The changes in the world market in recent decades require a new perspective on the concept of globalization and its importance. Thus, a decade ago, all companies were trying to enter the global market and gain a larger share of it. However, recently there has been a tendency to retreat from globalization. Moreover, it raises the question of whether the perceptions of businessmen were completely wrong before, and now they are searching for new vectors for the growth of their enterprises. The article focused on the issue that the international public is now going through a new phase of globalization, in which they are reconsidering the importance of new markets and the principles of the international system.
Conversely, firms have decided not to expand globally but rather to operate in domestic markets due to the instability of the international situation and system processes. Therefore, the article aims to explore common opinions and theories about the changes in the globalization phenomenon. At the same time, the writer will offer recommendations for company owners that can help multinational corporations choose the right course in conditions of ambiguity.
The Changing Movement of Globalization Processes
The paper applies a method to the DHL Biennial Global Connectivity Index, which assists in monitoring global flows of capital, information, trade, and labor. It is significant to note that the world crisis of 2008-2009 had a negative impact on the globalization phenomenon. Its effect was particularly noticeable on trade in goods and foreign direct investment. In addition, these business areas were affected by the rise of the dollar in 2015, which determined the change in prices and the decline in raw materials. Although full data is not yet available, globalization increased after 2016. At the same time, the public began to actively discuss trends in the market and the risks of globalization. According to newspaper research, most people are concerned about the state of the world economy and do not consider the growth of globalization to be harmful. The writer finds that the primary reason that causes the negative attitude toward this process is that most business owners and experts overestimate the current level of globalization. Hence, international flows and their intensity are not critical for conducting commercial business.
The writer also used the method of interviewing respondents among those who overestimated the effects of globalization. Consequently, he found that they believed in statements about international business and public policy strategies. Thus, they considered that the differences between states had already been erased and did not consider them when launching their product in international markets. The research also demonstrated that there are still barriers, such as distance and lack of knowledge of the appropriate language.
Accordingly, to counter them, the writer proposed two rules. The first is the principle of semi-globalization, indicating that it is necessary to conduct international trade, even on a small scale. The other is the principle of distance, which declares that business relations are influenced by distance, especially in cultural, administrative, and geographical dimensions. The confirmation and validity of these guidelines can be observed in the last famous global crisis of 1930. International trade decreased but existed, and significant influence has geography based on historical connections between states. Hence, the crisis almost unaffected partners who constantly traded between their countries. However, the author suggests that if globalization survived the crisis of 1930, it would also exist in 2020. At the same time, the trade war during Trump’s presidency has less effect on globalization than the crisis of 1930. Therefore, the author concludes that Trump’s policies do not seriously damage the international economy and globalization.
Organization of Success
The author argues that companies need to make structural changes in the current phase of globalization, but they should depend on the state on which they are oriented. Thus, such actions will assist in adapting and achieving efficiency swiftly. If a business aims to integrate into regional structures, the benefits of similarity will be critical to the firm’s development. In the article, the writer analyzed 29 factors, arguing that states from the same region have more commonalities than those from different areas. The author also mentions that companies can use a “front-to-back” structure. According to this, firms focus on customer preferences (i.e., front-end). Although at the same time, the back end is that they utilize platforms for integration. The paper analyzes the methods that different businesses have developed during global integration. For example, Uber and Airbnb have expanded into the worldwide marketplace with IT platforms that enable rapid globalization with minimal assets. The writer also recommends that companies reconsider the organization’s structure and focus on the internal culture, mobility, and cohesion of the organization.
The writer finds that globalization will probably continue to exist but involve fewer companies. At the same time, he analyzes an article in the Economist, which indicates that globalization is diminishing through the fall in commodity prices, lower demand for services, and constant fluctuations in the exchange rate. Although, the writer agrees that market problems should be the impetus for the rejection of globalization and cites the example of Singapore as the most internationalized nation. However, he argues that abandoning globalization is ineffective even in states not heavily dependent on exports. Instead, the author explains that certain companies suffered losses and went bankrupt even during the heyday of globalization. The writer refers to his article “The Forgotten Strategy,” which indicates that from 1990 to 2001, firms consistently had lower sales in the international market than in the domestic market. The author concludes that the impact of globalization should be considered in each case.
Nevertheless, multinational companies need to focus on where they compete, i.e. market choice. The author also notes that it is impossible to succeed in all markets simultaneously. As a method to prove this, a survey was conducted, and 64% of the respondents agreed with the author’s views. There were 16 multinational companies that had a vast geographical expansion which was on the verge of being bankrupt due to excessive funding of all offices. Consequently, the writer argues that one should choose the appropriate market to expand into rather than capturing it all. In selecting which markets to focus on, it is essential to note that the distance rule applies to both foreign direct investment and trade. He assesses that the influence of a common language and connections between states and their former colonies is an essential characteristic of globalization.
The author considers a situation where a company owner has decided to continue entering foreign markets. Consequently, he recommends three strategies to resist protectionism. At the same time, the article indicates cases in which companies use specific techniques. Thus, adaptation will be beneficial to adjust to the differences between states. Aggregation is needed to gain economies of scale. In contrast, arbitrage strategies are used to exploit differences, for example, if one state has lower taxes and cheaper labor. In the paper, the writer provides advice on adaptation; for example, he argues that the faster and more qualitative a company reacts to variation in states, the less the effect of protectionism will be. The author notes that businesses can use changes in products, policies, and market positioning to meet buyer demands. Although this process requires time and finance, thus the writer suggests using common platforms with other firms or applying a franchise system.
Global companies justify their cross-border strategies primarily based on aggregation. As a general rule, they invest in intangible technologies or assets that can be utilized beyond the state’s borders. The writer argues that multinational corporations exiting emerging markets tend to exploit competition. This strategy continues to drive the growth and profitability of India’s offshore IT services industry. More than a decade later, programmer salaries in India are still a fraction of those in the U.S., although the largest Indian vendors are significantly ahead of their Western competitors. The article concludes that arbitrage has become entrenched in firms over the past several decades to such an extent that it will not disappear and will continue to be part of its globalization strategy.
Interaction with Society
The issue of interaction with society is also crucial for international business. However, companies have always considered that interaction with the government is not a factor for success as competition. Business management now recognizes the impact of political and macroeconomic factors that are associated with Brexit, when prices fluctuate due to political factors. It is also significant the cost of changing investment plans in light of anticipated changes in trade policy. It is worth noting that the writer adds to them still broad social networks and the increase of anti-globalization supporters.
At the same time, the article analyzes a Pew Research Center research. Respondents from the U.S. were asked what input into the well-being of society people in 10 professions contribute. Hence, only 24% of the participants said that they considered the contribution of company executives to be necessary. The author observes that reputation plays a significant role; for example, Uber CEO Travis Kalanick encountered problems with public perception when he joined Trump’s business advisory board. The article’s author believes that anti-globalization actions require multinationals to provide more local advantages to the countries where they operate. However, businesses should not only improve technology and jobs but also focus on social contacts.
Similarly, the law of semi-globalization should also focus on changing states’ domestic policies rather than simply closing borders to international trade. In particular, critics argue that globalization has contributed to growing income inequality among the population. In fact, inequality in the U.S. reached its level in the 1920s; other developed nations have less critical income disparity. Considering the fact that corporate profits are growing, one gains the impression that globalization is the cause of the problem. For his part, the writer remarks that he has no empirical evidence and argues that the technological process in the United States and the decline of labor unions have contributed to this problem. The writer provides an argument for the significance of globalization and maintains that the closing of borders will have a negative impact on jobs. This problem will soon be felt in the economy because of labor automation.
The author is referring to his book, “World 3.0: Global Prosperity and How to Achieve It,” in which he negatively assessed the consequences of globalization. For example, the dangers of international imbalances in trade and investment. Nevertheless, he argues that most of the negative features are clearly exaggerated and do not relate to integration processes. For instance, emissions of gases that contribute to global warming result from international transport and the irrational use of energy by states and their citizens. The author also mentions that the international arena should remain open, but at the same time, companies and nations must work on the side effects of globalization. However, the writer argues that President Trump has a radically opposite point of view.
However, the author maintains that states should not support anti-globalization policies if their firms have a chance to enter global markets. This is because the absence of globalization will create trade barriers and limit the mobility of people. The writer also indicates that in the long run, companies that rely heavily on foreign suppliers and firms that export much more than they import benefit from combining efforts to oppose protectionism. Thus, the paper’s author concludes that globalization is not of such magnitude that its effects have a significant immediate impact; nevertheless, international activity has recently decreased but still exists.