Globalisation is a more critical question today than it has never been before. It has been known a significant growth within the last two last centuries(Ospina, Beltekian and Roser, 2018). This phenomenon of world integration regarding exchanges of goods, information, cultures, and people (Kenton, 2018) has been had a substantial impact on different stakeholder for a long time and will probably continue to impact them in the future. Business Organizations, government, and customers are mainly affected by the influence of this Phenomenon.
This essay will critically analyse the positives and negatives on these stakeholders. The first part of this essay will focus on business organizations; then, the second part will be dedicated to the influence of globalisation on government; finally, impacts on customers will be analysed
Firstly, Business organisations have mainly been profitable from globalization. It has allowed them to produce goods or services at lower cost accessing low-cost labour, technical expertise and production inputs (Wild and Wild, 2016). This global processing method allows a high level of income with a reasonable cost of production and good product quality.
Thus, Apple produces his iPhone with components coming from all around the world before to be sold in different places (Barboza, 2016). However, the globalisation of production brings also issues specially concerning sustainability. Indeed, the environment is affected with the shipment of products from all around the world according to Banker (2018). This Impact the images of famous companies as Amazon which is ranked as the lowest company regarding its sustainability (Banker, 2018) Hence globalization of production allows to produce better products with higher quality and lower the cost; on the other hand, it negatively impacts the image of companies thereby imitating the sells to non-ecological-customers.
Globalization of market has also been beneficial to businesses companies. The global convergence of customers preference has allowed the developing of new marketplaces with direct investment. This has resulted in the appearance of a universal market (Hill, 2013). For instance, it is possible to eat in an mc Donalds restaurant in 119 countries (Kuzoian, 2015). The firm follows an aggressive expansion strategy in China to reach a new market (Flannery, 2017). Such globalization is, ergo, a way to enhance the profits of Multinational Corporations.
Nevertheless, problems also appear under the pressure of globalization. Indeed, growing competition between companies is a considerable issue which forces companies to innovate (Wagstyl, 2009). The competition between Airbus and Boeing is an example of the innovation that globalization implies according to Zhang (2018); a permanent need of innovation is necessary to compete for businesses. Hence, innovation requires a substantial budget which is always growing: from 2002 to 2009 Boeing budget for research and development raised from 1639 billion to 60506 billion of US dollars (Statistica, 2019). This highlight that the efficiency of innovation tends to decrease. Hence, the growing need for innovation is a vicious circle which drives companies to invest more in research thereby leading to low-profit margins.
Secondly, globalization has changed the government policy in capitalist countries. With the instauration of Keynesian policies, governments have tried to enhance the economic stability after the WW II (Field, 2018). This economic policy has reinforced the purchasing power. This policy model was mainly dominant among the western government during the Trente Glorieuses (Cambridge University Press, 2018). Therefore, Globalization has driven governments to change their policies to reinforce their economic power and being more adapted to this change. However, this change is also responsible for the failure of government policy: The Keynesian policy of Mitterrand has, for example, been overtaken by the German, US and UK policies thereby leading to an austerity policy (Rowen, 1982): French government had, and instore new measure regarding taxes increase, reduction of business charges and a devaluation of the franc (Birch, 2015) . Thus, Globalization has shaped government policy to fit with the international trade tendency.
Although governments are still relevant, they tend to lose independence. According to Lucas(1999), the influential international connection between countries lowers the power of states; governments are not as free as they were in the past. This is, in part, due to the creation of regional trade organization such as the European Union which drain the government’s powers (Tupy, 2016). Consequently, the European Union policies cover a large panel of areas from the budget to fraud prevention. Globalization is leading to a centralized power which is ruled by supranational organizations: states cannot decide as they took by their own in the past. However, inside the border states keep a powerful control over the regulation of trade and protect the country over the foreign competition. They are for example able to increase taxes for foreign products to promote local economy (Tarver, 2018). As a result, it promotes the “competitiveness” of the country to ensure the interest of the state regarding globalization (Negash, 2015). Therefore, governments are likely to play an essential role in the future.
Thirdly, customers are influenced by globalization. Indeed, direct Investment in foreign counties allow new sells opportunity; ergo, people access a larger variety of products: customers are now able to buy a wide range of products (Collin, 2015). Zara is, for instance, a leading international brand of the fashion world. Ranked 46 of the most valuable brand in 2018 (Forbes, 2018) its products are internationally sold among 96 countries. Billions of customers can access their low-cost products in developed countries; Zara adopts the “fast fashion” model (Rauturier, 2018) which consist in the production of inexpensive products with collections renewed each half-week (Lutz, 2012). Equally, food and accessories are products available in large quantity and variety when produced by multinational corporations. Convenient food available in supermarket is one of them. However, the drawback of such practices is that customers choices are directed towards chain stores being more attractive for an average customer: people from different cultures are less likely to purchase homemade products. Although this product represent a part of local culture, customers are more interested in diversity and low-cost product: globalization tends to erase cultures identity, leading to the end diversity (Pagel, 2014). Hence, globalisation offers a vast variety of merchandise and lower the cost; this results in a monopoly of chains stores products and the disappearance of cultural identity and diversity.
Finally, globalization has considerably increased the purchasing power of customers. The prices have dropped substantially since the 19th century (Jacks, Meissner and Novy, 2008). Such a phenomenon has allowed reducing the products prices. For example, it is possible to buy a television at a little cost in comparison to 2000. Indeed, television prices have dropped by 96% since 2000 according to the Bureau of Labor Statistics (2015). Thus, people can buy more items for the same price than they could in the past. However, increase the purchasing power of customers also drive to uncontrolled purchases. Indeed, the desirability expectancy is a new trend which results of the stronger purchasing power of customers: people are more likely to buy new products even though they do not need (Kaul, 2018). For instance, a customer is more likely to buy more clothes than he needs when he goes to a fast fashion shop. Prices are low, and because of new collection renewed twice a week customer is driven to be bored by the products they already have. Hence, a higher purchasing power drives to buy more than necessary.
Business organisations, governments and customers are under the influence of globalization. Business organisations benefited from this influence as it has opened new market opportunities and allowed to produce products for a lower cost and better quality with delocalization. On the other hand, it has implied serious consequences regarding the sustainability of certain companies. Competition between companies is also a result of the globalisation influence which force companies to invest always more money in research and development to compete with each other, thereby reducing benefits. Government have also been affected by globalization; especially regarding the policies adopted which goes in the same way that international trade. Therefore, they have lost independency and given some of their power to supra-national institutions. They, however, still play a fundamental role inside the border on the trade policies. Lastly, customer have accessed lower cost products and a larger diversity of products provided by multinational corporation. This is responsible for the death of local cultures identity and diversity. Eventually they have a higher purchasing power which may lead to non-responsible behaviour as buying non-necessary goods.