Introduction
Globalisation is a common phenomenon in the contemporary world. Business competition has stiffened, and thus many organisations are using globalisation as a competitive advantage. The concept of globalisation cuts across numerous attributes in the modern-day society, thus contributing to unifying cultural practices in economic and business areas (Markus 2005). Globalisation can be defined as a practice of unifying business and economic practices across nations’ boundaries in search of new opportunities. This trend has greatly contributed to the growth of world markets. In the modern world, large business corporations are expanding at a high rate across their nation’s boundaries in search of new business opportunities in regions seemed to have unexploited potentials (Steger 2009).
Consequently, business globalisation and technology transfer have fostered the creation of harmonised world economies, thus easing the expansion of large businesses to international markets due to uniform trade treaties made by various nations across different parts of the world.
Drivers of Globalisation in the Production of Goods and Services Sector
Globalisation is driven by various factors, but the four main aspects that have had a major impact on the twenty-first century include technological advancements, competition, the convergence of global consumerism patterns and markets, and government policies. In the contemporary world, technology is an essential component of economic growth and development in any country. Technology is a globally universal component that is adopted in most parts of the world, thus making it easy for globalisation of other factors of business such as labour and markets (Soros 2002).
Technology is very important for the progression of a business production as it helps in lowering production costs coupled with enhancing the quality of products. The ultimate goal of all businesses is to maximise profits and thus anything that lowers production costs is highly preferable to business players in a bid to attain the set profit goals. Traditionally, businesses required many workers in different departments, which then made it hard for management to oversee the business production in a human crowded environment (Friedman 1999).
Many employees are a risk to the business success and growth as it is often very difficult for managers to come up with policies that suit the interests of every stakeholder, which then leads to endless complaints and grievances in the workplace. Technological advancement assists businesses to reduce the human labour in operations, which is a great milestone in cutting down the cost of production in terms of labour and reducing risks posed by larger workforce in the business premises.
In mid-nineteenth century, technology had not fully been adopted in a majority of world countries, and thus many businesses operated on traditional methods of production. Traditional methods of production consumed more power as compared to the modern technological advanced methods of production (Helliwell 2000). In addition, traditional forms of production also required more time to produce quality products as compared to the modern methods due to low technological applications. Hence, businesses incurred high production costs, which were deterrents towards achieving the ultimate goal of profit maximisation. Surprisingly, technological advancement in the modern-day world uses less time and power to produce high quality products, which enables businesses to produce large volumes within a short period, thus enabling profits maximisation.
Technology is a major driver of globalisation as it is universal and it is traded internationally. Developed countries are the major source of technology whereas the middle income and developing nations are the buyers of that technology. Technology advancements lead to unified production across the world whereby goods and services produced under the same technology advancement are standardized in quality and branding irrespective of the place of production. This aspect increases global market for the same products by giving international traders an opportunity to choose from different buyers in the international level, and hence contributing to the globalisation of trade.
Technological advancement is a major factor of production in today’s world as it reduces cost production and increases efficiency whenever installed irrespective of the location. For instance, the adoption of computerised working systems in offices has increased rapidly in the twenty first century across the world. Businesses and large organisations have been in a position to centralise their operations into a single centre across the world, hence saving high costs that would be incurred in hiring the requisite human resources to carry out work, which is equally performed by the technological installed systems. Hence, the desire by businesses and profit-making organisations to cut down cost and increase profit has played a major role in contributing to globalisation as centralised managerial functions pool people of different origins and cultures from various parts of the world.
Secondly, competition is a major factor and driver of globalisation in the world today. Competition is the major threat to business growth and development. Every businessperson wishes to exist in a monopolistic environment with many buyers, but one seller. The existence of competitors in a business environment contributes to globalisation of business operations, as it seems to be a competitive advantage and a competitive strategy. Competition has its benefits to the business players as it threatens their survival if competitive advantage strategies are not taken into account, thus leading to business expansion and globalisation.
Most large businesses and large profit making organisations have expanded to regions that are far beyond the boundaries of their countries of origin as the local market is never satisfactory for them due to competition. The world trade has grown to unprecedented levels in the contemporary world as large businesses and especially those operating in manufacturing and technology industries, survive under global competitive conditions. For instance, a carmaker in the United States cannot solely rely on the American market for profit making due to other competitive carmakers in the country. In addition, every carmaker in the world is fighting for an opportunity to enter the US market, as it seems potential and promising. Hence, the carmaker would opt to expand to other markets across the world in order to have a diverse market, and thus a competitive advantage (Scholte 2005).
In addition, competition has forced some businesses to merge with other global business partners as a competitive strategy over other competitors. A small business enterprise is always ambitious to outdo an existing large business that then makes it easy for a competitive large business to merge with the small business in order to outdo the already existing large firms by applying new operational strategies. Hence, the effort by business players to garner competitive advantage leads to globalisation of business operations (Dicken 2011).
Thirdly, market and convergence of global consumerism patterns is also a major driver of globalisation in the contemporary world of business. The global market is ever available for business products, but the main challenge to the business players is the application of strategies that will enable them to exploit such markets. Apparently, the twenty first century is an era of high consumerism due to advanced technology and dynamism in consumption patterns, thus leading to the development of newly attractive products regularly. Consumerism is a dangerous social behaviour that lowers financial intelligence in the consumers’ minds as they compete in acquiring new and most attractive products that exist in the market. Additionally, consumerism is common amongst the middle class and the youth.
For instance, the technology has enabled carmakers to produce attractive car models regularly on yearly or half-yearly basis, which are meant to target the youthful celebrities and middle-income earners (Arndt & Kierzkowski 2001). Hence, the attention is not on the location of the market place, but rather the social status and age group of the potential customers at the global phenomenon.
The idea of viewing the world as a global village has led to change in mentality and attitudes in the business environment. There have been advancements in transport systems that enable a customer to transport goods and services to various parts of the world conveniently. In addition, some businesses are virtually global since they target the wide global market through online marketing and shopping mechanisms, hence enabling customers to acquire goods conveniently from various places across the world (Anderson & Svensson 2009). These business trends have contributed to gradual changes on the world cultures, thus leading to universal consumerism patterns. For instance, a youthful Kenyan dresses the same way as a youthful American as they buy clothes made by the same fashion designer based on a particular place in the world. In addition, the two will mostly use the same mobile and computer gadgets as they share a common consumerism taste and preferences (Guest 2012).
Notably, business players are prudent and they acquire strategies that will increase their survival and ability to increase profits as soon as the need arises. Hence, the universal consumerism pattern has led to a majority of global businesses to invest heavily on goods and services that match what consumers need in the modern world. Hence, the American businesses are operating in the same way as Italian businesses as they target the same customers with the same preferences. Hence, it is easier for a business to change location to another country and continue with operations without the need to change the products (Levitt 2013).
Fourthly, government policies have also contributed highly as drivers of globalisation of production of goods and services across the world. Every government endeavours to see its economy growing, and thus actions that will fuel economic growth are essential in making government policies. In different regions of the world, governments have contributed to globalisation by introducing trade policies that attract foreign investors in an economy.
For instance, developing countries rely heavily on the agricultural and tourism sector for economic growth and development, as they do not have the ability to invest on industrial and technological sectors due to high capital requirements (Wild & Wild 2007). In addition, the majority of developing countries have high population that hampers the ability to invest in high capital-intensive ventures due to budget constraints. These challenges force governments to introduce policies that will attract foreign investments in the local economy. In some cases, more than two developing countries form a trading block where they allow free trade and reduce trade barriers amongst them in order to attract foreign investments. The policies by governments to attract foreign investors open doors to globalisation whereby foreign businesses enter an economy for investments.
In some cases, government officials are sent to foreign countries to seek for markets of local products. The effort to seek market in foreign countries often leads to the signing of trade agreements whereby the foreign buyers seek favourable trade policies for investing in a certain country and in most cases, such requirements are granted. Hence, foreign traders get opportunities to invest in another country under disembroiled government policies. In addition, the majority of developing countries seek foreign expertise in the implementation of major economic projects such as construction of huge transport infrastructures due to experience and efficiency, hence leading to globalisation.
Impacts of Globalisation in Production of Goods and Services Sector
The production of goods and services sector is the backbone of the world’s trade, and thus globalisation has had a major impact on the sector in the twenty first century. The two main impacts of globalisation on this sector include an increase in the market of goods and services and improved quality of goods and services. The aspect of globalisation has forced a majority of businesses to increase their market coverage across various parts of the world as customers have uniform consumerism tastes and preferences.
In addition, the stiff competition in the global phenomenon has led to withdrawal of some business players in the sector due to failure to adopt efficient competitive mechanisms, hence increasing the market potential of the few left in operation. In addition, the idea of universal global consumerism has enabled large business organisations to merge with smaller businesses operating in the same business line in foreign countries in order to increase the global market coverage in foreign countries at lower costs than they would incur if they chose to open subsidiary branches.
In addition, globalisation has led to increased quality of production of goods and services in the world (Graham 2009). The existing business players have already set high quality production benchmarks for new entrants, which has enabled global customers to enjoy high quality products and services. The universal global consumerism has played a major role in the improvement of production as producers try to please their potential clients in the market. Producers are at the risk losing their market share if they make substandard goods and services, courtesy of competition and the ever-increasing consumerism in the global market. For instance, for a long time, the Chinese products have been considered as inferior to other brands in various parts of the world and especially in the western countries. However, the Chinese have tried to merge with western producers in order to convince the potential clients that their goods and services are of high quality. Hence, globalisation has played a major role in the improvement of quality production of goods and services in the world markets.
Personal reflection
Globalisation is essential for the development of world economies as well as social development of the world’s population. The majority of world’s developments are results of globalisation, which pool people of different cultures and origins to a common environment for social or business reasons. Globalisation has led to the establishment of notable world events such as sporting activities where people of different cultural heritages are made to understand that they share some similarities. Sporting and tourism activities are the major historical drivers of globalisation in the world apart from war and colonisation as visitors get time to exchange ideas with the locals.
In addition, the visitors carry with them some ideas to their countries of origin, which often bear them economic values. In the contemporary world, sporting and tourism activities are a global culture and it has opened doors for trade expos where traders exhibit their products to foreigners with an intention of securing global markets. Hence, globalisation is a norm for every successful tradesman in the modern world of business.
In the education system, globalisation has led to various developments in the sector in an effort to make it relevant when compared with other systems across the world. In the higher learning institutions, the presence of e-learning systems enable students to participate in lectures, while physically away and this aspect has resulted in globalised technological advancements in the education sector. In addition, the majority of learning materials are products of foreign producers who have a good reputation of producing high quality products such as stationers and other learning materials. Hence, globalisation has had a major impact on students by availing relevant learning materials.
Globalisation has also contributed to the personal growth of fashion consciousness across the world. It is good for both the consumer and producer to be aware of the trending fashions in order to remain at par with customers’ needs and preferences. Traditionally, only the cloth wear industry was fashion conscious, but the technological advancements in today’s world have led to other sectors acknowledging fashion consciousness. For instance, a mobile producer would be required to produce a mobile phone that is equal to or above the current trending mobile fashion in order to garner sizeable market coverage in the global arena.
Moreover, as a buyer, I would be required to be aware of the trending fashions and models of goods and services that I deal with in order to remain updated in the social phenomenon. In addition, globalisation has contributed highly to the price determination of products in the world markets due to stiff competition in the market place. Economically, foreign traders are believed to bring in higher and more affordable goods and services into the market as compared to local traders. Hence, local traders fear competition from the foreign traders, and thus they tend to produce higher quality products and sell them at considerable prices. Hence, globalisation determines the price of products in a given market.
Conclusion
Globalisation is essential for the development of world economies as it opens doors for large market coverage to producers who come up high quality products and sell them at considerable prices. In addition, globalisation has led to growth and development of unified world cultures due to the convergence of global consumerism. In education sectors, globalisation has played an equally important role as explicated in this paper. Hence, globalisation has enabled customers to acquire high quality goods and services from various traders, due to the wide choice availed by the many competitors in the world markets.
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