1|Page

GLOBALIZATION: ITS POSITIVE AND NEGATIVE EFFECTS ON

BUSINESSES.

A Research
presented to JOVINER Y. LACTAM
SAINT ESTANISLAO KOSTKA COLLEGE, INC.
Poblacion, Manukan, Zamboanga del Norte

in partial fulfillment of the

requirements for the Course General Education
(Contemporary World)

BY

BASIS, EFREN D.
MACION, REYZALDI E.
SIMAN, JERRY P.
UNDO, JO-AN D.
ALIA, CLENT PAUL S.

BSBA BLOCK 1

OCTOBER 2019
2|Page

ABSTRACT
Globalization has played a vital role in the development of international business.

No doubt, international business has a long history, but the real development of

international business was possible because of globalization. Even after that it doesn’t

mean globalization only has positive effects; it does have negative effects on business.

In this study, secondary data has been used for analyzing the effects of globalization

and for studying the extent of globalization on financial services industry. This study

discusses the following point; Globalization it’s positive effects and negative effects.
3|Page

ACKNOWLEDGMENT
First and foremost, we would like to acknowledge our ever dearest

supportive family, for not leaving us in doing this study especially in financial

support. Above all we thank God for giving us strength, knowledge and guiding us

in the entire study. And to our beloved and very humble instructor for not leaving

us instead keep on encouraging us in every time. To our friends, and to all the

person who are voluntary give their support in order to finished this study, and to

the Saint Estanislao Kostka College Inc., who give us the opportunity to be here in

this institution to pursue our college education, without you this would not be done

successfully. God Bless You All and Thank You!

4|Page

Chapter I
INTRODUCTION

Globalization is a widely used term in different contexts. Globalization definition

available in some general dictionaries is not very clear. Some dictionaries define

globalization as ‘the act of globalizing’ or ‘to render global’ (Waters, 2001). Many people

accepted globalization as a vague concept and don’t try to define it precisely.

Background of the Study

By this way globalization is a catch all, malleable concept which can be interpreted

the way user wants (Scholte, J., 2000). Robertson (1992) says Globalization refers both the

world’s escalation and compression of consciousness as a whole. Global compression

reminds the dependency and system theories’ arguments. It points out the rising level of

dependency between countries in term of cultural, military alliance, trade, and domination.

International trade has benefited the most from the wave of globalization and has

increased the dependency among countries. The dependency of any country for other

country can have both type of effect negative and positive. It depends on the countries, how

much and for what, they are dependent on one-another. International business has increase

significantly after Globalization. But, it is not always beneficial, it can be harmful also.

Before globalizing economy, a country should understand it clearly that how it is going to

take benefits out of globalization and it should be ready with a contingency plan.

Statement of the Problem

5|Page

This study aims to determine the importance of Globalization that can affects the

international and Local businesses, its negative and positive effects to the business and how

it is important for the economic growth.

Did the globalization play an important role for the economic growth?

What is the effect of globalization in our economy and businesses?

Significance of the Study

This study will be able to contribute ideas for us as a future business man

and business woman that we will be able know how this globalization works and how it

affects to the businesses. It is not just for but those who can read this works, it can open

their minds if they will be able to know this study.

Scope and Delimitation

Although this study states that the title itself “Globalization” is a wide range of

study, but this study that we conducted is for the Local Businesses only. Especially the

small business here in our Municipality, though it is called as small business but they have

the big impact to the globalization in terms of economic aspects.

6|Page

Chapter 2
REVIEW OF THE LITERATURE AND CONCEPTUAL FRAMEWORK

Related Literature

Globalization describes how different world cultures, populations, and economies

are interdependent from each other. It is a consequence of cross-border business.

Technology, goods, investments, information, and services along with the labor market are

the most popular components of such activity. Nations have established worldwide

integration over many centuries by enabling economic, political, and social partnerships.

In ancient times people moved to distant places to settle, exchange goods with others, and

to produce food and unprocessed materials.

Positive Effects of Globalization

It is believed that globalization has increase economic opportunity and prosperity in the

world. Now the markets are open for trade and resources are used efficiently. Due to this,

prices have come down, employment has increased, and life standard has become better.

Globalization has helped to remove poverty form the developing countries, in 1980 – 2001

people living on $1 or less than that per day has come down 1.1 billion from 1.5 billion

(Burande, 2007). It’s not the developing countries who has benefited from globalization,

developed economies have also enjoyed the fruits of globalization. It’s very difficult to

explain all the positive effect of globalization on culture, human mindset, trade,

employment, capital market and on the other fields. Still, we have tried to summarize the

positive effect of globalization. Some of the positive effects are following;

7|Page

Free Capital Market – With the introduction of globalization countries opened their capital

market. This helped companies to operate easily in many countries, as they could change

the currency as per their choice to get it out of the country. It also helped to attract foreign

investors to invest in their capital market which provided funds for developing

infrastructure (Rugman, 2002).

Common Market Regulations – In the era of globalization when it became very difficult to

operate in multiple countries due to different requirements of regulation, then countries felt

need of easing regulations and agreed for common market regulations (Rugman, 2002).

Now, many countries use same accounting and tax standards by which it become easy for

companies to operate. Later on countries formed groups according to their trade needs like

OPEC, NAFTA, etc.

Wide Operation Field – Globalization widens the operation field of a country, the people

of a global economy can operate in many countries, thus it opens door of opportunities to

increase their market size and profit. Within the country an organization wouldn’t get much

scope for increasing it operation but in a globalized economy it can go mile for increasing

its operations (Tanzi, 2004).

Spread of Education – Education is the best positive effect of globalization. Today one can

go around the world for best learning and training facilities. If one is interested in the

subject that is not available in the country, one can go to the country for learning that

indigenous subject and spread the knowledge in one’s home country. There are several

examples where people learnt the subject from other countries and earned name in their

own country (Kulkarni, 2009).

8|Page

Boosts Export – Globalization helped in two ways to boost export; first by free capital flow,

and open market for increasing operation. Some countries set-up special economy zones

for giving extra boost to export (Rugman, 2002). In these zones companies where given

tax shops and subsidized facilities with the condition to export the maximum production

form these units.

Flexible Labour market – Globalization helped people to learn multiple skills, while doing

different jobs. By this people moved from one job to another easily. It shows a more open

and flexible labour market with a regulated system to increase investment. When

companies moved from one country to another, they also shifted their people and trained

people from that country to get their work done (Carbaugh, 2008).

Curb on Inflation – When companies moved from one country to other in search of market,

they launched their product on competitive rates. The availability of cheap consumer goods

helped those nations to lower down inflation, which was disturbing their economic growth.

Because of their increasing influence the domestic companies also searched for innovative

and better technology for reducing cost (Carbaugh, 2008).

Economies of Scale – Large companies may not be able to utilize full capacity of their

manufacturing units due to closed economy and small market. Globalization provided

score to these large companies to operate with full capacity, which helped them to reduce

cost further (Rugman, 2002). By globalization not only the companies were able to get

economies of scale but also the consumers.

9|Page

Technological Improvement – Countries those adopt globalization, opens doors for

advanced technology. When large companies start their operations in developing or under

developed countries, they use advanced technology for operations. Govt. can also access

new technology by agreement with large groups after negotiation for their operations in

their countries. Technological improvement is also possible by to running R&D

programme in collaboration with big companies and by providing training to its people

(Tanzi, 2004).

Better Uses of Resources – Resources are scare but still the countries were not able to

utilize them efficiently, in the lack of technology. When they got access on technology, the

proper use of the resources was started. Companies started use capital intensive technology

on the place of labour intensive technology, which saved on cost and helped them to use

the man force in other productive activities (Carbaugh, 2008).

Spread of Culture – Globalization has also affected culture! It is not that every civilization

has all good practices. Today the culture, in which we live, is the contribution of many

cultures. Humans tend to pick new and correct things from other cultures and drop the

flaws in their culture.

Societies welcome people from other cultures and backgrounds to form a new culture.

Languages, cooking styles, customs, and dressing styles all have spread from globalization.

The other cultural forms like movies, music and art are also affected by globalization. Now,

movies are launched worldwide, which leave an impression on people and culture

(Kulkarni, 2009).
10 | P a g e

Negative effects of globalization

Globalization has both positive and negative effects. But, for the poor and

developing countries negative effects seems very large (Future-econ, 2009). Economic,

political and social unification was expected from globalization. But, strong and developed

economies continue to exploit underdeveloped and developing countries on the name of

business sharing. Power reallocation is happing in the form of technological and industrial

competition (Borade, 2009). Most economists argue that the positive effects of

globalization are more than the negative effects (Future-econ, 2009). Whatever is the truth

behind all these arguments can be analyzed by discussing these points:

Dumping – Dumping has emerged as a big problem in front of developing countries. By

dumping the developed countries exploit the market in the developing countries by

charging low price for its products, on which price local producer can’t sell its product. In

this way, the developed and advanced countries get a large share of market for their

products (Boudreaux, 2008).

Unemployment – Globalization helped many countries to develop technology very fast.

Due to use of advanced technology the use of labour reduce significantly. Because of that

the unskilled employees lost their jobs. Use of capital intensive technology also helped to

reduce production cost, but most of the benefits were retained as increased profit by the

manufacturers. One more reason, behind unemployment was shifting of job location in

search of skilled and cheap manpower (Carbaugh, 2008).

11 | P a g e

Environment Disaster – Climate change has become a “hot” topic. Global warming is also

a part of global economies. In search of advance and capital intensive technology, countries

have established many industries; those industries are increase pollution rapidly (Lane,

2006). Traditional labour intensive technologies were based on low power and machines,

so the pollution was not an issue from those industries. Moreover, the products of factories

are also polluting the environment.

Limited Natural Resources – In the race of globalization and development, every country

is exploiting its natural resources extensively, due to that in near future these resources will

be finished. Petroleum is a very important source of energy in present but it will not last

long if the alternative source of energy is not searched (Lane, 2006).

Competition – To globalize their economy countries opened their market for foreign

companies, these companies were large and were using high technologies. Domestic

companies were not able to produce goods on that cost, which put a question mark on the

sustainability of these companies. Competition increased with the entry of new companies

in the market. Many home companies were not able to compete with these multinational

companies, so they have to close their business. Dumping also enhanced completion in

these markets (Lane, 2006).

Spread of Diseases – Globalization helped first mobility, due to that unknowingly diseases

are spreading very fast from one country to another (www.darkseptemberrain.com). When

people enters into a new environment he may faces several types of health problems,

because of change in environment. Recently H1N1 flue was also a result of fast and

increased movement of people. Earlier when where no such health facilities were available

people used to consume homeopathic medicines but now on one side where the health
12 | P a g e

facilities have improved a lot the fear of fast spread of transmittable diseases have also

increase (Lane, 2006).

Inequality – Economic development is successful in reality, when it is able to generate

equal opportunities without any consideration. But globalization has increased inequalities,

now the gap between the poor and the rich has increased. No, doubts there are improvement

in the overall living styles but the way it was expected to improve that couldn’t be achieved.

Inequality has also increased in terms of skilled jobs. Those who are skilled can get better

jobs, but those who are not updated with new skills find it difficult to change their jobs

(Sharma, and Starik, 2002).

All these points clearly indicate the negative and positive effects of globalization. Like any

other thing globalization also has both aspects which are bad and good for mankind. It the

human being who has created this global phenomenon, so he can also control it and use it

for the betterment of the world without any discrimination.

Financial services industry

Financial services industry provides services related to money, for money, with

money. Financial services are utilization, manipulation, management, storage, and creation

of money. There are many companies to serve the market for financial services for different

needs, but no single company has the dominance in the financial services industry (Global

edge, 2010a). Financial services industry is more open than ever before.

Definitely globalization is one of the reasons behind this growth. The member countries of

WTO opened their economy for increase world trade and free market. International trade

needs currency transactions, which is not possible without global financial services. When
13 | P a g e

we say global financial services, it means any one can access the services in any country

any time after paying the applicable charges.

Information technology is playing a crucial role in delivery these services. Plastic

money has made transaction easy which carrying cash. It not only helped to access financial

service round the clock but also around the world (Dolan and Lindsey 1991). This was

possible because of globalization of financial services and financial industry.

Globalization affect on financial services industry is not equal in all the countries and

regions. Where in some countries it is intensively used, in some countries financial services

are still the in the infant stage. Globalization is not simply about the presence of any

business in many countries around the world.

Conceptual Framework

The impact of globalization in the changes a lot in terms of the culture, values,

and economy. It also helps the improvement of infrastructure in the Philippines. It gives

more opportunities to all Filipino to work abroad and help each country to stay

connected. Globalization has also helped to let know the people about global warming,

climate change, and the natural resources of the Philippines.

14 | P a g e

The effect of globalization can help a flexible communication and greater

understanding in terms of improvement and development of each country condition. It

also helps the local and international market to create flexible labor across the miles.

Globalization affects the international market and enhances economic growth.

Research Hypothesis(es)

Globalization has its affect on every industry; the difference is in the extent of the

affect and in the aspects of its effect, positive or negative. Where globalization has some

positive effect, it does have negative effect. Because of globalization countries have opened

their door for multinational companies; market for business is free and wide now.

Globalization has also increased the gap between haves and haves not. Financial services

industry is not an exception in this globalized world. Globalization has also forced world

economies to free financial market. Most of the countries are enjoying modern and
15 | P a g e

advanced technologies for financial transactions. People of different countries from the

different regions of the world have access on similar financial service. Use of information

technology and plastic money has played a significant role in the globalization financial

services industry. Financial services industry is globalized to some extent, but the

restrictions on the flow of money from one country to another limits its globalization.

Definition of Terms

Manpower- is the total number of people who can work to get something done. How

quickly you clean your house after a big party will depend on how much manpower you've

got.

global phenomenon- are major natural or human. events or processes which possess the

capacity to affect the globe or. significant parts of it, and require more than a local or

national. response. A response, which is global in scale, would usually influence the

majority.

Globalization- he process by which businesses or other organizations develop

international influence or start operating on an international scale.

16 | P a g e

Chapter 3
METHODOLOGY

While this subject may also be fruitfully studied from a historical, sociological,

demographical or political viewpoint, here the adopted methodology will be only

economic, with particular attention devoted to the applied approaches.

Research Design

This study is qualitative in nature since the research questions is answerable by yes or

no, which is an open ended questions. Specifically, The Study is correlational as it aims to

determine if there is a positive and negative effects of globalization in businesses to assess

whether the degree of association between these variables is significant. Cristobal &

Cristobal (2016) defines correlation research as the research design employed to investigate

the direction and magnitude of relationships among variables in a particular population.

The Sample

Before the study began, the research team obtain informed consent approvals or the

protection of human subjects at saint Estanislao Kostka College Inc. with a total of 100

participants. Participants are assigned to one of three selected business man or woman or

three all community business groups, each of which range from two to three participants

in each group. The sample reported a mean age of 25 years (30-60) years. In general,

participants are split rather by everyday income and businesses ownership identification.

The Instrument(s)

The questionnaire is composed of two parts. Part one seeks to gather data regarding the

economic profile of the participants. Namely income, capital, and gross net. Part two

presents the positive and negative effects of globalization in businesses and instruct the
17 | P a g e

participants to check those statement depends upon their mode of appreciation or the

factual of the statement or issues. Possible answers are yes or no.

Intervention

Since the researchers were not able to use an experimental research design.

Intervention(s) were not included.

Data Collection Procedure

The researcher shall seek permission from the authors of the

instruments that are adapted in the study. Obtained informed consent signed up by the

instructor before conducting a survey. The participants are signing a consent form as a

proof that they are voluntarily participating in the study. The questionnaires are distributed

to the selected participants of the population in the locality of Manukan. Questionnaires

shall be retrieved the same day as they were given to ensure a higher return percentage of

questionnaires.

Plan for Data Analysis

To answer the questions presented under the statement of the problem, the following
Statistical tool were employed.
> Percentages are used to present and analyze data regarding the business
profile of the participants.
18 | P a g e

Chapter 4
PRESENTATION AND ANALYSIS OF DATA
Furthermore, as we undergo research survey we gathered data from the participants
who voluntarily show their effort and time to cooperate our study.
Participant 1: I see globalization more as a common knowledge, a common civilization.
Maybe I’m just not interested in economy.
Participant 2: I see globalization as the development of technology and through that the
development of different things.
Globalization is not often seen as part of a process of becoming ‘civilized’, or as a
civilization process. Usually it is portrayed solely as an unequal economic development
causing polarization between peripheries and social sectors. Through defining
globalization through an accumulation of common knowledge should also be seen as a
common civilization”.
Participant3.it is the development of technology and through the development of different
things.
Participant 4: it plays a big role in economy expansion as developing country wherein we
can have more products to be known that we can’t have it to our country.
Some saw globalization also as an economic and commercial intensification of
interaction and institution and as a “cultural integration” and the birth of global sub-
cultures”
19 | P a g e

Re-conceptualized Framework
20 | P a g e

Chapter 5
CONCLUSIONS AND RECOMMENDATIONS

Conclusions

This study shows that majority of the participants out of 100 says that globalization has

many positive effects on businesses in our economy mostly to developing countries despite

the contribution of it in the natural resources wherein we got our supplies, while the other

said that there are still negative effects exist especially to all developed countries.

Recommendations

This study strongly recommended to all economist, future economist,

businessman and woman, to all who wants to know about this study to better understand

globalization its positive and negative effects on the economy and industry so that we

would know the role of it in our economic growth especially to the said developing

countries.
21 | P a g e

References

Follow the APA, 6th Edition style for referencing.

References

1. Beck, U. (2018). What is globalization?. John Wiley & Sons.

2. Chinnammai, S. (2005). Effects of globalization on education and culture. New Delhi.

3. Cox, K. R. (Ed.). (1997). Spaces of globalization: reasserting power of the local.

Guilford Press.

4. Garrett, G. (2001). Globalization and government spending around the world. Studies in

comparative international development, 35(4), 3-29.

5. Giddens, A. (2018). Globalization. In Sociology of Globalization(pp. 19-26). Routledge.

6. Kohn, D. L. (2006). Effects of globalization on inflation and their implications for

monetary policy. In Conference Series;[Proceedings] (Vol. 51). Federal Reserve Bank of

Boston.

7. Levitt, T. (1993). Globalization of markets. Readings in international business: a

decision approach, 249.