of local companies: Companies that can expand into other countries may have enormous financial power, resources and famous names. This means that when these firms enter, they compete fiercely for local firms, forcing the industry’s smaller establishments out of business.
- A global recession is more likely: As countries begin to form partnerships, interdependence on certain goods and services may emerge. When a country’s economy or workforce begins to decline, global markets can be adversely affected.
- Potential Unemployment: When a company decides to move production to another country, all the workers who used to work there suddenly lose their jobs. If the company is big enough, it can have a negative impact on the economy of the entire country.
Related: of united nations You gave Elon Musk a $6.6 billion plan to personally solve world hunger. does he bite?
What’s Next After Business Globalization?
Globalization is the expansion of business around the world due to advances in technology and transportation.
Over the centuries, global supply chains have grown astronomically. You never know where the financial markets will end up as the world becomes more and more global.
For more information, world economyvisit Entrepreneur today.
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