GLOBALIZATION
What is globalisation?
Globalisation is a term used to describe how technology and trade have connected and
brought together the world into a much more socialised and well-adjusted place.
Globalization is induced by the merging of the worlds both cultural and economic systems.
More countries and societies across the world have become interconnected and intertwined
with the rest of the world, both culturally, economically, and politically. In the world of
business, globalisation refers to companies operating in a global scale. The increase of
services, capital and goods sold by businesses across the planet are all driven drastically by
globalisation. An international business is a company that produces or operates in
numerous countries at a time. Globalisation however allows these international businesses
to find lower cost methods to produce their products, driving prices down and increasing
profit margins.
Advantages
One effect that globalisation has is increased trade. Greater interconnectedness amongst
markets and business opportunities across the globe have been impacted tremendously.
Companies in the UK can benefit from specialising in goods where they may be allusive
advantages. The UK, for example, has comparative advantages such as pharmaceutical
products, financial services, and crude oil. These products are now accessible to new
markets across the globe, allowing greater investment and unifying economies through
trade. This allows higher exports which then creates jobs. Nations are no longer self-
sufficient in the global economy, and they are included in trade at different levels to sell
what they produce in order to obtain what they are in need. [Savrul and Incekara,2015]
Lower costs for firms
Globalisation also has had a great impact on costs for firms, such as making it easier to
source and produce goods needed for the production process. Countries with low labour
costs such as China, will greatly benefit from this as it will increase their exports and create
many jobs in the process. Firms can also make great use of technological factors that will
allow them to interact with people around the world. However, outsourcing can lead to
domestic job-losses and lower quality of service. [Pettinger, 2019]. Economies of scales are
, cost advantages that companies experience when production becomes efficient, as costs
can be spread over a larger amount of goods. Companies can achieve this by overall
increasing their production costs and lowering other costs. [James,2021]. International trade
has also cut import costs for both consumers and businesses that purchase for their own
production. [Erixon,2018]. These cut costs not only benefit the firms, but also the consumer
as they have access to cheaper goods and services. However, if a business exceeds a limit
and becomes too big, its unit costs will rise. This is known as diseconomies of scale, and it
will greatly influence businesses efficiency and availability to stay in the market.
Migration
Globalisation has made it more accessible and easier for migrants to work where they wish
too. The importance of having this free movement is so that countries who need low paying
or specialised jobs to be fulfilled due to labour shortages. In principle, demand for labour
will encourage a more liberal attitude towards economic migrants at a high level. As a result,
European countries will benefit whilst social cohesion may decrease. [Dokos,2017].
However, greater migration will place huge amounts of toil and hardship on the housing
prices, especially in densely populated areas such as the UK. Brexit makes it much more
difficult for workers to migrate to the UK. According to the GOV.UK website, the visa
application process only allows skilled workers, global talent schemes, international
students and graduates and people getting married to enter the UK [Office,2020]. No
mention of migrant workers has been stated, meaning that gaining entry to the UK is much
more difficult. Migrants will be more opted to entering illegally, causing much more legal
and ethical issues.
Competition & Monopolies
One other factor that globalisation has on the market is that it brings more competitors to
different industries. This competition can be related to product and service cost and price,
target market, technological adaptation, quick response, quick production by companies
etc. Domestic monopolies will face much greater competition as there are more
opportunities for new firms to emerge into the market. Low barriers to entry such as low
start-up costs will also greatly impact the growth rate of many upcoming firms, thus,
potentially eliminating any monopolistic competition in the market.
What is globalisation?
Globalisation is a term used to describe how technology and trade have connected and
brought together the world into a much more socialised and well-adjusted place.
Globalization is induced by the merging of the worlds both cultural and economic systems.
More countries and societies across the world have become interconnected and intertwined
with the rest of the world, both culturally, economically, and politically. In the world of
business, globalisation refers to companies operating in a global scale. The increase of
services, capital and goods sold by businesses across the planet are all driven drastically by
globalisation. An international business is a company that produces or operates in
numerous countries at a time. Globalisation however allows these international businesses
to find lower cost methods to produce their products, driving prices down and increasing
profit margins.
Advantages
One effect that globalisation has is increased trade. Greater interconnectedness amongst
markets and business opportunities across the globe have been impacted tremendously.
Companies in the UK can benefit from specialising in goods where they may be allusive
advantages. The UK, for example, has comparative advantages such as pharmaceutical
products, financial services, and crude oil. These products are now accessible to new
markets across the globe, allowing greater investment and unifying economies through
trade. This allows higher exports which then creates jobs. Nations are no longer self-
sufficient in the global economy, and they are included in trade at different levels to sell
what they produce in order to obtain what they are in need. [Savrul and Incekara,2015]
Lower costs for firms
Globalisation also has had a great impact on costs for firms, such as making it easier to
source and produce goods needed for the production process. Countries with low labour
costs such as China, will greatly benefit from this as it will increase their exports and create
many jobs in the process. Firms can also make great use of technological factors that will
allow them to interact with people around the world. However, outsourcing can lead to
domestic job-losses and lower quality of service. [Pettinger, 2019]. Economies of scales are
, cost advantages that companies experience when production becomes efficient, as costs
can be spread over a larger amount of goods. Companies can achieve this by overall
increasing their production costs and lowering other costs. [James,2021]. International trade
has also cut import costs for both consumers and businesses that purchase for their own
production. [Erixon,2018]. These cut costs not only benefit the firms, but also the consumer
as they have access to cheaper goods and services. However, if a business exceeds a limit
and becomes too big, its unit costs will rise. This is known as diseconomies of scale, and it
will greatly influence businesses efficiency and availability to stay in the market.
Migration
Globalisation has made it more accessible and easier for migrants to work where they wish
too. The importance of having this free movement is so that countries who need low paying
or specialised jobs to be fulfilled due to labour shortages. In principle, demand for labour
will encourage a more liberal attitude towards economic migrants at a high level. As a result,
European countries will benefit whilst social cohesion may decrease. [Dokos,2017].
However, greater migration will place huge amounts of toil and hardship on the housing
prices, especially in densely populated areas such as the UK. Brexit makes it much more
difficult for workers to migrate to the UK. According to the GOV.UK website, the visa
application process only allows skilled workers, global talent schemes, international
students and graduates and people getting married to enter the UK [Office,2020]. No
mention of migrant workers has been stated, meaning that gaining entry to the UK is much
more difficult. Migrants will be more opted to entering illegally, causing much more legal
and ethical issues.
Competition & Monopolies
One other factor that globalisation has on the market is that it brings more competitors to
different industries. This competition can be related to product and service cost and price,
target market, technological adaptation, quick response, quick production by companies
etc. Domestic monopolies will face much greater competition as there are more
opportunities for new firms to emerge into the market. Low barriers to entry such as low
start-up costs will also greatly impact the growth rate of many upcoming firms, thus,
potentially eliminating any monopolistic competition in the market.
