POST GRADUATE DIPLOMA IN BUSINESS MANAGEMENT

Globalization and the progress of an organization

Business Globalization OXBRIDGE COLLEGE

Table of content Chapter 1

An introduction to the Globalization.........................................................3

Chapter 2
2.1 Trading Blocs.......................................................................................4 2.2 Preferential Trade Area........................................................................5

Chapter 3
3.1 Change in the balance of world trade..................................................6 3.2 Physical balance of trade.....................................................................7

Chapter 4
Advantage of globalization to an organization..........................................8

Chapter 5
5.1 Cultural dimensions of globalization...................................................9 5.2 Economic inequality..........................................................................10 5.3 Social inequality.................................................................................11 5.4 Formation of new forms of relationships with diverse cultures.........11

Chapter 6
6.1 Pros of employees interest towards globalization..............................12 6.2 Constrains of employees interest towards globalization....................12

Chapter 7
Conclusion...............................................................................................13 Abbreviations.........................................................................................14 References..............................................................................................15

Chapter 1
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An Introduction to the Globalization The word Globalization can be identified as the whole process by which regional economies, societies, and cultures are become incorporated through a global network of political ideas through communication, transportation, and trade. The United Nations ESCWA defines globalization is a widely-used term that can be defined in a number of different ways. When used in an economic perspective, it refers to the reduction and removal of barriers between national borders in order to facilitate the flow of goods, capital, services and labour... although considerable barriers remain to the flow of labor... Globalization is not a new phenomenon. It commenced towards the end of the nineteenth century, but it decelerated during the period from the start of the First World War until the third quarter of the twentieth century. This deceleration can be endorsed to the inward-looking policies engaged by a number of countries in order to protect their own industries... however, the pace of globalization picked up rapidly during the fourth quarter of the twentieth century...' When referring the historical background, long before 1492, people began to link together heterogeneous locations on the globe into broad systems of communication, migration, and interconnections. For an historical example, c.325 BCE: Chandragupta Maurya becomes a Buddhist and blends the expansive powers of a world religion, trade economy, and imperial armies for the first time. Alexander the Great litigates for peace with Chandragupta in 325 at Gerosia, marking the eastward link among terrestrial routes between the Mediterranean, Persia, India, and Central Asia. This formation of systems of interaction between the global and the local has been a central driving force in world history. Therefore, the Globalization can be recognized as driven by a blend of sociocultural, political, economic, technological, and biological factors. However, globalization may have the potential to affect on the world in different ways Such as economic, industrial, financial, job market, cultural, health policy and political.

Chapter 2
2.1 Trading Blocs A trade bloc can be identified as a type of intergovernmental agreement, frequently part of a regional intergovernmental organization, where regional barriers to trade are reduced among the participating states (Schott 1991). German Customs Union (Zollverein) initiated in 1834, formed on the basis of the German Confederation and subsequently German Empire from 1871.that can be considered as one of the first economic blocs (Milner 2002). The rise of trade bloc formation was seen in the 1960s and 1970s, as well as in the 1990s after the collapse of Communism. By 1997, more than 50% of all world commerce was conducted under the auspices of regional trade blocs. Economist Jeffrey J. Scott of the Peterson Institute for international economics notes that members of successful trade blocs usually share four common traits: similar levels of per capita GNP, geographic proximity, similar or compatible trading regimes, and political commitment to regional organization. Advocates of worldwide free trade are generally contradicted against the trading blocs, which, they argue, encourage regional as opposed to global free trade (O'Loughlin and Anselin 1996). Scholars and economists continue to debate whether regional trade blocs are contributing to a more fragmented world economy or promoting the extension of the existing global multilateral trading system (Mansfield and Milner 2005). Trade blocs can be stand-alone agreements between several states such as the NAFTA or part of an organization. Depending on the level of economic integration, trade blocs can fall into different categories, such as: preferential trading areas, free trade areas, customs unions, common markets and economic and monetary unions. Some of the regional trade blocs are, Eurasian Economic Community European Union Union of South American Nations Central American Integration System Arab League European Free Trade Association Association of Southeast Asian Nations North American Free Trade Agreement

South Asian Association for Regional Cooperation

2.2 Preferential trade area A Preferential trade area is identified as a trading bloc which gives discriminatory access to certain products from the participating countries. It is also named as preferential trade agreement. This process is done by reducing tariffs, but not by removing them completely. A PTA can be established through a trade agreement. It can be considered as the first stage of economic integration. Normally, any PTA may have the main goal of becoming a FTA in compliance with the general agreement on tariffs and trade. Therefore, the line between PTA and FTA may not distinct. These tariff preferences have created numerous exceptions from the normal trade relations principle, namely that World Trade Organization () members should apply the same tariff to imports from other WTO members.

Chapter 3

3.1 Change in the balance of world trade The balance of trade is being calculated over a certain time period. It calculates the difference between monetary value of exports and imports of output in an economy. It is also identified as net exports, symbolized as NX. Trade balance can be affected by several key factors. Some of those factors can be listed as,
1.

The production cost which may include working force, land, capital, taxes, inducements, etc. The total cost and accessibility of raw materials, arbitrate goods for the production and other inputs in relation to the product. Behavior of the exchange rate. Non-tax barriers viz. environmental barriers, barriers related to health or safety Unilateral,bilateral and multilateral, taxes or restrictions on trade. The accessibility of sufficient foreign exchange with which to reimburse for imports. Prices of products manufactured at home.

2.

3. 4. 5. 6.

7.

Trade balance is known as the difference between the output of a state and its domestic demand of that state. Therefore, the trade balance can be considered as the affiliation between the imports and exports of a country (Sullivan et al 2003). When the balance is positive, it is known as a trade surplus. It means of exporting was done more than is importing. When it is negative, it is referred to as a trade deficit or trade gap. It is occationally divided into a balance of the goods and the balance of the services. For an example for the application of the positive and negative trade balance, since the middle of 1980s, US has lacking of tradable goods, especially with Asian nations such as China and Japan which are the countries now handling large amount of U.S debt that has funded the consumption (Roberts and Craig 2003). U.S. has a surplus of trade with countries such as Australia. The trade deficit issue can be complex. Trade deficits created in tradable goods such as finished products or software may inflence with the domestic employment to different levels than shortage of trade in raw materials.

Economies such as Canada, Japan, and Germany which have savings surpluses, typically run trade surpluses. Considering China, which is having high growth economy, may lead to occur trade surpluses. A higher savings rate may simply represent the trade surplus. Equally, the countries such as U.S. with lower savings rate may lead to run high trade deficits, particularly with Asian nations. Practically, it may be difficult to measure the balance of trade. The major issue may be the recording and collecting reliable data. To figure of this problem, consider when official data for the entire world's countries are updated, exports exceed imports by approximately 1%. It reveals that the world is running a positive balance of trade. This fact may not be reliable. Because, all the transactions may involve with an equal credit or debit in the account of each nation. The inconsistency is extensively believed to be explained by transactions planned to make legal money or elude taxes, smuggling and other visibility issues. Conversely, when considering developed countries, precision can be expected. In addition, the trade balance is prone to differ across the business cycle. The countries which are running by exports viz.oil and early industrial goods, the trade balance will ameliorate during an economic expansion. Referring to the different conditions in different countries or regions, trade balance can be problematic or non problematic. 3.2 Physical balance of trade Physical balance of trade consists of amount of raw materials which is also known as total material consumption. It differs from monetary balance. In practice, developed countries tend to import a more primary raw materials for their products from developing countries at cheaper prices. Repeatedly, these materials are may converted into finished products, and a value addition may be significant. Though, the instance the EU has a balanced monetary balance of trade, although its physical trade balance is negative. It means that majority of material is exported than imported. For this reason, militants talk about the issue of ecological debt which involve in a sort of predatory economic system. The distinct of the trade balance statistics is such that it holds back distorted material flow.

Chapter 4

Advantages of globalization to an organization Globalization may be advantageous to an organization in many ways. When considering the media, it plays a major role in the development and also for the reputation of an organization. Therefore, the globalization process is more important, because global media ties the world together. The increased flow of communications allows vital information to be shared between individuals and corporations around the world. That would facilitate the establishment of both local international relationships for an organization. Globalization would increase the free trade between nations. As result of that, it may be a Greater ease and speed of transportation for goods and people. That would be more beneficial to an organization also. Globalization facilitates the reduction of cultural barriers both locally and internationally. Because of that the global village effect would be improved. Establishment of the global village concept would be important for an organization to achieve their business aspects.

Chapter 5

5.1 Cultural dimensions of globalization There are many arguments on globalization whether it increase or decrease the cultural diversity. When considering the mass media, the impact of western culture through mass media such as TV, cinema advertising and radio are replacing for and challenging with local and minority cultures. But, this process may lead to the negative behavioral changes by increasing the risk behaviours for the health such as alcohol consumption, and smoking, increased social conflict, loss of identity, displacement and disappointment. In contrast, greater cultural exchange may have the potential to increase tolerance and understanding, while increasing the accessibility for information can make lifestyle and social changes with health benefits, such as gender equality, better respect for human rights, less loneliness of people living with sexually transmitting diseases such as HIV/AIDS. The term global village, referring to the increased contact between different cultures, identities and views across boundaries of the different states those may create from the application of modern communications. This reveals that a positive view of globalization in which the different societies get closer to each other and develop shared values and common interests. Global communications may play a key task in the cultural scope of globalization. The term means the use of novel information technologies such as the, mobile phones, internet, e-mail, as well as the satellite TV. Those technologies are becoming cheaper and more accessible. The increased comfort and pace of global communication may have both direct and indirect influences on health. For an example, global advertising may increase the tobacco use but, on the positive side, the internet democratizes access to information, facillitating the health professionals to access and share knowledge, information, and ideas on health. Regardless of betterments in global communications, a huge information gap exists between developed countries and developing countries. For an example, over 70% of Africans may not a phone to anyone in their lifetime, nor use the internet. However, it is believed that radio broadcasts may reach 70% of all Africans. Ownership and impact of the content of communications is important. It should also critical that, while culture is affected by the TV and cinema, a society's culture can be expressed and influenced in many ways. It can be concluded that the integration of global markets and communication channels may lead to higher level of communication. But, the disadvantage of development of negative behavioral change still remains. 9

5.2 Economic inequality Economic inequalities consist of all inequalities in the distribution of economic properties and income. Practically, the term social inequality may be used to describe inequality of income among the individuals and groups within a society. It is also refer to the inequality among countries. The main implement which reduces the economic inequality can be considered as the progressive taxation. It is believed as an effective tool in international comparisons of income compression and wealth distribution. It is argued whether the economic inequality is a positive or negative, both on utilitarian and moral grounds. A study published in 2009 (Wilkinson et al 2009) has revealed that negative social processes such as shorter life expectancy at birth, high morbidity, homicide, infant mortality and increased prison population may correlate with higher socioeconomic inequality. But, still it is believed as controversial. A country's economic structure or system such as capitalism or socialism, ongoing or past wars, and differences in individuals' capabilities to become wealth may be the contributing factors for economic inequality. Economic inequality can be decrease or increase over the certain period of time. For an example, inequality decreased in the U.S. from 1890 to 1940 because of the supply of skilled workers exceeded demand, as the high school movement generated skilled workers and border closure reduced the supply of low-skilled immigrants. Inequality increased in the U.S. from 1970 to 2000 with skill-biased technical change. Some of the factors which are affecting the economic inequality can be listed as, 1. Globalization 2. Inherent ability of the population 3. Education status 4. The labour market 5. Information technology and growing technology 6. Race and Culture 7. Gender 8. Decrease of progressive taxation 5.3 Social inequality

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Social inequality is differs from economic inequality, though the social inequality and economic are related. The social inequality consists of the way people behave socially, through racism and other forms of discrimination. It tends to trickle down and affect the opportunities and wealth individuals can generate for themselves. Thomas M. Shapiro shows a theoretical example of this in his book (Shapiro and Thomas 2004). One example on that book is how a black family was denied a bank loan to use for housing, while a white family was approved. 5.4 Formation of new forms of relationships with diverse cultures Brazzel and Michal (Brazzel and Michael 1991) define cultural diversity in terms of human differences that play an important role in the culture and operation of organizations. The culture of an organization may consist of customs, assumptions, beliefs, values, rules, norms, practices, arts and skills that define and guide members about: 1. The reasons for the existence of the organization. 2. How its "work" is to be done. 3. The rules needed for membership. 4. How to relate to others in the organization and to those outside. Cox and Taylor (Cox and Taylor 1991), state that preconceptions are negative personal attitudes toward members of a cultural group. In contrast, discrimination may be an observable adverse behavior toward the group member. The dimensions of diversity in organizations may include age educational status, gender, income ethnicity and ownership like factors. These dimensions may need to be considered when identifying, selecting and recruiting prospective members of a community. Accordingly, a heterogeneous group can work together to achieve mutual goals and objectives through agreement and cooperation. If an association is to be formed to obtain more housing, people from each or most of these groups must participate for that coalition to get power. If not participating, at least all cultural groups must be consulted for their opinions or beliefs. But, the most crucial thing is culturally-diverse coalition should be consisting of representatives of the cultures living in an area or community.

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Chapter 6
6.1 Pros of employees interest towards globalization Globalization process can be considered as apparently beneficial for workers in developing countries. Through the globalization process, the demand for the work force may be increased. Therefore, the competition for labour will direct to increases in wages and domestic consumption and rising living standards of workers. Not only that, the increased demand for workers would also lead to generate better working conditions with higher standards. Globalization may increase the economic output and equalizes and increases the material living standards of the world population. Increasing productive capacity and specialized labour force may cause to increase efficiency and increase opportunities for everybody together with the labours. The increased availability of foreign jobs can be expected through the globalization process. Therefore, it would also be beneficial for the labours to increase their living standards. 6.2 Constrains of employees interest towards globalization In short run, globalization generates benefits for everybody in the long term along with consumers in the developed countries, and workers in developing countries. Millions of people may lose their jobs due to the imports or production shift abroad. Therefore in the long run, the workers may lose their jobs or face wage competition in the short term, although they still benefit as the consumers. Not only that, workers may face pay cut demands from employers, which may often threaten to export jobs in the mean time. Globalization can be considered as an endless process. Because of that, the problems that will be experienced by workers may be due to the massive imbalances between the highly developed countries and developing countries. As this begins to equalize the pressures should be reduce slightly.

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Chapter 7
Conclusion The Globalization is being the popular term for describing the current times. Just as the depression, the cold war era, the space age, and the roaring 20's were used to describe certain periods of history. The term globalization is being used to describe the political, economic, and cultural atmosphere of today. People around the world are being more associated with each other than ever before. Information and money flow can be considered more rapid than ever. Goods and services produced in one part of the world are increasingly accessible in over the world. International travel is being also more frequent than earlier. International communication is commonplace. Some times it is believed that term globalization refers to the primarily a synonym for global business. But, the term occupies more than that. The same forces that allow businesses to operate as if national borders did not exist also allow social militants, labor organizers, journalists, academic people, and many others to work on a global stage. Referring to the various organizational bodies, organizations are exposed to global forces of demand, international market competition, supply, their relevance to global issues global-social concerns, demographic changes and political developments instead of remaining protected by local environment. The preferences of the stakeholders' are therefore affected also by the net impact of the same set of factors instead of being subject to local situations and trends. This applicable for all the stakeholders - investors, business managers, labour, suppliers, farmers, consumers, politicians and administratives, government workers, the young, and the old, men and women as also all types of organizations such as business firms, trade associations, government bodies, civic authorities, NGOs, civil societies, social and cultural organizations, religious establishments, scientific bodies, education and research institutions, political bodies, the military organizations and the multi-lateral organizations. Those who cannot adapt to the global forces sooner or later lose their relevance and have to take a great effort to survive. Those organizational bodies who have the potential to adjust and change as the globalization proceeds convert global opportunities into strategies that strengthen them and make them continuously relevant and cope with the threats from the external environment successful

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Abbreviations
ESCWA NAFTA EU PTA FTA WTO GNP NGO Economic and Social Commission for Western Asia North American Free Trade Agreement European Union Preferential Trade Agreement/ Area Free trade area World Trade Organization Gross National Production Non Government Organization

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Takis F. (2001) ' Globalisation, the reformist Left and the Anti-Globalisation Movement ', The International Journal of Inclusive Democracy, 7(2), pp 40-61. Sheila L. Croucher. (2004) Globalization and Belonging: The Politics of Identity in a Changing World. Rowman and Littlefield publishers. Shapiro and Thomas M. (2004) 'The Hidden Cost of Being African American' .Oxford University Press. Grusky and David B. (2001) 'The Past, Present and Future of Social Inequality: Social Stratification: Class, Race, and Gender '.2nd Edition. West view Press. Colorado. William N., Liuba Y. B. and Paradis A., (2008) ' Perceived career opportunities from globalization: globalization capabilities and attitudes towards women in Iran and the US, Journal of International Business Studies, 39(1), pp 814-832. Reinsdorf, Marshall and Matthew J. Slaughter (2009) International Trade in Services and Intangibles in the Era of Globalization. The University of Chicago Press, Chicago.

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