Globalization in the business environment has provided with many positive and negative aspects to different factors. The most affected factors due to the phenomenon of globalization are the local culture and local communities. In this part of the report, in depth analysis of the affects that are left on these two attributes are discussed. Since it has been already discussed that through globalization the world has become one market place for the companies, through this companies are able to set their manufacturing or distribution setting anywhere in the world which is more suitable to them, this is just easy to say, but in fact it has many negative effects on the country. Many businesses in the world has welcomed the globalization of manufacturing and distribution of different goods and services as by this they are able to increase market share, increase profit and reduced cost. But due to this change in the business world, it has threatened the products the producing people hence resulting in the negative impacts on the local community (Waters M, 2001).
In other words, the availability of the foreign goods in the local market will make people buy the international products leaving the local products behind, hence cutting the share of those who traditionally earn their livings by selling goods in the local market. The affect of globalization does not only limits itself to here, but also it affects the culture of the local community for example, the globalization enables the companies to send their products across the world, these products may include movies, music and other publications, hence the cultural products are also being sent to different markets and this exposure to foreign culture material may bring some changes to the local culture and community, since this affect cannot be measured and also this affect is long term, but this is surely said that due to this exposure the local communities will lose their own identity. This section of the report will discuss these negative aspects of globalization in detail.
Here it should be noticed that the most negative impacts are on those countries which fall in the category of developing countries or under developed countries, since these countries also posses of potential market therefore they are on the main priority of international businesses. Since the living standards are also being improved due to globalization it leaves poor people in need of other goods also the cultural influences is also being very much enhanced these days since it is very easy to communicate across the world (Scholte J, 2000).
Disadvantages of Globalization:
This part of the report includes the various disadvantages of the globalization in terms of local culture and community. Some of the many draw backs are defined below:
Increased Economic Disruption:
When the world experienced the industrial revolution than many industries focused on the countries in which by working they can gain competitive advantage, like China is the country which can provide low cost labor hence decreasing the cost of production for the company, when more companies will tend to move to China, the country will get more stronger, getting stronger is not the issue, but it will leave other countries weaker (Ervin J, Smith Z, 2008).
This will result in unemployment in other countries. One more example to illustrate this idea is let assume that Nokia prior was operating in Germany, and due to globalization it transferred all of its operation plant to China, here China will get benefit as it will get the new technology and also the new employment opportunities for the citizen, on the other hand in Germany most people will get unemployed, this results in economic disruptions of economy.
The most significant impact of globalization is that it has increased the competition and made it more complex. Since the boundaries in between the countries have started to eliminate in terms of trade of goods, this has generated a ground for different attributes not to only compete with international firms but also with the national companies (Wagner H, 2000).
Hence the competition has being increased dramatically these days and in order to survive in this business environment, companies tend to have low cost production facility. This has a huge impact on the local producers, since they produce very little amount of products and ought to sell them in the local market as they lack the resources of sending them to other markets, and if the varieties of products are easily available in the market, for the local producers it is very difficult to manage the increased competition, hence the local market struggles.
Increase in Environmental Pollution:
Since different countries have different laws and regulations and especially in the developing countries and companies working in such countries do not have to fulfill the corporate social responsibility and they do not take in consideration the wastages and pollution that is generated by the operational activities in the country. This results in the increase of pollution in terms or air and water too. Government of many nations does not pay attention to these factors in the country and does not implement laws to cope up with these issues, many companies working in such countries get benefit and a significant amount of money is being saved, which they would have been paying in terms polluting the environment in any other country (World Bank, 2009).
Trade of diseases:
The globalization has increased the travelling of many business persons from one place to another, which also increases the probability of carrying any disease to another place. At beginning it may seem to be very minute but this is the fact and this is the way by which the diseases are carried to different places, for example if the business executive had to visit Africa and then he got ill and got contaminated with bird flu or swine flu and returns back to his own country, he carried the disease to his own country. The probability has increased because there is persistent traveling of many people of business purpose across the globe. This is one of the severe impacts that the globalization has done to the local communities (Taylor W, Schechter M, Wolfson L, 2007).
Disrupting the life styles:
The risk of spoiling the local culture is always there, since companies tend to make investment in those countries which can give them any kind of competitive advantage, therefore they make huge investment in the countries and sending people to work there which tend to change the working habits and also make a huge impact of life of others in the developing countries. Also the products from the different countries may also influence the lifestyles, like people will try to adopt the change that is already a norm in the western countries, and people in the way of adopting the changes will lose their own identity, because of this many cultures have started to diminish (Hopper P, 2007).
This can be observed that the globalization is also being done in the technological factor, which has resulted in intense communication system and intense media coverage to all. The problem can be identified when a child is always watching the western channels on the TV, surely he will try to adapt to those values leaving the own cultural values behind (Pieterse J, 2009).
Flow of Employment:
As it has already being discussed that companies chose to setup their operational plant anywhere in the world by which the company is able to gain any kind of competitive advantage, therefore the flow of the employment opportunities is changed and is generated in the country in which the company is planning to setup the working facility. This also disrupts the country from which the company belongs, moreover this flow is good for the potential countries and makes them economically strong and generate many employment opportunities in the country to adopt the technology, but on the other side the origin country will not be able to get the benefit from having a such a huge organization in the country (Rupp G, 2008).
Misuse of the Natural Resources:
In most of the developing nations, the government does not pay much attention on the natural resources; any company which set the operational setup in such country may use the huge amount of the natural resources and may get all the benefit from the resource and may not pay enough to the country, hence this result in the misuse of natural resources in the country.
The above discussed points are the draw backs of the globalization and hence it can be observed that the globalization has take considerable steps to promote the business environment across the globe by making the world a global market place, where intense competition exits and the survival of the fittest is possible, hence leaving behind all the aspects that are related to community and the local culture (Scholte J, 2000).
The below part of the report discusses the various issues that have identified due to globalization from the perspective of a global company the British Petroleum.
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- Taylor W, Schechter M, Wolfson L, 2007, Globalization: affects on fisheries resources, Cambridge University Press, UK
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- Rupp G, 2008, Globalization Challenged: conviction, conflict, community, Columbia University Press, US