GLOBALIZATION

Globalization

Globalization

Introduction

There are competing definitions of globalization, some favourable and others less so. From the perspective of business, it is a process of worldwide economic integration. A more broad perspective describes the process through which culture is diffused throughout the world as a result of various forces including trade, travel, and communications. In some cases, the term is often used without clear definition. For example, Ramesh Diwan, professor of economics at Renssalaer Polytechnic Institute, says, "Globalization has become a buzz word." He continues, "Like other similar buzz words, such as sustainable development, it is rarely defined but used to promote arguments favouring business interests." Therefore, an introduction to the topic requires a working definition (Smadja, 1999).

The Turin European Council calls economic globalization one of the major challenges facing the European Union. The Council defines globalization as a process of worldwide economic integration based on three forces:

The liberalization of international trade and capital movements

Accelerating technological process and the advent of the information society

Deregulation through withdrawal of the state from specified areas of economic activity.

Businesses want to know what it means for a company to globalize, and they ask several kinds of questions. First, is there something fundamentally different about doing business globally as compared to established business practices? Second, will globalization require different practices in the future as compared to today? Third, what products and services will firms need as they globalize?

Meanwhile, globalization involves more than economics. Cultural globalization involves the spread of language, products, and customs as people intermingle. In some cases, cultural perspectives literally involve love and gene pools as people from around the world intermarry.

A third facet of globalization involves government and international organizations. Nation states have created supranational organizations such as the European Union and the World Trade Organization. Such organizations, in turn, include new rules of law and international bodies charged with enforcement of those laws. Further, governments of single nations are changing their outlooks as a result of globalization.

Globalization means different things to every nation of the world and cannot be discussed fully in a short essay. Therefore, this discussion provides only an introduction to several facets of globalization. First, the forces behind globalization are outlined. Second, examples of global businesses are given along with discussion of characteristics they share. Third, the results of globalization are discussed. Finally, there is a brief introduction to issues arising from globalization that must be addressed as we enter the 21st century (O'Sullivan, 1998).

The forces Behind Globalization

Business firms want to globalize in order to expand their markets, increase sales, and increase profits. Free trade agreements facilitate those activities and promote economic globalization. Such agreements vary in scope. Some are bilateral such as the U.S.-Canada Free Trade Agreement and the U.S.-Israel Free Trade Agreement. Others are multilateral and regional such as the North American Free Trade Agreement (NAFTA), Mercosur (including Argentina, Brazil, Paraguay, and Uruguay as full members and Chile as an associate member), and the 18-member Asia Pacific Economic Cooperation Group (APEC). The European Union (EU) goes further by creating a ...