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Globalisation- the future
At this juncture, there's a good deal of difference opinion on
the future of international business andglobalization. Basically,
there are three major viewpoints:
1. Further globalization is inevitable.
2. International business will grow primarily along regional
rather than global lines.3. Forces working against further
globalization and international business will slow down the
growth of both.
The view that globalization is inevitable reflects the premise
that advances in transportation andcommunications are so pervasive
that consumers everywhere will demand the best products for thebest
prices regardless of their origins. Those who hold this view also
argue that because MNEs haveso many international production and
distribution networks in place, they'll pressure theirgovernments
to place fewer rather than more restrictions on the international
movement of goods andthe means of producing them.Even if we accept
this view, we must still meet at least one challenge to riding the
wave of the future:Because the future is what we make of it, we
must figure out how to spread the benefits of
globalization equitably while minimizing the hardships placed on
those partiesboth people andcompanieswho suffer from increased
international competition.Not long ago, the Wall Street Journal
posed one question to all living Nobel Prize winners ineconomics:
"What is the greatest economic challenge for the future?" Several
responses relate toglobalization and international business. Robert
Fogel said it's the problem of getting availabletechnology and food
to people who are needlessly dying. Both Vernon Smith and Harry
Markowitzspecified the need to bring down global trade barriers.
Lawrence Klein called for "the reduction ofpoverty and disease in a
peaceful political environment." John Nash felt we must address the
problemof increasing the worldwide standard of living while the
amount of the earth's surface per person isshrinking.59 Clearly,
each of these responses projects both challenges and opportunities
formanagers in the international arena.The second viewthat growth
will be largely regional rather than globalis based on studies
show-ing that almost all of the companies we think of as "global"
conduct most of their business in homeand neighbouring countries.60
In addition, most world trade is regional, and many treaties to
removetrade barriers are regional agreements. Transport costs favor
regional over global business. Further,regional sales may be
sufficient for companies to gain scale economies to cover their
fixed costsadequately. Nevertheless, regionalization of business
activity may be merely a transition stage. Inother words, companies
may first promote international business in nearby countries and
thenexpand their activities once they've reached certain regional
goals.The third view argues that the pace of globalization will
slow down or may in fact already be in theprocess of collapse.61
We've already had occasion to cite a few antiglobalization
sentiments, and it'seasy to see that some people are adamant and
earnest in voicing their reservations. The crux of
theantiglobalization movement is the belief that there's a growing
schism between parties (includingMNEs) who are thriving in a
globalized environment and those who aren't. For example, during
2008,hungry people (those consuming less than 1,800 calories per
day) rioted in over 30 countries as their
numbers increased by about 100 million from the year
before.62
Antiglobalists pressure governments to promote nationalism by
raising barriers to trade and rejectinginternational organizations
and treaties. Historically, such groups have often been successful
(at leasttemporarily) in obstructing either technological or
commercial advances that threatened their well-being. Recently, for
example, antiglobalization interests in Australia and Austria
succeeded in electinganti-immigration parties. In Brazil and South
Africa, voters have authorized domestic companies tocopy
Pharmaceuticals under global patent protection. Bolivia and
Venezuela have nationalized someforeign investments, and the United
States prevented China from purchasing a U.S. oil company.
Thesparring between pro- and antiglobalists is one of the reasons
why the globalization process has sofar progressed in fits and
starts.There are other uncertainties that may hamper globalization.
First, there is the question of oil prices,which are important in
determining the cost of international transportation. Between
January and June
of 2008, global oil prices rose 44 percent and then descended 74
percent by the end of the year.
63
Many U.S. companies, such as U.S. furniture manufacturers,
responded by returning to U.S.production bases rather than facing
transport cost uncertainty.64 Second, the economic
recessionbeginning in 2008 has led countries to employ measures to
protect their own production and workforces.65 Third, recent rises
in safety concernsproperty confiscation,Terrorism, and the piracy
of shipsmay inhibit companies from venturing as much
internationally.
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Finally, there is a view that for globalization to succeed,
efficient institutions with clear-cut mandatesare necessary;
however, there is concern that neither the institutions nor the
people working in themcan adequately handle the complexities of an
interconnected world.66
Going Forward
Only time will tell, but one thing seems certain from everything
we've read in this chapter: If acompany wants to capitalize on
international opportunities, it can't wait too long to see what
happenson political and economic fronts. Investments in research,
equipment, plants, and personnel trainingcan take years to pan out.
Forecasting foreign opportunities and risks is always a challenge,
but byexamining different ways in which the future may evolve, a
company's management has a betterchance of avoiding unpleasant
surprises. That's why each chapter of this book includes a feature
thatshows how certain chapter topics can become subjects for
looking into the future of internationalbusiness.Source Daniels
13th edition
