CHALLENGES OF GLOBALIZATION AND ITS EFFECTS ON

CORPORATE SECTOR
THE CHALLENGES OF GLOBALIZATION AND
THEIR EFFECTS ON THE CORPORATE SECTOR
 THE CHALLENGES OF GLOBALIZATION AND
THEIR EFFECTS ON THE CORPORATE SECTOR

EXECUTIVE SUMMARY

Conclusion drawn from this report suggest that these factors should be kept in consideration
by the corporate sector when it decides to globalize:
1. Having a strong marketing campaign
2. Strong R&D of the target market
3. In-depth study of their target customers
4. Suitable market offerings
5. Cultural values and norms of the foreign market

In this report globalization challenges and their effects on the corporate sector are discussed.
As evident from the findings in the report, it has become mandatory to cope with the challenges
posed and minimize their effects as much as possible. The corporate sector especially, needs
to make sure it adapts to the changing globalization landscape for its survival in this present
day competitive world.
Various factors contribute to act as challenges for the globalizing companies. These factors
include:
 Economic
 Technological
 Sociocultural
 Legal
 political
 Environmental

In this report topics like introduction of globalization, global drivers, stages of going global,
challenges of globalization and their effects, pros and cons of globalization, conclusion and
recommendations have been elaborated.
From the information collected on these topics, it is clear how globalization in itself becomes
a great challenge for companies. When talking about the economic challenges it refers to both
the economic stability of the domestic country as well as the foreign country or market. That
includes the purchasing power of people, the debt ratio of the public, their savings etc.
In technological factor as the dynamic changes in technology boost the company’s production
and profits on one hand, on the other hand the company stepping into a technologically
advanced market or country will have to face severe consequences due to its digital illiteracy.
When it comes to sociocultural and environmental factors, companies have to take the highest
level of precautions. Nowadays going green is becoming a mega trend all over the world
especially in the developed nations. Similarly, Social and cultural diversities make it hard to
cope with the foreign market’s local beliefs, values, norms and preferences. Therefore,
Companies have to put real efforts on their R&D if they want productive results of their
expansion. Also Legal and political challenges are the initial barriers to entering a foreign
country or market. After undergoing through a number of contracts and agreements the
companies become eligible to enter into a country successfully.
 THE CHALLENGES OF GLOBALIZATION AND
THEIR EFFECTS ON THE CORPORATE SECTOR

THE PROBLEM AND THE PLAN

INTRODUCTION
Globalization is to basically make the world more interconnected. It is primarily an economic
process of integration that has social and cultural aspects, but conflicts and diplomacy are also
large parts of the history of globalization. Here the challenges of globalization and their effects
will be discussed.

OBJECTIVE
A challenge facing all the world’s countries regarding more economic growth and high living
standards nowadays is financial stability. The objective of this report is to highlight the
connection globalization and its challenges have with the corporate world, how these
challenges have ultimately resulted in a commercial reality that is the quick emergence of the
global markets for running a business on a previously unimagined scale of magnitude.
Moreover, what happens if a company going out for expansion gets wrapped up in hindrances
posed by globalization? Quite contrarily, how companies if they do their homework in a proper
manner can tap the foreign country successfully. If a company neglects this initial preparation,
it gradually gets kicked out of the market ending up with a pack up and going back to home.
When a company decides to globalize or enter into a foreign country or market it faces a
number of challenges such as:
 Socio-cultural
 Economical
 Technological
 Legal
 Political
 Environmental

RESEARCH METHODOLOGY

The method of secondary research has been adopted for this report and overall data collection.
 THE FIVE STAGES OF GOING
GLOBAL
In the first stage (market entry)

Companies tend to enter new countries using business models

that are very similar to the ones they set up in their home
markets. To gain access to local customers, however, they
often need to establish a manufacturing existence, either
because of the nature of their businesses (as in service industries like food retail or banking) or
because of local countries’ regulatory restrictions (as in the auto industry).

In the second stage (product specialization)

Companies transfer the full production process of a particular

product to a single, low-cost location and pass on the goods
to various consumer markets. Under this situation, different
locations begin to specialize in different products or
components and trade in finished goods.

The third stage (value chain disaggregation)

Represents the next step in the company’s globalization of the supply-chain set-up. In this
stage, companies start to disaggregate the production process and focus each activity in the
most advantageous location. Individual components of a single product might be manufactured
in several different locations and assembled into final products elsewhere. Examples include
the PC industry market.

Figure 1: porters value chain

In the fourth stage (value chain reengineering)

Companies seek to further increase their cost savings by reengineering their processes to suit
local market conditions, notably by substituting lower-cost labor for capital. General Electric’s
(GE) medical equipment division, for example, has personalized its manufacturing processes
abroad to take advantage of low labor costs. Not only does it use more labor-intensive
production processes—it also designs and builds the capital
equipment for its plants locally.

Finally, in the fifth stage (the creation of new markets)

The focus is on market expansion. The McKinsey Global

Institute estimates that the third and fourth stages together have
the potential to reduce costs by more than 50% in many
industries, which gives companies the opportunity to
noticeably lower their prices in both old and new markets and
to expand demand. Significantly, the value of new revenues
generated in this last stage is often greater than the value of Figure 2: Creation of new market
cost savings in the other stages.

INDUSTRY GLOBALIZATION DRIVERS

Yip identifies four sets of “industry globalization drivers” that underlie conditions in each
industry that create the potential for that industry to become more global and, as a consequence,
for the potential viability of a global approach to strategy. George S. Yip first developed this
framework in his book Total global strategy: Managing for worldwide competitive
advantage (1992), chaps. 1 and 2.

Market Drivers

SOne aspect of globalization is the sound convergence of customer needs. As customers in

different parts of the world increasingly demand similar products and services, opportunities
for scale arise through the marketing of more or less consistent offerings. How common needs,
tastes, and preferences will vary greatly by product and
depend on such factors as the importance of cultural
variables, disposable incomes, and the degree of
homogeneity of the conditions in which the product is
consumed or used. This applies to consumer as well as
industrial products and services. Coca-Cola offers similar
but not identical products around the world. McDonald’s,
while adapting to local tastes and preferences,
and has standardized many features of its
operations. Software, oil products, and
accounting services increasingly look alike no matter where they are purchased. The key to
manipulating such opportunities for scale lies in understanding which elements of the product
or service can be standardized without sacrificing responsiveness to local preferences and
conditions.

Global customers have emerged as needs continue to converge. Large corporations such as GE
demand the same level of quality in the products and services they buy no matter where in the
world they are acquired. In many industries, global distribution channels are emerging to satisfy
an increasingly global customer base, further causing a convergence of needs. Finally, as
consumption patterns become more similar, global branding and marketing will become
increasingly important to global success.

Cost Globalization Drivers

The globalization of customer needs and the opportunities for scale and standardization it
brings will fundamentally alter the economics of many industries. Exploiting differences in
costs for product development, manufacturing, and sourcing in different parts of the world will
assume a greater importance as contributing factors of global strategy. At bottom is a simple
fact: a single market will no longer be large enough to support a competitive strategy on a
global scale in many industries.

Global scale and scope economics are already having

far-reaching effects. On the one hand, the more the
new economies of scale and scope shape the
strategies of occupants in global industries, the
harder it will be for new entrants to develop an
effective competitive threat. Thus, barriers to entry
in such industries will get higher. At the same time,
the rivalry within such industries is likely to increase,
reflecting the broadening scope of competition
among interdependent national and regional markets and the fact that true differentiation in
such a competitive environment may be harder to achieve.

Competitive Drivers

Industry characteristics—such as the degree to which

total industry sales are made up by export or import
volume, the diversity of competitors in terms of their
national origin, the extent to which major players
have globalized their operations and created an
interdependence between their competitive strategies
in different parts of the world—also affect the
globalization potential of an industry. High levels of
trade, competitive diversity, and interdependence
increase the potential for industry globalization.
Industry evolution plays a role, too. As the primary
characteristics of the industry change, competitors
will respond to enhance and preserve their competitive advantage. Sometimes, this causes
industry globalization to speed up.
Government Drivers

Government globalization drivers—such as the presence or absence of favorable trade policies,

technical standards, policies and regulations, and government operated or subsidized
competitors or customers—affect all other elements of a global strategy and are therefore
important in shaping the global competitive environment in an industry. In the past,
multinationals almost exclusively relied on governments to negotiate the rules of global
competition. Today, however, this is changing. As the politics and economics of global
competition become more closely tangled, multinational companies are beginning to pay
greater attention to the so-called nonmarket dimensions of their global strategies aimed at
shaping the global competitive environment to their advantage). This broadening of the scope
of global strategy reflects a delicate but real change in the balance of power between national
governments and multinational corporations and is likely to have important consequences for
how differences in policies and regulations affecting global competitiveness will be settled in
the years to come.

SOME EXAMPLES OF GLOBALIZATION

 Some automobiles use parts from other countries, as in a car being assembled in the
United States with the parts coming from Japan, Germany, or Korea.

 The Free World Trade Organization supervises world trade.

 Greek culture spread across Africa, Europe and Asia through Alexander the Great. This
is the reason there are cities named for Alexander in Africa, Egypt and Turkey.

 The Silk Road was a trade route between China and the Mediterranean Sea area and it
allowed the exchange of not only goods, but culture and knowledge.

 Global news networks, like CNN, contribute to the spread of knowledge.

 Cells phones connect people all over the world like never before. Around 60 percent of
all people in the world use cell phones.

 The Olympics began in ancient Greece and continue today.

 CHALLENGES OF GLOBALIZATION

Following are some of the challenges corporate sector faces while in the process of
globalization.
 Socio-cultural
 Economical
 Technological
 Legal
 Political
 Environmental

SOCIOCULTURAL FACTORS

Social and cultural challenges of globalization play a very important role in determining the
success of a company in a foreign country it has tapped into. If the socio-cultural aspect of
globalization is grasped correctly it brings in good results for the company’s growth and
expansion. Following are the factors included in sociocultural challenges that lead to cultural
differences.
FACTORS

 Religion
 Education
 Attitudes
 Lifestyle
 Beliefs and customs
 Social class
 Language
 Taste
 Concept of beauty

When globalizing into a foreign country marketers look out for all these factors that are relative
to their target market. For example if target market in the foreign country consist of more
illiterate people than marketers will have to go for in-depth explanation of their product or
service in their marketing campaigns. If their target market is elite class and has a price
insensitive attitude then the company will take advantage of this fact and set high prices for
their product/service. If they fail to analyze their foreign target market’s social and cultural
aspects then they will face severe losses and the situation can turn into a fiasco as well.

EXAMPLES FROM THE CORPORATE WORLD

McDonalds Multicultural Menu

The Teriyaki Burger in Japan, Croque McDo in France, the Maharani Burger in
Malaysia, a green pepper burger in Singapore, a Thai burger with a Thai curry paste, spaghetti
in the Philippines, spicy chicken with rice in Indonesia, and spicy seafood noodle in China are
some of the examples of its localization strategy.

McDonalds in India

McDonald’s launched various new products particularly for Indian consumers so that they can
fully tap the traditional and cultural Indian taste of their consumers. Undoubtedly it is not an
alien concept for McDonald’s to be introducing new products specifically for its targeted
customer’s taste preferences.
But the special thing here when talking about its food chain in India is the company’s initiative
to take its core product, beef-based Big Mac off the menu list.
Given the fact that an overwhelming majority of Indians (about 83%) do not eat beef or pork,
the introduction of the Maharaja Mac (a mutton-based burger) by McDonald’s seems to be
a very suitable cultural diffusion.
McDonalds in Japan

In Japan rice is the major element to their food. And they have a culture of commensality,
being on a single table and the entire family eating together. They consider anything with bread
to be light and categorize it as just a snack not a full meal. All these cultural deviations of japan
from routine the culture of McDonalds posed a great threat and challenge for it to operate
successfully there. Japanese culture affected McDonald’s culture more than McDonalds
affected Japanese culture. As a result Mcdonalds came up with menu items that matched to the
palate of a typical Japanese. They instead prefer rice burgers, a slice of meat between bun-
shaped rice patties. Though it has become progressively more acceptable by the Japanese to
eat at McDonald’s, it has not become a place where lunches or dinner by the masses is
consumed. Den Fujita concedes:
“McDonald’s has gained ample recognition among Japanese consumers. However, our image
is that of a light-meal restaurant for young people. We are not regarded as a place for adults
to have dinner.” (Ohnuki-Tierney, 2007:164

L’Oréal’s Multiculturalism

It has built a portfolio of brands from many cultures—French, of course (L’Oréal Paris,
Garnier, Lancôme), but also American (Maybelline, Kiehl’s, SoftSheen-Carson), British (The
Body Shop), Italian (Giorgio Armani), and Japanese (Shu Uemura). The company now has
offices in more than 130 countries, and in 2012 over half its sales came from new markets
outside Europe and North America, mostly in emerging economies, up from only a third as
recently as 2009.

ECONOMIC FACTORS

Economic globalization is an Irreversible Trend

Economic globalization refers to the increasing interdependence of world Economies as a result

of the growing scale of cross-border trade of commodities and Services, flow of international
capital and wide and rapid spread of technologies. It reflects the continuing expansion and
mutual integration of market frontiers, and is an irreversible trend for the economic
development in the whole world at the turn of the millennium. The rapid growing significance
of information in all types of productive activities and marketization are the two major driving
forces for economic globalization. In other words, the fast globalization of the world’s
economies in recent years is largely based on the rapid development of science and
technologies, has resulted from the environment in which market economic system has been
fast spreading throughout the world, and has developed on the basis of increasing cross-border
division of labor that has been penetrating down to the level of production chains within
enterprises of different countries.

Figure 4: Globalization networks

The advancement of science and technologies has greatly reduced the cost of transportation
and communication, making economic globalization possible. Today’s ocean shipping cost is
only a half of that in the year 1930, the current airfreight 1/6, and telecommunication cost 1%.
The price level of computers in 1990 was only about 1/125 of that in 1960, and this price level
in 1998 reduced again by about 80%. This kind of ‘time and space compression effect’ of
technological advancement greatly reduced the cost of international trade and investment, thus
making it possible to organize and coordinate global production. For example, Ford’s Lyman
car is designed in Germany, its gearing system produced in Korea, pump in USA, and engine
in Australia. It is exactly the technological advancement that has made this type of global
production possible. Moreover the development of the networking-based economy has given
birth to a large group of shadow enterprises, making the concept of national boundaries and
distance for certain economic activities meaningless.
 Figure5: Infrastructure spending

Multinational already came up to 1/3 of the world’s total and that between
corporations (MNCs) their parent companies and their subsidiaries took up another
have become the main 1/3. In the US$ 3,000 billion balance of foreign direct
carriers of economic investment at the end of 1996, MNCs owned over 80%.
globalization. They are Furthermore, about 70% of international technological
globally organizing transfers were conducted among MNCs. This type of cross-
production and allocating border economic activities within same enterprises has posed
resources according to the a challenge for the traditional international trade and
principle of profit investment theories.
maximization. And their Globalization of the financial sector has become the most
global expansions are rapidly developing and most influential aspect of economic
reshaping macroeconomic globalization. International finance came into being to serve
mechanisms of the the needs of international trade and investment activities.
operation of the world However, along with the development of economic
economies. In 1996, there globalization, it has become more and more independent.
were altogether only more Compared with commodity and labor markets, the financial
than 44,000 MNCs in the market is the only one that has realized globalization in the
whole world, which had true sense of ‘globalization’. Since 1970’s, cross-border flow
280,000 overseas of capital has been rapidly expanding. In 1980, the total
subsidiaries and branch volume of cross-border transactions of stocks and bonds of
offices. In 1997, the major developed countries was still less than 10% of their
volume of the trade of GDP. However, this figure had far surpassed 100% in 1995.
only the top 100 MNCs
Figure 6: Portfolio flows

The process of economy globalization is market, both domestic enterprises and those
also the process of global industrial from other countries have been resorting to
restructuring and readjustment. With the mergers and acquisitions one after another,
development of science and technology and which has resulted in tides of industrial
increase of income level, industrial restructuring.
structures of all the countries have been Developed countries have been playing a
also undergoing readjustment and dominant role in the process of economic
upgrading. In recent years, developed globalization. In 1996, the total volume of
countries in the west are gradually entering exports of developed countries was US$
the era of knowledge economy and have 4,057 billion, accounting for 81.7% of the
started to shift to developing countries world’s total value of international trade. In
many labor-intensive industries of weak 1995, the foreign direct investment by 10
international competitiveness. This process major developed countries including the
of cross-country shift is pushing forward an G7, Switzerland etc.
in-depth development of economic
globalization. On the other hand, there has
existed a surplus of productivity since the
end of the cold war. Due to this fact,
economic globalization has intensified the
competition at the international market
among enterprises from different countries.
In order to raise their positions and improve
their competitiveness at the international
 TECHNOLOGICAL FACTORS

IT is a driving factor in the Products based upon, or improved by,

process of globalization. information technology are used in
Improvements in the early 1990s nearly every aspect of life in up-to-
in computer hardware, software, date industrial societies. The spread of
and telecommunications greatly IT and its applications has been
increased people’s ability to extraordinarily rapid. Just 30 years
access information. While ago, for example, the use of desktop
advancements in Internet-based personal computers was still limited to
tools over the past five to ten a fairly small number of
years, such as social networking technologically advanced people. The
websites, twitter, and other irresistible majority of people still
Web2.0 applications are produced documents with typewriters,
changing the way people use and which permitted no manipulation of
share information for personal, text and offered no storage.
political, and commercial
purposes. These developments The news industry was dramatically
have facilitated efficiency gains altered by the emergence of numerous
in all sectors of the economy. IT Internet-enabled news-gathering and
drives the innovative use of distribution outlets. Websites, blogs,
resources to promote new instant messaging systems, e-mail,
products and ideas across nations social networking websites, and other
and cultures, regardless of Internet- Technology and
geographic location. Creating Globalization based communication
efficient and effective channels to systems have made it much easier for
exchange information, IT has people to connect.
been the promoter for global
amalgamation.
THE IMPACT OF (INFORMATION) TECHNOLOGY IN
Business:

Developments in computing and telecommunications technology are changing

industrial landscape and its workforce. The application of new digital technologies to
management, manufacturing, distribution, and services has produced significant and
lasting increases in productivity. The new technologies have also created new industries
(e.g., Internet access providers) and entirely new kinds of work (e.g., website designers)
and boosted other industries. But the new technologies have also shrunk or even
eliminated other industries and the jobs associated with them (e.g., electric typewriters).

IT is fundamentally restructuring business practices. IT innovations have increased the

efficiency of business operations. New IT-based inventory systems allow businesses to
cut costs by delivering or receiving parts for "just-in-time" assembly. By reducing
delivery times and inventories, "just-in-time" assembly allows businesses to meet
consumer demand more quickly and cheaply.

IT and the use of the Internet have also dramatically transformed exchanges between
buyers and sellers. Some Web based businesses, such as Amazon.com, are using the
Internet to sell and arrange for the delivery of large quantities of goods without buyers
themselves having to access a network of wholesalers and retail stores. "Business-to-
business" (“B2B”) commerce over the Internet helps many companies streamline their
sourcing of production inputs and allows them to sell products or services to other
companies. Similarly, companies are using the Internet to find other businesses that
might want to buy their products or services or sell them products or services. The value
of B2B e-commerce exceeds the value of e-commerce between Internet retailers and
individual consumers.

In 2014 it is estimated that there will be over 100 million knowledge workers in the U.S.
(Info trends, 2011). Knowledge workers are also called "symbolic workers," as they use
very little physical or mechanical labor. Unlike their industrial counterparts, knowledge
workers spend their time at work manipulating information rather than machines. An
increase in knowledge workers has led to a decline in other sectors of the economy, such
as service and labor-intensive jobs.

The flip side of increased demand for high-tech workers is the decreased demand for
workers in industries where computers and other high-tech devices have replaced tasks
that used to be performed by people. Workers have also lost jobs in industries or firms
that have been unable to adopt new information technologies as effectively as industries
or other firms that offer comparable products or services.

Many of the workers who lose jobs in declining firms or industries lack the education
or training to take up jobs in the high-tech sector. A person who spent 30 years in a steel
plant that is shutting down may not be equipped to work for many of the industries that
are adding jobs as our economy transforms itself. Unfortunately, many firms in the
industries that are succeeding also have a bias in their hiring practices toward younger
workers. They may believe that younger workers are more flexible and more easily
trained than older workers, and they may undervalue the importance of experience and
maturity.
Cloud computing:

Cloud services have become increasingly popular in the business world in recent years.
The basis of cloud computing is that data is not stored on a person's physical machine
but hosted in third party pools known as the cloud. This allows for businesses to store
more information without having to worry about failure of their own computers and
risk losing vital information. This type of storage has already been adopted by Amazon,
Google, and Microsoft. It is estimated that 74 percent of enterprises now use cloud
computing. There has been a 19% increase in usage of the service since 2009.

These services also allow virtual collaboration on projects that can also be worked on
simultaneously, making meetings and traditional office work obsolete. One of the key
benefits to cloud storage is the ability to recover from a disaster, since the data is stored
in a third party location any problems can easily be mitigated.

LEGAL FACTORS

Law becomes a great challenge for the company that is trying to enter into a foreign
market. Law of both domestic and targeted foreign country pose a number of legal
issues for the globalizing company. Different methods are used to enter into foreign
market. The methods of entering indicate the processes the firm chooses to enter into
the market and specifically the international markets, the foreign markets. The modes
of entry include following. (Armstrong and Sweeney (1994)).

MODES OF ENTRY

Exports (direct or indirect)

This is the initial method through which a firm enters into a foreign market that is
physically or geographically closer to the domestic country. Sending their tangible
goods to the foreign market and getting the feedback gives a good idea about the
standing of the firm’s offering in the international market to the company. This helps
identify whether the company should actually go on opening its own retail outlet or
production plant in the foreign country or not.
It includes legal issues for corporate sector like
 Anti-dumping
 Anti-boycott regulations
 Protection of intellectual copyrights
Contractual methods (licensing and franchising)

Here the firms issue license to those who want to work using the firm’s
reputation and identity or allow a franchise to be opened into the foreign country or
even within domestic country.

 Franchising is done through registration and the territorial rights transfer to

the franchisee. Franchiser retains trademark, logo and design of company
and franchisee is allowed to use them. Franchiser has control over the
franchisee. It is governed by securities law. Important legal documents are:
i. The Disclosure Document
ii. The Franchise Agreement

 Licensing is done through contract and registration is not necessarily

required. It is governed by contract law.
i. Brand Licensing Agreement

Direct foreign investment

 Jointly with other companies, or wholly owned subsidiaries

LEGAL PROTECTION RIGHTS

Trademark
It protects the words, phrases, symbols, logos, or other devices used to identify the
source of goods or services from usage by other competitors.
Registered
It is a trademark or service mark that has been registered with a
national trademark office. The mark, ® may only be used by the owner of a mark
following registration with the relevant national authority
Patents
Prevent others from making or selling an invention.
 POLITICAL FACTORS

 The political issues of a country make globalization process as per political leaders of
the nation.
 The political issues of a country make globalization channelized as per political
bosses. The regional trade understandings or agreements determine the scope of
globalization. Trading in European Union and special agreement in the erstwhile
Soviet block and SAARC are examples.
 The political environment can have a huge impact on how your project, product or
the whole company is being seen in a country.
 Furthermore the politics can be affected by the religion, elections, wars, geographical
locations and many other factors. Like in many western countries the religion and
politics are separate.
 If you are targeting ad marketing to them you may not have to worry about the
government interference, if your content doesn’t line up with their primary religions’
teachings. But in other regions like middle-east where the religion and politics are
deeply intertwined if your content is against their religions’ teachings you can expect
serious consequences.
 In countries like china where the government has complete control and internet
censorship is common. You could easily be blocked for not abiding by their laws. The
social websites like Facebook, twitter, YOU tube and 3000 different sites have been
blocked in mainland China
 Taking the example of Pakistan with current situation. If any foreign company wants
to start its business here in Pakistan, they would be a bit reluctant because of the
current political situation. They would not prefer starting their business because of
current political instability.
 So, the stable political situations are very important to let the globalization penetrate
and the companies to have their business in a country.
 ENVIRONMENTAL FACTORS

Globalization has featured extensively in the debates on environmentalism, and green

activists have highlighted its far-reaching effects. Let us know about the impact of
globalization on our environment.

Majorly globallization leads to:

 Soil pollution
 Water pollution
 Greenhouse effect

Transportation has also put a strain on the non-renewable sources of energy, such as
gasoline. The gases that are emitted from the aircraft have led to the depletion of the
ozone layer apart from increasing the greenhouse effect. The industrial waste that is
generated as a result of production has been laden on ships and dumped in oceans. This
has killed many underwater organisms and has deposited many harmful chemicals in
the ocean. The damage caused to ecosystem from the oil that spilled from one of the
leaking containers of British Petroleum in 2010 is just one of the examples of the threat
globalization poses to the environment.

Due to globalization and industrialization, various chemicals have been thrown into the
soil which have resulted into the growth of many noxious weeds and plants. This toxic
waste has caused a lot of damage to plants by interfering in their genetic makeup. It has
put pressure on the available land resources. In various parts of the world, mountains
are being cut to make way for a passing tunnel or a highway. Vast barren lands have
been encroached upon to pave way for new buildings. While humans may rejoice on
the glimmer with these innovations, these can have long-term effects on the
environment. Various studies over the years, have found that plastic is one of the major
toxic pollutants, as it is a non-biodegradable product. However, plastic is of immense
use when it comes to packaging and preserving goods that are to be exported. This has
led to increased use of plastic, causing widespread environmental pollution.

Figure 3: wastage of natural resources

 PROS AND CONS OF GLOBALIZATION

PROS

Easier and cheaper communication

Globalization has made communication easier and cheaper than before. With the vast
technology networks and online services, the subscribers and users of internet have
increased. And by making communication easier it has let people to come closer and
know about different countries as well as the cultures and ethnicities.

Effect on the educational field

The new and advanced technologies and networks that are linked with the process of
globalization has made the students, researchers, scholars and learners to seek from the
best libraries of the world. Now they don’t need to travel all the way to the countries
miles away now the libraries are available online.

Knowing and understanding with other countries

The potential for people to know and understand about the countries, cultures, religions
of others has now increased to a great deal. And this knowing and understanding of
people for different regions plays an important role in promoting and establishing
common values. Globalization also helps people to show sympathy and compassion for
the victims of any natural calamities or any tragedy regardless of culture and religion
of the victims.

Global market

The impact of globalization on business management is seen by the sudden increase of

number of transactions across the borders. In protecting yields and maintaining
competitiveness, businesses are continuing to develop a wide range of their footprint as
it lowers cost and enjoys economies of scale. Multinational corporations is a result of
globalization. They occupy a central role within the process of globalization as
evidenced through global foreign direct investment inflows. Their concentrations
within Europe in western economies has led to size constraints, therefore there is a need
for new geographical areas to operate whereby they will face a lot of competition in the
market. Through this they will enlarge their market and enjoy economies of scale as
globalization facilitates time space compression, economies compete at all levels
including that of attracting investors.
Globalization and competition

A healthy competition has noticed due to the emergence of the concept of globalization.
Customer service and the 'customer is the king' approaches to production have led to
improved quality of products and services. As the domestic companies have to fight out
foreign competition, they are compelled to raise their standards and customer
satisfaction levels in order to survive in the market. Besides, when a global brand enters
a new country, it comes in riding on some goodwill, which it has to live up to. This
creates competition in the market and a survival of the fittest situation.

Figure7: Effects of globalization

CONS

Globalization and culture

Every country and region has its own culture, its own traditions and set of values. But
here globalization represents a challenge to culture and local languages. United
Nations’ survey shows that half of the local languages will disappear. This will
marginalize many local languages and cultures.
English is being spoken as a second language in some developed countries, and as a
first language in some others. It has been always seen that a language has an impact on
the cultures, and therefore the dominance of English language could give its part to the
emergence of a global an intercontinental culture which may wipe out the traditions and
values of many cultures and societies.

Globalization and the developing countries

Globalization is instead increasing and widening the gap between the countries who
are being benefitted and which are not getting benefitted by the globalization. However
the real test of globalization actually was to see how it reduces the gap between the poor
and the rich regions. Globalization has forced many countries in various parts of this
world to regulate to a lower league the most fundamental needs of their people. The
equitable distribution of food, adequate health care facilities, and the quality of
education are no longer priority concerns the political agendas of the governments in
these countries. All these indicate that poor societies in the third world not only remain
far away from benefiting from globalization, but also they continue to suffer from its
calamities and misfortunes. It then contributes to laying the foundation of injustices and
social inequalities, and moreover preventing the growth of new markets in these
countries because they are unable to compete with the advanced markets.

Globalization and religion

Although globalization might benefit religions through the easier exchange of

information and different opinions about these religions, it however represents a source
of harm to many religious and spiritual values. Globalization, through its cultural and
informational aspects and the promotion of consuming patterns and value corruption,
challenges religious systems. In fact, it is gradually replacing these values with pure
secular systems within which certain religious values will lose their influence on
peoples’ behaviors.

Globalization and morals

Like everything else the negative impacts of globalization has spread its impacts more
than the positive ones. The crimes like drug trafficking and woman and children
trafficking has now become much difficult to control due to its global character.
Another aspect of this problem is that most users of Internet in cyberspaces are adults
and they waste a lot of time using the Internet for unnecessary purposes. One of the
most dangerous effects of globalization on young people is the immoral usage of the
Internet. Studies show that the number of adults and young people who use web sites
containing immoral materials are increasing in particular among schools and
universities’ students
Globalization and economy

Globalization as an economic movement has significant effect on national and global

economies. Although many trade blocs were established and many industrial and
economic nations have emerged as a response to this process, the rules of this process
have contributed to the collapse of many national economies. The emergence of what
can be called ‘electronic trade’ though the Internet is another negative aspect of
globalization. Piracy is also reinforced by this process.

Globalization and the job insecurity

Due to globalization the people of developed countries have job insecurities. Their jobs
are getting out of their hands. Developed nations have now outsourced the white collar
workers. That means less jobs for their people. This is because the manufacturing work
is outsourced to countries where the costs of manufacturing goods and wages are lower
than in their countries. They have outsourced to developing countries. Most people like
accountants, programmers, editors and scientists have lost jobs due to outsourcing to
cheaper locations.

Here is a survey showing the response of people on the effects of globalization.

Figure8: Surveys on effects of globalization

 CONCLUSION

Globalization has become a mega trend from the past many years. Using different
modes of entering the foreign countries and markets, a number of companies have took
on this change. This process of interconnecting different parts of the world as one has
been seen producing positive results. The challenges that come in the way of
globalization should be faced head on. Companies should focus on proactive approach
rather reactive approach if they want to successfully and completely take over the
foreign markets. If the companies ignore the impacts these challenges can bring to the
health then they are bound to fail this process of growth.

RECOMMENDATIONS
1. In-depth study of their target customers to avoid wastage of their resources utilized
in producing offerings.
2. Having a strong marketing campaign that helps explain and educate about the
benefits and need of their product to the unaware audience.
3. Cultural values and norms of the foreign market to synchronize with the local
standards.
4. Strong R&D of the target market to ensure success.
5. Suitable market offerings to fulfill the right kind of needs creating customer
satisfaction.
 APPENDIX
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