Globalization is the growing interaction of different economies, customs and populations in the world, brought by exchanges in services, goods and technology (Explainer video, 2014) . Globalization has changed the way American organizations do business through such aspects as free trade, outsourcing, and the exportation of American culture. With free trade, the businesses have the opportunity to import cheap inputs and goods. Outsourcing allows the businesses to pay less to outsource some operations. Exportation of American cultures makes it easy for businesses to flourish in other countries and this opens more revenue streams.
There are various effects that globalization has on other parts of the world. Free trade makes it difficult for developing countries to earn revenue through taxes because they obtain very little revenue from the trade. Developing countries experience challenges maintaining their specialized labor because most people are attracted to higher wages offered in developed countries. According to The CQ Researcher (2001), developing countries that closed their economies to globalization are more likely to have substantial numbers of citizens suffer from poverty and are denied access to flow of commerce, communications and innovative ideas.
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Globalization has caused positive effects on American organizations and its customers. Globalization has helped increase household income by reducing high inflation rates, allowing consumers to acquire more value for their money. All these are as a result of increased investments in developing countries and increased exports (The CQ Researcher, 2001). Improved exports assists in better affordability of products to more people especially lower income households.
Although globalization has all these advantages, it also has negative effects on American organizations and their customers. Because of hiring labor from all over the world companies, have issues with language and culture differences. Companies have more competition because they now seek to enter foreign markets and as a result, they focus more on offering lower priced products (Levitt, n.d.). Low-priced products may have poor quality and that is a disadvantage to consumers.
References
Levitt, T. (n.d.). Costs. The Globalization of Markets . https://hbr.org/1983/05/the-globalization-of-markets
The CQ Researcher. (2001, September 28). Globalization Backlash . Congressional Quarterly Inc.
Explainer video. (2014, December 27). Globalization easily explained explainity . https://www.youtube.com/watch?v=QXN_jl2abEE
