Introduction
Global competition is the presence of competing business organizations that serve customers internationally (Pearce, R. 2016). This idea has therefore been applied on productivity and I will briefly discuss its effects on productivity as well as its disadvantages and the ethical issues prevalent to in organizations that practice global operations. To understand this better, it is important to understand the concept of the productivity equations.
Productivity can be tracked per employee, working teams or per department. There are therefore different approaches to measuring productivity as outlined below;
Delegate your assignment to our experts and they will do the rest.
Partial factor productivity; the ratio of total output to one single input.
Multifactor productivity; the ratio between total outputs and the subset of inputs. For example, it can be used to calculate the ratio of output to materials, labor and capital.
Total factor productivity; this formula combines the effects of every input used in the production of outputs.
Effects of Global Competition on Productivity
Economists concur that competition has a major role in triggering the productivity growth of every economy. It is through competition that business organizations realize the need to improve on the quality of their goods and services thus creating a larger demand for these goods and services which as a result boosts the productivity if the economy (Marginson, S. 2006). Global competition has several advantages as stated below on productivity;
Existence of dynamic and competitive markets has led to an increase in productivity thereby promoting economic growth worldwide.
Competition policy has a vital role in improving productivity hence the economy’s growth prospects.
Productivity is strong when competition is also strong this is because efficiency is improved, costs are controlled and innovation of new products thus increasing productivity.
Healthy competition also benefits the consumers through low prices and improved quality of goods and services.
It is therefore important for us to understand how global competition increases productivity. It does this by;
Pressurizing firms to control their prices; in order for firms to thrive in a competitive business environment, they constantly need to control the price of products to the competing one in the market which in most cases is lower.
Easing the market entry and exit; this way, there is room for new competitors and a way created for those who are weak to leave the market.
Sensitizing on infrastructure improvement; this reduces lateness of services and products to the market thus saving on time which is used in increasing productivity.
Benchmarking; this is a way of measuring your strengths against other similar organizations. This helps productivity through sharing of technology and production techniques.
Encouraging innovation; this is a strong driver of economic growth thus productivity through introduction of new products in the market.
Disadvantages of globalization
Despite the benefits accrued from globalization, there are some demerits (Raluca, P. 2010) such as;
High global competition leads to the collapsing of the infant industries because of their inability to cope with the cut-throat competition.
Also, due to introduction of international products to the market, there is a significant decrease in the demand of the domestic products which negatively affects a country’s economy.
Globalization encourages more imports and in some instances less exports. This makes the economy to experience a situation known as balance deficient as a result of superfluous imports.
It also yields to inequality. This is because a domestic manufacturer will not in any way compete with the foreign manufacturer.
In the case where the foreign manufacturers outdoes the domestic manufacturer due to the free market entry, the competition will be killed hence lowering the levels of productivity of an economy.
Ethical Issues Prevalent in Organizations that Adopt Global Operations
Due to adoption of global operations, there those ethical issues organizations face some of which are discussed below.
Technology; whenever an organization is dealing with global operations, it has to constantly deal with different advancements in technology as far as production techniques are concerned and also innovations.
Safety and health; this is a major issue of concern because though they are trying to keep up with the global competition, they have to keep in mind that the health and safety of the employees is adhered to as well as production of standardized products which met the set health standards.
Transparency; this is also very crucial part of an organization’s well-being. An organization has to keep records that show its profitability levels and also inform employees and all departments concerned of any change that has been made. This creates a trustable environment which in turn motivates employees thus increasing productivity.
Fair and favorable working environment; organizations should provide their employees with the best working conditions which will motivate them to work harder. However, in doing so, an organization incurs a lot of costs and resources are used to ensure this which would have been otherwise used in the production process. To decide whether to focus on productivity or better the employees’ working conditions remains a conflicting issue in most organizations.
Conclusion
Global competition is a very wide topic but the latter help us in comprehending it more. It is therefore a good thing in an economy because it increases productivity in ways discussed earlier despite having its disadvantages. It is therefore crucial for any economy to take part in globalization
References
Pearce, R. (2016). Global competition and technology: essays in the creation and application of knowledge by multinationals . Springer.
Marginson, S. (2006). Dynamics of national and global competition in higher education. Higher education , 52(1), 1-39.
Raluca, P. (2010). Advantages and Disadvantages of Globalization. Ovidius University Annals, Economic Sciences Series, 10(1), 768-771.
