Экзамен 3 курс / Globalization

Globalization

1. Globalization is the tendency for the world economy to work as a one unit, led by large international companies doing business all over the world. Globalization refers to increasing global connectivity, integration and interdependence in the economic, social, technological, cultural and political, spheres. Globalization includes different sub-process such as enhanced economic interdependence, increased cultural influence, rapid advances of information technology. All of that binding people more tightly into one global system.

There are several definitions and all usually mention the increasing connectivity of economies and ways of life across the world. The Encyclopedia Britannica says that globalization is the "process by which the experience of everyday life ... is becoming standardized around the world." In economics, globalization is the convergence of prices, products, wages, rates of interest and profits towards developed country norms.^[2] Globalization of the economy depends on the role of human migration, international trade, movement of capital, and integration of financial markets.

2. The advantages and disadvantages of globalization have been debated heavily in recent years. Proponents of globalization say that it helps developing world’s poor nations to industrialized nations much faster through increased employment and technological advances. Critics of globalization say that it weakens national independency and allows rich nations to ship domestic jobs overseas where labor is much cheaper.

In my opinion the both parties are right. On the one hand, due to globalization people around the world are more connected to each other than ever before. Information and money flow quicker than ever. High-quality products produced in one part of a country are available to the rest of the world. It is much easier for people to travel, communicate and do business internationally. Globalization offers a higher standard of living for people in rich countries and is the only realistic route out of poverty for the world’s poor. On the other hand, globalization leads to the situation when international companies rule the roost and strongly influence on government’s actions. Big corporation is able to say to the local government “Look unless you lower your taxes on us, we’ll be moving off to South East Asia or Latin America, and so on. And so it takes out of the hands of government the ability to control their own wages, taxes and welfare system. Big companies can now dictate to government and it means that there should be some kind of give-and-take between government and corporations. In the future, the process of globalization will gather pace and the power of companies could increase. The other problem of globalization is unemployment in the Western World. As companies want to improve their profitability, they are going to look for the low costs in other countries, where the work force is cheaper.

3. Nowadays many national companies want to become global in order to gain extra benefits through increasing the number of countries of operation. The result of losing national image is very impressive. In some countries the nationality of foreign companies has begun to disappear. It means that people don’t think about these companies as foreign companies. For example BP is probably the most global company in the world, but in US everybody says BP and not British Petroleum. It is a local kind of company for American people. The other global companies present itself as local companies in the countries of operation, too.

4. When a company globalizes, it tries to choose the best method to enter its overseas markets. There are a lot of ways to do this. For example, a global company may use acquisition, it means that this company buys or takes over another foreign company. Another method to break into export field is joint venture; it means that two or more companies join temporally to carry out a large project. Apart from that it is possible to use other different methods such as consortium (a group of companies in similar business working together), local partner (a person or company who cooperates with foreign company who wishes to enter the market), subsidiaries (a company partly or wholly owned by a parent company), franchising (selling the right to a manufacturer’s trademark, usually in a foreign market), licensing (giving someone the exclusive right to sell products in certain area).