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3/6/2015 AdvantagesandDisadvantagesofGlobalization

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AdvantagesandDisadvantagesofGlobalizationTheworldhasbecomesmallerandcloser,allthankstoglobalization.Themodernblazingword,globalizationistheamalgamationofthe home countrywiththeworldeconomy.

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Globalizationpullsthecountriesout,fromtheirdetachmentintothecompetitiveworld.Ajourneytowardsnewcollaborationsandunity,ithaschangedtheworldintoaglobalvillage. Both distanceandisolationhavebeenterrificallyreduced.

Globalizationintegratestrade,technology,investments,andthemobilefactorsofproductionlikelaborandcapital.AlltypesofgoodsrangingfromCocaCola,Sprite,LouisPhilippeshirts,MarieClairebags,Policesunglasses,toAdidasandNikeshoesareallavailableineverymarketglobally,all credit toglobalization.

Globalizationhasbeenquiteadebatablesubject.Whilesomeareoftheopinionthatithasalotofilleffectsuponthesociety,thereexistsotherswhofeelexactlytheopposite.Someopinethatithasmadelifeextremelyeasierandcomfortable.Ithashoweveraffectedthe consumers andbusinessesdifferently.Forabetterpicture,letustakealookatsomeoftheadvantagesanddisadvantagesofglobalization.

AdvantagesofGlobalization

EmploymentConsideredasoneofthemostcrucialadvantages,globalizationhasledtothegenerationofnumerous employment opportunities.Companiesaremovingtowardsthedevelopingcountriestoacquirelaborforce.Thisobviouslycaterstoemploymentandincomegenerationtothepeopleinthehostcountry.Also,themigrationofpeople,whichhasbecomeeasierhasledtobetterjobsopportunities.

EducationAverycriticaladvantagethathasaidedthepopulationisthespreadof education .Withnumerouseducationalinstitutionsaroundtheglobe,onecanmoveoutfromthehomecountryforbetteropportunitieselsewhere.Thus,integratingwithdifferentcultures,meetingandlearningfromvariouspeoplethroughthemediumofeducationisallduetoglobalization.Developingcountriesorlaborintensivecountrieshavebenefitedthemost.

ProductQualityTheonsetof internationaltrade hasgivenriseto intense competitioninthemarkets.Nolongerdoesonefindlimitednumberofcommoditiesavailable.A particularcommoditymayfetchhundredsofoptionswithdifferentprices.Theproductqualityhasbeenenhancedsoastoretainthecustomers.Todaythecustomersmaycompromisewiththepricerangebutnotwiththequalityoftheproduct.Loworpoorqualitycanadverselyaffect consumer satisfaction.

CheaperPricesGlobalizationhasbroughtinfiercecompetitioninthemarkets. Since therearevaried products toselectfrom,theproducercansustainonlywhentheproductiscompetitivelypriced.Thereiseverypossibilitythatacustomermayswitchovertoanotherproduceriftheproductispricedexorbitantly.'CustomeristheKing',andhencecandictatethetermstoaverylargeextent.Therefore,affordablepricinghasbenefitedtheconsumerinagreatway.

FreeMovementof CapitalCapital,thebackboneofeveryeconomy,isofprimeimportancefortheproperfunctioningoftheeconomy.Today,transferringmoneythrough banks ispossiblejustbytheclickofabutton,allduetotheelectronictransferthathasmadelifeverycomfortable.Manyhugefirmsareinvestinginthedevelopingcountriesbysettingupindustrialunitsoutsidetheirhomecountry.ThisleadstoForeignDirectInvestment,whichhelpsinpromotingeconomicgrowthinthehostcountry.

CommunicationInformationtechnologyhasplayedavitalroleinbringingthecountriescloserintermsofcommunication.Everysingleinformationiseasilyaccessiblefromalmosteverycorneroftheworld.Circulationofinformationisnolongeratedioustask,andcanhappeninseconds.TheInternethassignificantlyaffectedtheglobaleconomy,therebyprovidingdirectaccesstoinformationand products .

TransportationConsideredasthewheelofeverybusinessorganization,connectivitytovariouspartsoftheworldisnomoreaseriousproblem.Todaywithvariousmodesoftransportationavailable,onecanconvenientlydelivertheproductstoacustomerlocatedatanypartoftheworld.Besides,otherinfrastructuralfacilitieslike,distribution,supplychain,andlogisticshavebecomeextremelyefficientandfast.

InternationalTradePurchaseandsaleofcommoditiesarenottheonlytwotransactionsinvolvedin internationaltrade .Today,internationaltradehasbroadeneditshorizonwiththehelpofbusinessprocessoutsourcing.Sometimesinordertoconcentrateonaparticularsegmentofbusinessitisapracticetooutsourcecertainservices.SomecountriespracticefreetradewithminimalrestrictionsonEXIM(exportimport)policies.Thishasprovedbeneficialtobusinesses.

GDPIncreaseGrossDomesticProduct,commonlyknownasGDP,isthemoneyvalueofthefinalgoodsandservicesproducedwithinthedomesticterritoryofthecountryduringanaccountingyear.Asthemarkethaswidened,thescopeanddemandforaproducthasincreased.Producersfamiliarizetheirproductsandservicesaccordingtotherequirementsofvariouseconomiestherebytappingtheuntappedmarkets.Thus,thefinaloutcomeintermsoffinancialgainenhancestheGDPofthecountry.Ifstatisticsareofanyindication,theGDPofthedevelopingcountrieshasincreasedtwiceasmuchasbefore.

DisadvantagesofGlobalization

HealthIssuesGlobalizationhasgivenrisetomorehealthrisksandpresentsnewthreatsandchallengesforepidemics.AverycustomaryexampleisthedawnofHIV/AIDS.HavingitsorigininthewildernessofAfrica,thevirushasspreadlikewildfirethroughouttheglobeinnotime.Fooditemsarealsotransportedtovariouscountries,andthisisamatterofconcern,especiallyincaseofperishableitems.Thesafetyregulationsandthestandardsoffoodpreparationaredifferentindifferentcountries,whichmay

3/6/2015 AdvantagesandDisadvantagesofGlobalization

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poseagreatrisktopotentialhealthhazards.

LossofCultureConventionally,peopleofaparticularcountryfollowitscultureandtraditionsfromtimeimmemorial.Withlargenumberofpeoplemovingintoandoutofacountry,theculturetakesabackseat.Peoplemayadapttothecultureoftheresidentcountry.Theytendtofollowtheforeignculturemore,forgettingtheirownroots.Thiscangiverisetoculturalconflicts.

UnevenWealthDistributionItissaidthatthericharegettingricherwhilethepooraregettingpoorer.Intherealsense,globalizationhasnotbeenabletoreducepoverty.Insteadithasledtotheaccumulationofwealthandpowerinthehandsofafewdevelopedeconomies.Thereforethegapbetweentheeliteandtheunderprivilegedseemstobeaneverendingroad,eventuallyleadingtoinequality.

EnvironmentDegradationTheindustrialrevolutionhaschangedtheoutlookoftheeconomy.Industriesareusingnaturalresourcesbymeansofmining,drilling,etc.whichputsaburdenontheenvironment.Naturalresourcesaredepletingandareonthevergeofbecomingextinct.Deforestationispracticedowingtothenonavailabilityofland,therebydrasticallyreducingtheforestcover.Thisinturncreatesanimbalanceintheenvironmentleadingtoclimatechangeandoccurrenceofnaturalcalamities.

DisparityThoughglobalizationhasopenednewavenueslikewidermarketsandemployment,therestillexistsadisparityinthedevelopmentoftheeconomies.Structuralunemploymentowestothedisparitycreated.Developedcountriesaremovingtheirfactoriestoforeigncountrieswherelaborischeaplyavailable.Thehostcountrygenerateslessrevenues,andamajorshareoftheprofitsfallintothehandsoftheforeigncompany.Theymakehumongousprofitstherebycreatingahugeincomegapbetweenthedevelopedandthedevelopingcountries.

CutthroatCompetitionOpeningthedoorsofinternationaltradehasgivenbirthtointensecompetition.Thishasaffectedthelocalmarketsdramatically.Inrecenttimesthestandardoflivinghasimproved.Peoplearethereforereadytoshelloutextramoneyforaproductthatmaybeavailableatalowerprice.Thisisbecauseofthemodernmarketingtechniqueslikeadvertisingandbranding.Thelocalplayerstherebysufferhugelossesastheylackthepotentialtoadvertiseorexporttheirproductsonalargescale.Thereforethedomesticmarketsshrink.

ConflictsEveryeconomywantstobeatthetopspotandbetheleader.Thefastpacedeconomies,thatisthedevelopedcountriesarevyingtobethesupremepower.Ithasgivenrisetoterrorismandotherformsofviolence.Suchactsnotonlycauselossofhumanlifebutalsohugeeconomiclosses.

MonopolyMonopolyisasituationwhereinonlyonesellerhasasayinaparticularproductorproducts.Itispossiblethatwhenaproductistheleaderinitsfield,thecompanymaybegintoexploittheconsumers.Asthereexistsnoclosecompetitors,theleadertakesfulladvantageofthesaleofitsproduct,whichmaylaterleadtoillegalandunethicalpracticesbeingfollowed.Monopolyisdisastrousasitwidensthegapbetweenthedevelopedanddevelopingcountries.

Inthecurrentscenario,thekeytointernationalsuccessis globalmarketing . Globalmarketing isthecompetencyofaneconomytomarketitsproductinalmosteverycountry.Itisofutmostimportanceiftheproducthastomakeamarkandsustainglobally.Acarmanufacturerinonecountrywillmanufactureitsproductinadifferentwaythanacarmanufacturerinanothercountry.Butifboththemanufacturerswanttoselltheircarinathirdcountrythenitmusthaveaglobalappeal.Globalmarketinghasmadeknowntothecustomertheexistenceandbenefitsofaproductinthemarketgivingtheproductanidentity.Atthesametime,ithasfailedtokeepinmindthewantsandneedsofeveryconsumer,whichareunlimitedandseveral.

AdvantagesofGlobalMarketing

LowerMarketingCosts:Ifwearetoconsiderthelumpsumcost,thenitisobviouslyhigh,butthesamecostskyrocketsifthecompanyhastomarketaproductdifferentlyineverycountry.Globalmarketinghasloweredthecostofmarketingasthereexistsauniformityinsellingtheproducts.

GlobalScope:Thescopeofglobalmarketingissolargethatitbecomesauniqueexperience.Fullcredittothemoderndaytechnology,thescopeandreachofaproducthasbecomeextremelywide.

BrandImage:Consumerstodayaremorebrandconscious.Globalmarketingallowstohaveaconsistentimageineveryregionwheretheproductexists.Thisaidstheconsumerswhoareextremelybrandloyalwithrespecttocertainproducts.

QuickandEfficientUseofIdeas:Inthisfastpacedworld,onlyaglobalentitythatisabletouseamarketingideaanddesignitintoastrategy,toimplementonaglobalscale,canbesuccessful.

DisadvantagesofGlobalMarketing

InconsistencyinConsumerNeeds:Globalmarketingmustbeabletoadapttotheneedsofconsumerslocatedindifferentcountries.TheneedsofanAmericanconsumerwillbedifferentfromaSouthAfricanconsumer.Adifficultcall,failuretoaddressitleadstobadmarketingskills.

ConsumerResponseInconsistency:Consumerresponsesaredifferentandvaryfromconsumertoconsumerandcountrytocountry.Aconsumerinonecountrymayreactdifferentlycomparedtoaconsumerinanothercountry.

CountrySpecific:AJapanesemightlikeaproducttohaveatraditionaltouch,whereasanAmericanmightliketohavearetromodernlooktoit.Inthiscase,aglobalstrategyforthesameproductisdifficulttodevise.

TheLawsoftheLand:Thecompanypoliciesmaybeaccordingtothelawsofthehostcountry.Thustheoverseaslawsmayconflictwiththecompanypolicies.InfrastructuralDifferences:Infrastructuralfacilitiesinonecountryisdifferentfromanothercountry.Thiscouldhampertheprocessinonecountryandaccelerateinanother.Globalstrategycannotbeconsistentinsuchascenario.

Likeacoinhavingtwosides,globalizationtoohasitsplusesandminuses.Currently,globalizationisatitspeak.Industriestappingthenewmarketsneedtokeepinmindthelocalcultureandsentimentsofthepeople.Monopolybygiantplayersmustnotbepracticedandthelocalplayersmustnotbestifled.Fairtradedealingsandethicalpracticeswhenfollowed,wouldalwaysprovethatglobalizationisaboonandnotabanetosociety.

ByVipulLovekar

3/6/2015 AdvantagesandDisadvantagesofGlobalization

http://www.buzzle.com/articles/advantagesanddisadvantagesofglobalization.html 3/3

LastUpdated:January30,2013

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