Essay on "International Business Environment Today's Micro and Macroenvironments"

Essay 9 pages (2692 words) Sources: 15 Style: Harvard

[EXCERPT] . . . .

International Business Environment

Today's micro and macroenvironments are developing at rapid paces, paces which are sometimes difficult to keep up with. The modifications in all socio-cultural, economic, technological or political backgrounds are affecting all features of the everyday life, forcing the individual to adapt along. Some of these modifications have made the life of the individual easier, whereas others have hardened it. Probably the most relevant examples in this instance are offered by the technological field. Innovations such as steam vacuums or dish washers have improved the quality of life, whereas personal computers and laptops (when used mainly for online communications and gaming) have damaged the relationship between parents and their offspring, further deepening the gap between generations.

The list of positive and negative modifications which have affected the individual and the society is endless, but what must be, however, remembered is that most of these modifications are generated by the forces of globalization. Ultimately then, one should discuss these forces in light of the contemporaneous society. Great emphasis has yet been placed on the topics of globalization and the specialized literature is filled with praises as well as disclaims. One way to address the issues of globalization is an analysis through the lens of a quote:

Globalisation and the resulting increase in competition harm people, as international companies play one government against another to get the best deal possible. Meanwhile, governments continually ask for greater concessions from their citizens, demanding that they work harder and longer for less pay."

2. About Globalization

The term globalization emerged during the 1980s and gained popularity throughout the 1990s, becoming a buzzword of the contemporaneous society. A first attempt to define the term globalization "envisaged a situation in which information travelling at electronic speeds would replace language with instant non-verbal communication, creating an 'all-at-onceness.' [...] a globalized world is one of increasing instantaneity, where communication media enable people in disparate locations to experience events simultaneously" (Ray, 2007, p.1). Justin Ervin and Zachary Smith (2008) strive to define the concept of globalization from a broader perspective, and in their venture, employ the fact that the individual is no longer isolated, but that he becomes affected by the "actions of distant others" (p.2).

Globalization101 website defines the concept as "a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology. This process has effects on the environment, on culture, on political systems, on economic development and prosperity, and on human physical well-being in societies around the world."

To conclude the findings in the specialised literature, globalization could be simply defined as a process in which information and practices transcend the national boundaries and manage to affect individuals in various geographic locations. To better explain, the travelling information could belong to the fields of sociology, culture, economics, politics or technology and could affect these particular fields in another country.

The forces of globalization have generated numerous implications, of both positive as well as negative nature. This nature has sometimes been determined by objective reasoning, whereas in other instances it has been subjective. Some pro and con arguments relative to globalization are presented below. This endeavour is necessary for the ability to respond to the quote, in terms of agreeing or disagreeing with globalization generating negative aspects upon societies and individuals.

3. Benefits of Globalization

As the advocates of globalization state, the benefits of globalization are numerous and multifaceted. While some of them are implicit, others have a hidden or secondary nature. The opinions on this topic vary, but most economists seem to agree that globalization generates positive effects within the international market. "Pools of economists indicate that one of the few things they agree on is that the globalization of international trade, in which markets are opened to flows of foreign goods and services, is desirable" (Mishkin, 2006, p.8). Economists have reached this mutual conclusion due to the benefits of a globalized international market. Some of these advantages are succinctly presented below:

the price is correctly and objectively set by supply and demand the political interventions are limited and the market governs itself by economic principles the creation of a context in which Ricardo's theory of comparative advantages is properly implemented

Despite the fact that most economists agree in terms of the positive effects that globalization generates upon the international market, they find it extremely difficult to reach a common understanding when it comes to financial globalization. In this order of ideas, some economists state that the free flow of capitals fosters economic growth and development by increasing the access to resources. The benefits of financial globalization could be summarized as follows:

financial globalization brings in new capital, lowering as such the cost of capital; in turn this generates more investment opportunities and better chances of economic growth the penetration of foreign financial institutions within the territory of one country generates a superior allocation of capitals, and third, globalization of the financial system helps promote the development of better property rights and institutions, both of which make the domestic financial sector work better in putting capital to productive uses" (Mishkin, 2006, p.8) hidden advantage of globalization is that it improves the social and economic status of women. It places greater emphasis on their education and professional formation, which in turn supports the development of communities and the macro environment. "Societies that embrace education for women enjoy dramatic social progress. Educated women tend to have fewer children. When they enter the workforce their contributions dramatically improve their countries' economic prospects. Concurrently, economic independence increases their stature both at home and in the community. Importantly, women spend their income very differently than men, focusing on key areas for social progress: the education, health, and nutrition of their families" (Geddes, 2004). The author of the Benefits of Globalization also reveals other advantages, materialized in the following:

reduced poverty rates - over the past 20 years, 200 million people have overcome their status of poor people (living on less than $1 a day) reduced mortality rates and increased life expectancy, due to improvements in medicine, public heath and larger food supplies reductions in child labor generalized increases in income per capita (Geddes, 2004)

Each literary source presents various advantages of globalization, but often through diverse lens. The most comprehensive presentation of the benefits of the globalizing forces was achieved by the Business Maps of India Website. It incorporates the following benefits:

speedy and easy transportation of goods and services, reduction in the chances of war amongst the developed countries, increase in the free international trade between countries, growing connectivity with the development of global mass media, diminishing the cultural barriers, propagating democratic idealism, increasing interdependence between the nation-states, growing liquidity of capital, rising possibilities of investment of the developed countries in the developing ones, easy and flexible operations of corporations across borders, increase in the connectivity between the individuals and corporations all over the world, and policies undertaken in the developed countries for growing environmental protection"

In a nutshell then, globalization benefits countries through a triple action: it increases their chances of economic welfare, it increases the citizens' civil liberties and thirdly, it supports a better allocation of resources, by this supporting not only the socio-economic background, but also the environment.

4. Disadvantages of Globalization

The general blame that can be brought against the forces of globalization refers to the fact that they reveal their benefits selectively. This idea is sufficient to explain the controversial findings of economists relative to the benefits and limitations of globalization. To better understand, "globalization proceeds selectively, including and excluding segments of economies and societies in and out of the network of information, wealth and power that characterizes the new dominant system" (the International Institute for Environment & Development, 2002, p.4).

The selective effects of globalization primarily mean that while some individuals and groups will feel the advantages, others will be subjected to the disadvantages. This is most obvious in terms of income in the meaning that globalization makes the rich get richer and the poor get poorer. In a more scientific formulation, the forces of globalization foster an environment which embraces an uneven distribution of income and a greater income inequality across countries and individuals.

Aside the economic aspects, globalization also poses threats upon the natural environment. By allowing corporations to benefit from the advantages of various nations, it also allows them to pollute the waters, engage in deforestation, consume the energy, generate pollution and greenhouse gases and so on. Otherwise put, globalization damages the natural environment (Lane, 2006).

As Frederic Mishkin pointed out in the Next Great Globalization, the effects of the globalizing forces upon the financial markets are highly controversial. Whilst some economists only tend to see their upside, others also reveal the limitations. In this order of ideas, a financial globalization could lead to financial crises, which will in turn lead to disastrous socio-economic effects, such as high unemployment rates, increased costs of living,… READ MORE

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