Globalization of technology and ideas has provided businesses with a new dimension of operation. Many companies today are willing to invest their resources in reaching more markets and consumers at an international stage. Global businesses primarily engage in international trade which involves the exchange of commodities, services, knowledge, capital, and technology at the global level (Feenstra, 2015).The main hallmark of global business is that transactions are conducted across the borders of two or more countries. Globalization of business began many years ago with the long distance and the Triangular Trades taking center stage in the previous centuries. However, today, businesses are going global with the aim of building on their competitive advantage. Global business commits towards acquiring new international markets, satisfying local demands, and meeting the foreign regulatory requirements.
Philosophical and Pragmatic Assessment of Global Business
In “MIT Milestone Celebration Keynote Address” (2008), Tom Friedman provides a rational explanation of what globalization of world business means. He narrates an analogy which depicts the world as a flat area where knowledge and work can be shared in real time without necessarily paying attention to hurdles such as distance, geography, or language. Although not everyone has access to this flat platform, it has become more open to many people today. Friedman views globalization as a trend aimed at replacing the Cold War system. It has several elements including logic, rules, pressures, and incentives that in turn affect countries, companies, and communities either directly or indirectly. Global businesses have interwoven markets, information, and telecommunication systems that make the world to appear smaller than it really is. Integration is also an important aspect of global business as business continue to connect hence exposing one another to threats and opportunities.
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Pankaj Ghemawat continues to build on the philosophical explanation of business globalization covered by Friedman. He discusses his book known as "Redefining Global Strategy" where he highlights the significance of international borders in matters of trade. He intimates that the world has failed to attain its complete "flatness" due to borders which have subsequently implicated the exchange and flow of commodities and capital (Pankaj Ghemawat, IESE Business School, Barcelona, Spain, 2010). As earlier intimated, a global business engages in the exchange of goods and services between countries. However, as discussed by Ghemawat in his book, there is a need to develop a global strategy with the view of limiting all the hurdles that prevent exchange at an international level. The first significant barrier to trade the global businesses face includes the tariffs. McGovern (2018) asserted that when countries become afraid that their partners are likely going to interfere with their economic welfare, they might impose tariffs and taxes on any imported goods thus limiting competition. Trade protectionism, where a country protects the local markets from international competitors, can also implicate the opening of international borders.
The issue of foreign currency is another major factor that could possibly affect the opening of borders as discussed by Ghemawat. Exchange rates between two or more countries primarily depend on various factors including the market conditions and the health of the economy. Two countries must also agree on the type of currency to utilize in their trade endeavor. Exchange rates can also be severely affected when countries conflict with one another. Despite this, Ghemawat continues by suggesting the redefinition of a global business strategy. The Global business strategy includes all the approaches taken by a company to ensure that it operates efficiently on the international scene. One of the strategies commonly used by businesses includes standardization of their commodities where similar commodities are produced for different markets. The approach takes the philosophical thinking that all basic human needs are the same and as such, can be satisfied by similar goods and services. Other companies have however resorted to another global strategy known as market orientation or adaption. Advocates of this style use the philosophical thinking that whereas human needs are similar, differences in the environment and culture also plays a significant role in shaping the need to buy (Ferraro & Briody, 2013).
In “Davos 2012-The Global Business Context,” some of the most important factors hindering global businesses are highlighted. Lord Mandelson and other global leaders take this opportunity to warn of the dire consequences that protectionism will have on the process of business globalization. He noted that globalization should not be feared but instead used by nations to promote their economies. When markets and borders are closed, it becomes difficult to engage trade at an international level thus hurting the already weakened global economy. For instance, some countries are opposed to outsourcing, a common global business practice that involves a company delegating some of its production to an international enterprise (Peng, 2013). In blocking borders and limiting international trade, countries such as the United States under President Obama hit out at countries that engage in this form of business. Tom Friedman, as part of his explanation on a flat world, suggests that outsourcing should be embraced as an important global business practice. Countries must, therefore, take advantage of globalization by merging markets and opening borders to enhance the exchange of commodities, services, technologies, and ideas (Voegtlin, Patzer, & Scherer, 2012).
Future of Global Business
The future of global business depends on several factors that cut across the social, political, and economic spheres. As earlier intimated, global businesses have three major roles to play including identifying new markets, adjusting to the demands of the locals, and meeting the regulatory requirements. In identifying new markets, my vision is to see countries opening up their bodies and further create policies that improve trades across the international platform. International cooperation and partnership will ensure that nations come up with strategies to remove barriers of trade and open more borders to commerce. The second dominant strategy hinges on meeting the demands of the locals. Kose, Otrok and Prasad (2012) noted that companies such as Nike, Puma, and Coca-Cola have in the recent past employed several global strategies aimed at satisfying the needs of the people at international and local scenes.
The two major approaches utilized include standardization and adaption depending on the needs of the company. In the next 10 to 20 years, there is hope that all multinational companies will focus on providing localized goods that conform to the values and beliefs of the people. The third major hindrance that has faced global business includes meeting the regulatory requirements. As the world continues to become a global village, diplomatic engagements will ensure that countries develop rules and regulations favorable to international companies. Lastly, with the dynamic nature of technology, there is hope that the internet will connect more businesses at the global, improve trade, and enhance customer experiences from their comfort of their homes (Dunning, 2013).
In conclusion, global business refers to the exchange of goods and services at the international level. From the assessment of the videos, it remains crucial that globalization has a future in connecting nations and enabling the exchange of capital, ideas, commodities, and services across nations. However, this has not come without challenges. There continues to be a significant concern that the borders have not been opened to the levels expected. Other nations are also using anti-globalization strategies that can implicate the world’s economy. Therefore, developing effective global business strategies remains a viable means of reaping the most out of international trade. However, with these challenges, more engagements and cooperation will ensure that global businesses become a success.
References
Davos (2012). The Global Business Context . Retrieved from: https://www.youtube.com/watch?v=E2C1BTTtoqA
Dunning, J. H. (2013). Multinationals, Technology & Competitiveness (RLE International Business) . Routledge.
Feenstra, R. C. (2015). Advanced international trade: theory and evidence . Princeton university press.
Ferraro, G. P., & Briody, E. K. (2013). The cultural dimension of global business . Upper Saddle River: Pearson.
Kose, M. A., Otrok, C., & Prasad, E. (2012). Global business cycles: convergence or decoupling? International Economic Review , 53 (2), 511-538.
McGovern, E. (2018). International trade regulation (Vol. 2). Globefield Press.
MIT Milestone Celebration | Keynote Address, 2008. https://www.youtube.com/watch?v=EcE2ufqtzyk
Pankaj Ghemawat, IESE Business School, Barcelona, Spain, 2010 https://www.youtube.com/watch?v=u95c_xKNVvw&=&list=PL7609FAD6BECAD94B
Peng, M. W. (2013). Global strategy . Cengage Learning.
Voegtlin, C., Patzer, M., & Scherer, A. G. (2012). Responsible leadership in global business: A new approach to leadership and its multi-level outcomes. Journal of Business Ethics , 105 (1), 1-16.
