Globalization paper

Globalization Paper

Martin Konen martin.konecny@vsm-student.sk IS330 Information Systems Martina esalov, M.S.C.S. Research paper November 21, 2010

Globalization paper The term globalization represents one of the most discussed issues over previous

decades until the present day, mostly because of its direct impact on all spheres of human life. Therefore it is understandable that many definitions have been created so far, explaining globalization either from a specific or general point of view. As well as other human activities, businesses experienced huge changes thanks to the intensive globalisation in recent years, what resulted into creation of plenty of new definitions. It is really challenging to define what globalization actually is in ones own words, mostly because the enormous amount of definitions creates a lot of confusion. But considering the purpose of this research, a combination of the definition by the professor of literature at Duke University Frederic Jameson, that globalization reflects the sense of an immense enlargement of world communication, as well as of the horizon of a world market, both of which seem far more tangible and immediate than in earlier stages of modernity together with the definition by the professor of international relations at American University James Mittelman, that globalization compresses the time and space aspects of social relations could give an acceptable result that will include all the necessary information (as cited in Steger, 2009, p. 15). When looking at the effects of globalization, it is vital to understand that all the other forces that influenced businesses, like government, infrastructure, IT environment and culture, have been also changed because of the process of globalization. Therefore, the transformation of business has been even more fundamental and evident. According to an economics reporter from BBC News, Steve Schifferes, also The rapid spread of information technology and the internet is changing the way companies organise production, and increasingly allowing services as well as manufacturing to be globalised. Globalization [has been] driven by the decision by India and China to open their economies to the world, thus doubling the global labour force overnight.

Globalization paper If one would look for a synonym for globalization, it would be most probably interconnectivity. Thanks to the process of globalization, businesses are now able to easily compete on the global market with significantly lower costs compared to the situation that was 20 years ago. The communication was very limited as well as the access to data and multinational companies had to invest enormous money into technology that would allow them communicate with other parts of the world in order to be profitable on a global scale. Schiffers points out that Trade has been the engine of globalisation resulting into several times higher amount of goods and services traded. With this increase, governments were forced to change their foreign trade policies and trade organizations to apply international agreements to lower tariff and non-tariff barriers on the export of manufactured goods, especially to rich countries. (as cited in Schiffers, 2007). Thanks to the improvement in the barriers in trade, companies were able to engage foreign markets, what gave them many opportunities and possibilities. As the globalization evolved further and further, so did also the technology. IT could be viewed as the most vital part of globalization, and as Levin institute (n.d.) implies, the rapid technology development that begun 20 years ago

significantly improved the accessibility of data and information, thus increased the efficiency of resources location and usage, development of ideas and their promotion on the global scale. Therefore, information began to gain more value than ever before, forcing people to develop better communication channels, networks, but also hardware and software that would manage the exchange of information. As Levin institute (n.d.) suggests, Creating efficient and effective channels to exchange information [made] IT the catalyst for global integration. There most important ways how to effectively communicate are to use a phone or a computer, but considering the costs and availability of these devices in 1990's, one can assume that only the biggest and richest businesses could use their advantage. The todays situation is remarkably different, mobile phones and personal computers became an

Globalization paper

inevitable part of every business, even the smallest one. Lance Whitney (2010), the editor for Microsoft TechNet Magazine says that at the end of 2009, 4.6 billion mobile phones were user round the globe, and the number is expected to grow by additional 1 billion by the end of 2010. In terms of personal computers, according to Gartner market tracking firm, over 1 billion of personal computers were used in 2008, and it is expected to be 2 billion in 2010 (as cited in Anton Shilov, 2008). Moreover, one has to consider the fact that many companies nowadays use different, more powerful types of computers, like workstations or mainframes thus having the possibility to manage enormous amount of data and distribute it over the whole world. By establishing the communication channels, businesses gained the advantage of eliminating the need to contact suppliers and customers personally or by written letters, thus saving a significant portion of time. For sure, the introduction of the Internet and its mass usage contributed by the biggest part to the fast spread of globalization, allowing everyone immediately connect to almost all places on the planet. Naturally, the connection to the Internet was in the early 90's still relatively expensive and the maximum provided speed was, compared to the present situation, more than ridiculous, but the technology was advancing enormously fast. The computers were faster and had higher processing and storage capabilities with every new model, new media and channels became more available, but most importantly, the speed of the Internet was slightly, but constantly increasing. With the new technology, even small and local businesses had a chance to succeed on the global market, with the possibility to sell their goods or services worldwide thanks to the Internet whose popularity was increasing in a geometrical order. One of the most valuable opportunities that businesses gained thanks to globalization is the outsourcing possibility. According to the definition provided by Toshio Suzuki (2005), outsourcing means utilization of outside resources by alliances with other companies. The companies are able to use the knowledge and experience of a different company to perform a special task or series

Globalization paper of tasks in order to achieve better overall performance, reduce costs, increase professionalism, save time and maximize profits, instead of hiring an expensive domestic specialist or even train and educate own employees. From the IS point of view, outside companies can be used to, according to Suzuki (2005), software development and

maintenance, operation of information systems, and management of servers and networks. In addition, the [whole] planning of information systems [can be] relegated to outside companies. Basically, globalization allowed companies to use the outside labor, knowledge and resources to create higher profits in a shorter period of time. Therefore, the overall output of a most of the businesses rapidly increased, giving them all resources needed to an expansion. The OECD reports show that The value of crossborder mergers and acquisitions, for example, grew sixfold from 1991 to 1998 from $85 billion to $558 billion. From 1990 to 1999 the number of international alliances (including sales, marketing, and development agreements) rose from just over 3,000 to almost 60,000, jumping 40 percent in 1999 alone (as cited in IT World, n.d., p. 1). But as there is export, also import is a part of trade, and when operating now on global market, the competition for businesses could easily became unbearable. According to the managing director at Cyveillance International Andrew Muir, A regional or local business may find that they suddenly have a whole world out there that can be a direct competitor (as cited in IT World, n.d., p. 1). Besides the competition, there are other factors that could represent a restraint for businesses, like the need to know the language, political and economic situation, and also cultural background of the country a company is cooperating with. However, this problem was easy to overcome thanks to the advancing technology and increasing accessibility of information. Globalisation had an enormous impact on the way how people do business during last 20 years, offering new opportunities, possibilities but also threats. The development of

Globalization paper

technology, as an of the main causes of globalization, allowed companies to explore different markets, try various new strategies, and possibly maximize their profits more than it would be possible in the domestic country. The improvement of communication, increasing accessibility of data and information, but also constantly decreasing costs of hardware, software and networks resulted into fast development of the global trade. Thanks to globalization, companies that managed to fully utilize their potential created vast amount of new jobs and used the residual resources of foreign countries, thus creating revenue not only for themselves, but also for the outside world. Even though there are some disadvantages and threats necessary connected with the process of globalization, the advantages are more valuable and are exceeding to the extent that globalization influenced businesses in almost all aspects.

Globalization paper References IT World (n.d.). The new global economy: Bracing for the wave. Retrieved November 21, 2010 from http://www.itworld.com/IW001127hnglobal?page=0,0 Schiffers, S. (2007, January 21). Globalisation shakes the world. Retrieved November 20, 2010 from BBC NEWS Website: http://news.bbc.co.uk/2/hi/business/ 6279679.stm#top

Shilov, A. (2008, June 23). More Than One Billion Personal Computers in Use Worldwide Gartner: Analysts Expect Two Billion PCs in Use by 2014. Retrieved November 20, 2010 from Xbit Laboratories Website: http://www.xbitlabs.com/news/other/display /20080623220758_More_Than_One_Billion_Personal_Computers_in_Use_Worldwi de_Gartner.html Stegger, B. M. (2009). Globalization: A Contested Concept, Globalization: A brief insight (p. 15). Retrieved from Google books database. Suzuki, T. (2005, December). Globalization and it outsourcing: The case of Japanese banks [Occasional Paper]. Retrieved November 21, 2010 from the Weatherhead Center for International Affairs at Harvard University Website: http://www.wcfia.harvard.edu/ us-japan/research/pdf/05-12.Suzuki.pdf The LEVIN Institute (n.d.). Globalization101: Technology in depth. Retrieved November 20, 2010 from http://www.globalization101.org/issue_main/technology Whitney, L. (2010, February 16). Cell phone subscriptions to hit 5 billion globally. Retrieved November 20, 2010 from CNET Reviews Website: http://reviews.cnet.com/830113970_7-10454065-78.html

Globalization paper

Assessment Rubric: Globalization Paper Undergraduate Percentage Scale: Undergraduate Scaled Score: % of Grade Case relationship to course concepts Analysis of the influence of globalization on management decisions, individuals, government, organizations and society from the users perspective Originality of conclusions Proper grammar, spelling, and punctuation APA referencing Quality and use of 3 minimum outside resources 20% 58.75 76.24% 0.7 - 2.1 Approaching Standard 76.25 93.74% 2.2 - 3.5 At Standard

0.00 - 58.74% 0.0 - 0.6 Below Standard

93.75 - 100% 3.6 - 4.0 Exceeds Standard

30%

20%

15%

15%

TOTAL

100%