Term Paper: Business the Most Significant Contributor

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Business

The most significant contributor to the rapid rise of globalization over the last decade is the improvement in technology and communication. Computer technology has developed at a very rapid pace, and businesses have been obliged to match this speed or pay the price. The Internet has therefore become the basis of many an expansion opportunity where previously there had existed none.

Businesses can no longer afford to operate in isolation. Opportunities in modern business abound in the global market. Hence there is little likelihood that the globalization phenomenon will diminish. Indeed, with the continuing improvements not only in technology, but also in global business practices and cultural integration, the likelihood is that globalization will expand to an even greater degree in the future.

A significant challenge in globalization has always been the issue of cultural integration. When facing business expansion in a foreign culture, the owner is obliged to make modifications according to the cultural requirements of the target country. Other challenges may relate to political issues and specific trade agreements or limitations imposed by the target country.

2. Several examples can be cited of local economic events with global repercussions. These might for example include events such as the Prohibition movement in the United States, the country's decision to join the conflict in World War II, the Bolshevik Revolution, and the like. Because of globalization, such extreme events tend to negatively affect the global economy. The most recent example is the events on 9/11, with its many and extreme repercussions.

The tendency in the past, in terms of protection practices, was for countries to isolate themselves in terms of business practices. This occurred especially during the Depression during the 1930s in the United States. Self-protection can also occur by more aggressive means such as sanctions against certain countries. A country could also protect itself from negative international trends by expanding locally instead of globally until economic stability is restored.

Research has however shown that the global economy prospers because of rather than in spite of international collaboration, expansion, and free trade agreements. Furthermore, an increasing amount of developing countries are entering the global market, which means further expansion opportunities. Rather than complete isolation for self-protection, temporary local instead of global expansion, while global connections are retained, may be a more viable option.

3. Change is a challenge in any business, whether local or international. The exact nature of the business and the people involved will determine the strategies the business uses to handle the challenges presented. When expanding abroad, for example, there are various specific factors that need to be taken into account, along with the general principals of change management. The first step is for example to assemble a workforce and supervision in the foreign country. This alone presents a number of challenges.

The issue of culture, as also mentioned above, is significant. Local workers expected to relocate to the foreign country may for example experience resistance to this change. Newly recruited workers may also experience conflict with more experienced relocated workers; this factor could be harmful to business.

One of the keys to proper change management is communication. Indeed, this is the main most important factor that brought about global expansion in the first place. If used effectively, communication can be used to cultivate mutual respect and trust, rather than the opposite. Preparation and orientation sessions can also be provided to ease workers into the transition. It important to maintain a sense of choice; employees should not be forced into change, but allowed some autonomy in terms of the decision-making process.

4. In international business, tolerance and mutual respect have become increasingly important. This is particularly the case as a result of more effective communication and business strategies, and the profitable implementation of these. The less tolerant political systems, totalitarianism and collectivism are therefore declining as democracy and individualism are on the rise. Even those countries who still hold totalitarian ideals do so only in combination with more tolerant practices in order to survive in the global trade market.

Democratic political systems would for example allow more free trade practices than totalitarian regimes. They would also be more tolerant in their restrictions and regulations for foreign business entering the local arena. A combination of complete democracy and a somewhat restricted regime would result in restricted democratic practices, where some freedom is allowed, but the obligation is to a single ruling party in the country. Trade regulations would then be imposed according to this party's rule.

Totalitarian regimes on the other hand, imposes its rule upon everything, both within and outside the country. It is therefore extremely difficult to enter a market ruled by such a political system. If foreign trade is allowed at all, these regimes tend to be extremely strict in their regulations ad restrictions. It is therefore more likely that, should such a country wish to enter the global market, totalitarian practices would have to be diminished. In the light of globalization developments, it is therefore likely that totalitarianism would decline rather than increase in order to accommodate the increased demand for global collaboration in the future.

5. Nontariff barriers to exports entail that countries place restrictions on their import goods. Examples of these include subsidies to European Union companies, Chinese trade regulations and movie piracy in China. These are often closely connected to the specific political regimes in power in these countries.

With the increase of democracy, nontariff barriers tend to decrease. The general trend is therefore in favor of decreasing barriers. This is a trend that I agree with, as it is generally discouraging to global trade and potential benefits. Placing to many restrictions on such trade is not conducive to mutual benefits, and the tendency is mostly for totalitarian regimes to impose strict and somewhat unreasonable barriers. The United States for example is actively working to identify and eliminate unfair trade restrictions. Particularly, Japan and Europe are targeted for their restrictions upon farm policies.

6. Price controls are imposed for a variety of reasons. One of these is foreign exchange. In order to ensure a growing local economy and fair trade in the global arena, countries impose price ceilings on exports to international markets. While the country imposing this practice may benefit, this also limits the number of exports to foreign countries, and hence may limit the supply and create possibly unnecessary shortages. Furthermore, it could also impact badly upon the relationship between the exporting country and its partnerships.

An example of this is Canada and the United States in terms of copper and brass scrap. China's emergence into the international market as a significant buyer of copper scrap has disrupted the market, prompting the United States to raise its prices. Canada, however, in its capacity as partner in the North America Free Trade Agreement, expects to be exempted from such limitations.

In addition to demand increases, some countries have also imposed trade barriers on the commodity, further driving price increases. Canada on the other hand feels that limitations should not be imposed in this way. Instead, increased demand should be addressed, according to Canadians, by encouraging free flow of trade materials. This will further encourage fair trade practices and an increase of international cooperation.

7. An increase amount of developing countries are making a transition to the market economy. When successful, such a practice is beneficial for the country in question, as it provides the country with a significant increase in resources and prosperity. The rest of the world benefits by an increase of unique goods and services, with a concomitant increase in competition and reduction in price. However, to be successful in its transition, a country needs to adjust its policies and procedures to match its international goals.

The market economy, for example, operates on the basis of a balance between production and consumption, demand and supply. The pricing and free capital flow mechanisms are at the core of this balance. A social division of labor therefore needs to be developed in order to provide the goods and services in demand in the market. Furthermore, private ownership and autonomous economic decision-making needs to be supported within the emerging economy. In terms of information flow and disclosure, absolute government control and monopoly are unacceptable. Information must flow freely, without any barriers, between the various entities within a nation. This is particularly important in the economy, as vital information relating to the market and goods should reach the relevant parties intact and accurately.

The role of the government is to establish rules and regulations to favor the market economy. It should ensure its ability to cover market failures, establish social security and promote social development. Clearly a totalitarian government would need to make adjustments to at least the level of a restricted democracy in order to ensure the success of the transition.

8. Purchasing power parity (PPP) means a state of equilibrium in the exchange rate between currencies. Hence a product selling at a particular price locally and abroad sells at… [END OF PREVIEW]

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