Tuesday, October 9, 2012

Research Paper on Globalization

Sample Research Paper on Globalization

Many opinions have been expressed recently about the term of globalization, although one cannot consider it exactly a contemporary phenomenon. First of all, globalization is described as the trend of global exchange in all aspects and spheres of human life and referred to the ideology of interdependence between nations, countries, and continents (Brown 2008: 44). The concept unifies the dependence of domestic markets and currencies on foreign trade, and the improving role of the global corporations (Landefeld, Kozlow 2003: 111).

The profile of the firm affected by the globalization is the following: a company uses global sourcing to produce some type of goods or services, overcome political and legal barriers in each country for the reason of opening an office or a store and employ local population, maintain worldwide distribution, and adapt packaging, advertising, and point-of-sales materials for each geographical region. In addition, it may also face scandals and conflicts on a local level, which can later affect the global image of the company.

Here one may see that in order to analyze the impact of governments and supranational organizations on a business, macro environment should be taken into consideration. Macro environment includes the list of factors, which can categorize the perspectives of cooperation between the official bodies and the global corporations. Oxford University Press (2007) identifies the LoNGPESTEL analyzing tool, the derivative from the PESTEL framework, as the one that helps firms to make decisions in the global environment. This model can be useful in analyzing six main categories of factors which matter on local, national, and global levels and propose suggestions about the ways how governments and other supranationals can help the firms that are affected by globalization. These factors include political, economic, social, technological, environmental, and legal. 

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Categorization of assistance for the firms
Political Sphere
Membership in international organizations
As an example of political support for the firms, one can mention the creation of international unions and organization of different profiles such as World Trade Organization (WTO), European Union (EU), United Nations Organization (UN) and many others. These supranational organizations are supposed to serve firms by investing in their research and development activity, broadening of their distribution networks, simplifying and reducing taxes and tariffs in the issues of international trade. The role of the government is ensuring the acceptance to certain international organizations, which comprise the highest political and economic interest for the country and namely the global firms within its borders. It is an important step toward the development of already operating global businesses in the country and, in most cases, the guaranteed access for the emerging firms to the international markets. 

Image and ideology
According to Mayda, O’Rourke, Sinnot (2007: 9-10), ideology of the nation plays a significant role in shaping an attitude towards other nations, their principles of life and work. Political issues between the countries may become the obstacles in trade relationships. One of the functions of the government is creation of a positive image of the country in the international arena, which helps to attract foreign investors, promote tourism, and, what is more important for the domestic companies going international, - conduct exporting activity. The image that the country possesses may be easily projected on each firm established in that country and will either help or block successful trade with other countries.    

Economic Sphere
Trade barriers versus free trade
The openness of the markets, outsourcing and global sourcing are the determining factors of the contemporary globalization for that economic growth tends to the countries with rapidly emerging economies. Brutto (2010: 513) points out that nowadays the economic growth in different countries is not fairly distributed, that’s why the developed countries design the policies that are aimed at establishing trade barriers and filtering the imported goods. The reasons for this are usually the slow internal growth, high rate of unemployment within those countries, and the abundance of cheaper alternatives of products manufactured in the less developed countries. Such isolation policies do not benefit the development of free trade making globalization efforts less effective. Besides, it leads to the trend of economic nationalism, which can be considered as negative for the global economics.
Under the firms affected by globalization one can understand the companies, which conduct exporting and importing activity. Based on the aforementioned, governments can help companies affected by globalization by encouraging import and export. With the well-established trade activity, the exchange of goods can be easier allowing for quicker turnover, better utilization of manufacturing facilities, shorter production terms, wider distribution, and larger demand for the products. As a result, it will stimulate the creation of new jobs, lower the prices, and make the competition in the industry more challenging. Besides, free trade is the basis for global sourcing, a strategy of searching for partners and contractors around the world gaining a possibility to offer the best products and services for the most affordable prices.
Governments in different countries specify customs rules and norms for the imported goods. They include establishing tariffs and duties based on the specifications and characteristics of products, as well as other types of requirements necessary for certain categories of products. That’s why one the most effective solutions in benefiting global corporations lies in adjusting and reducing taxes and tariffs on import. This is mostly possible within the trade organizations like WTO and and under GATT, which were established with the primary idea to alleviate the duties on export and import.
Another solution that may help the firms to benefit is countertrade – a form of agreement helping to develop commercial cooperation between two nations on the basis of import activity. Such type of agreements are usually maintained on a governmental level for that they usually takes into consideration the currency conversion rates, foreign trade policies and other type of regulations promoted by governments. An offset, the most popular form of a countertrade, allows importing to a foreign country with a condition that the components will be fractionally taken from or even produced in the importing country. On the one hand, such type of agreements may reduce the involvement of the manufacturing company because less materials, components and work force is required from the producer, but on the other hand, it helps to expand globally, enter new large markets, and increase distribution and revenues associated with it.

However, countertrade can be based on another concept – barter, for example. In this type of agreement, two nations are involved in the exchange of goods produced domestically avoiding money as the means of exchange. The government can help its domestic producer by distributing the goods to another country obtaining other type of commodity for the equal amount of money in return. Being far-from-ideal method of bargaining, barter is usually applied in the period of unstable economic situations and helps both the government and the producer to benefit.

Export guarantees
Export guarantees can also be considered a means of helping firms working on a global basis. By issuing the long terms loans for the businesses, the government can support the national companies involved in international activities and overseas projects. The principle of such agreement between the company and the government is in transferring political and economic risks from the manufacturing company to the corresponding governmental body.
Acting as a customer or a partner
Finally, governmental bodies and supranationals can act as customers purchasing products and solutions from the firms for own purposes. These legislative bodies also have physical headquarters and offices, employ people, and accomplish different types of projects. Therefore, governments can support the national manufacturers making a win-win deal. They can also function as intermediaries by searching for foreign partners and customers or promoting the business of the firms abroad. In addition, many firms going international would find it useful to obtain some sort of trainings and workshops, the main purpose of which is learning the principles of working with other countries, international business ethics or any other type of knowledge applicable on a global basis. The Chamber of Commerce may be the most appropriate body within the state administration dealing with such type of issues.    

As it turns out, a direct investment in foreign business in the country usually results in higher return on investment compared to an investment in a domestic business (Landefeld & Kozlow 2003: 117). Following this suggestion, the governments can help international businesses to prosper by investing in them, although it would not be always the best solution, especially for the countries, which intend to support national manufacturers.

Social Sphere

Medicine and healthcare
The most obvious examples of globalization are certainly found in solving universal problems of health care and medicine, which are usually the concern of governments and supranational authorities as those primarily responsible for the living conditions of population. For example, such diseases as AIDS or cancer are the international concern so global efforts have to be dedicated to fighting them (Brown 2008: 42-43). But how can we tie this together with the concern for the firms? Obviously, the statistics for global economic processes will show that the changes in demographics and work force supply take place as these problems are being settled. Firms act as employers and certainly depend on people, who work for them. To ensure the health of the employees and the potential of customers means to ensure the prosperity of business and other types of activities in the country and outside it, which is of high concern for the state governments and public organizations.

Work force security
In addition, not only health of the nation determines the quality of the labour force. Mayda, O’Rourke, Sinnot (2007: 4) point out that the rates of production and trade in each country depend on the skillfulness of workers, so it is quite reasonable to mention that labour market of each country affects globalization. After observing the international trends, one can mention that high-skill labour tends more to the countries with higher welfare rates, which discloses the unfair distribution of the work force between the countries. Consequently, Mayda, O’Rourke, Sinnot (2007: 6) conclude that ‘opposition to economic integration – analyzed as the dependent variable – is negatively affected by welfare policies’. Research shows that the more the government of the country rejects the possibilities of free international trade, the less opportunity exists in the labor market of the country and the less security the work force gains. As a result, the rates of skillful work force emigration increase and the GDP, which incorporates national spending for labor market, decreases. Based on this, globalized companies may not be satisfied with the quality of the labor force, which will negatively reflect on the operations in the given countries making business there unreasonable. That’s why the governmental policy aimed at labor protection will benefit both employers and employees on a national and international scale, providing competitive environment for maintaining international business relationships and reducing risk associated with uncertainty about the globalization processes on a domestic scale (Mayda, O’Rourke, Sinnot 2007: 20). 

Specialized education
According to Becker (2006: 271), globalization and global competition nowadays require employees to possess special knowledge and education. However, the system of education that exists in many countries does not allow reacting sufficiently to such changes and should be reshaped in accordance to the contemporary business environment. Education falls under the range of governmental responsibility, that’s why namely the government can restructure the system in order to accurately correspond to the up-to-date demands in the globalized society. 

Public events sponsorship
Sport, charity, art and other aspects of life worldwide are managed by international organizations and supranationals, which are usually non-profit and resort to the help of sponsors and patrons when searching for financial resources and investments. UNESCO, FIFA, International Olympic Committee are among such worldwide known independent organizations. Investment in the aforementioned spheres guarantees acknowledgement of the sponsoring company due to the PR activity and advertising associated with it. The company gets promotion on an international scale, has a possibility to create a positive image for the customers, and sometimes even to present its products or services to the global public. Such type of cooperation between non-profit organizations and businesses are mutually profitable and always noticeable.

Technological Sphere
Research & Development
One of the crucial manifestations in the process of globalization is the increase in sharing of knowledge and advancements in technology. This is the primary role of governments and supranationals acting in the interests of firms. Corporate policy of global corporations usually insists on uniformity in operations and equipment, which makes the necessity in the compliance of processes within the organization obvious. Because of the inequality in the countries’ rates of overall development, the distribution of know-how and technological novelties usually appears to be essential for a certain type of business. This primarily concerns the joint venture companies, which are usually established with the support from the governments and aimed at a common goal in research and development. The role of the government for such types of firms is well-defined – the government should act as an investor and ensure the growth and improvement for the firm, the result of which can later become the national or even global property. Supranationals can provide even greater contribution to the advancement of technologies by financing the projects of the manufacturing companies. As the European Union expands and unifies new countries, it invests in new prospective businesses in those countries. This allows the firms to handle projects, which were not previously affordable to them in financial terms and broaden the distribution network by obtaining partners within the member states of EU. 
As Landefeld and Kozlow (2003: 115) point out, research and development is a delicate issue for the global corporations. The primary concern is that the technological advancement can be easily transferred to partners and contractors in other countries, which leads to losing the global competitive advantage to certain extent. Governments cannot be fully in charge of protecting the technology developed domestically. However, the governments of the importing countries can help in the technology transfer and implementation of know-how through the franchisees and other types of partnership by establishing loyal regulations and encouraging investments in the country by the foreign companies and organizations.
Statistical data and international standards
When entering new markets, a company must be certainly interested in market statistics and looks forward to conducting a marketing research or buying statistical data, which satisfy the necessary parameters. For such reasons, governments should be able to present the requested data. In order to understand the data correctly, international standards should be applied to all types of information. Standardization of information and introduction of standards comprise the duties of supranational organizations on a universal scale and appear to be another point in helping the firms affected by globalization. Landefeld and Kozlow (2003: 119-120) specify the requirements for the statistical data insisting on their accuracy, consistency, and quality by saying that ‘the obligation of statistical organizations is to keep pace with changes in the world economy’.   

Environmental Sphere
Environmental concern
The problem of resources has always been a major concern for different companies, especially those involved in production. That’s why much attention nowadays is paid to the environmental concern and the natural resources, which people consume. According to the summary of Brown (2008: 49), ‘the major problems with globalization are in relation to concerns about energy renewal, sustainability of the world’s ecosystem, the inequalities associated with the global market’. In other words, the scarcity of resources available is predetermined by the rates and frequency of usage. For those resources that cannot be replenished quickly, certain policies should be established. They may even affect the activity of the firm on a global basis leading to diversification of business and other drastic changes. Oil industry can serve an example for this because petroleum has to be substituted with another type of fuel in future.

Some global companies try to assure the availability of resources for themselves. For example, IKEA, the world’s largest furniture retailer, plants trees on a regular basis to support the ecosystem (American Forests 2009). However, the role of environmental protection organizations is inevitable in such type of issues for that they are supposed to implement control over the utilization of natural resources, identification of endangered species, and regulating the distribution of amounts of natural supplies.

Omitting environmental concern
According to Landefeld and Kozlow (2003: 117), when pursuing the development of international business in the country, the governments can sometimes ignore the environmental impact, which global corporation produce in the country. This appears to be the case in the third world countries where norms and regulations are still not so strict and the corruption in the legislative bodies still takes place. This is supposed to benefit the firm because the firm enters the market in shorter terms and with less paperwork but is originally a question of business ethics, which casts doubt upon the positive image of the firm.

Legal Sphere
As mentioned above, sometimes governments make concessions in order to attract foreign businesses in the country. Technically, the government helps the firm to establish presence in the given country aimed at mutual benefit but it is sometimes made neglecting environmental issues, rights of the citizens or contradicting with fair competition. In such cases, supranationals are supposed to act as independent spectators and resolve the disputable issue.

In whole, governments and supranational organizations can assist the global corporations in regulating the issues of brand identity, employment of the personnel, managing insurance of the risks, establishing taxation norms and laws, etc. In terms of globalization, the law is also globalized to certain extent, so international practices become more applicable each day.  

Nowadays globalization is strongly associated with risk for the firms and individuals. Firms tend to see the advantages of globalization, although they cannot handle them without any external help. This help is found in the support of the governments and independent international organizations, which identify own interests in providing assistance for the companies. As a result of such interaction and cooperation, new units appear in a global business network, broadening the supply and the opportunities for customers, contractors, suppliers and even competitors. All principles and technologies that a company uses become a universal property that is shared on an international basis, leading to either prosperity or decline of the business. I suppose that the main fair of globalization is exactly in the uncertainty, which appears after the company turns from a domestic producer into a multinational corporation, namely the firm affected by globalization.
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