1. GLOBALISATION AND THE COMPETITIVENESSOF MARKETS
BY: AIN ATIYA AZMI BINTI NAZMI
IISM A LEVELS BUSINESS
24TH OCTOBER 2016
Globalisation isthe processbywhichbusinessesorotherorganisationsdevelopinternational
influenceorstart operatingoninternational scale.Nowadaysthe economiesall aroundthe globe are
showingchangesinthe patternsof trade.Theyare movingawayfromimposingtrade restrictions
towardsa more liberalisedtrade systemcalledfree trade.
Free trade allowsinternational trade tooccur withoutrestriction.The countryisnotrestrictedby
tariffsandotherprotectionistmeasuressuchasquotas,exchange controlsandembargoes.This
permitsforfreermovementsof products,capital andlabouracrossthe worldwidemarket.Thiscase
isevidentinthe formationof trade blocs,wherebycountriessignedpreferential agreementbetween
membercountriesandare oftenheldregionally.The mostfamousexample of thisisthe European
Union,whichisa fullyintegratedeconomicandpolitical unioncomprisingof 28 countriesincluding
Ireland,Italy,Denmark,Poland,France,Germanyandthe UnitedKingdom.
The trend towards globalisationandfree trade bringsaboutmanypositivebenefitstowardsthe
marketcompetitiveness.Firstly,intermsof politics,itimprovesthe country'sforeignrelations.As
our worldbecomessmallerandsmallerthroughcommunicationtechnology,rapidairtransportation
and a complex internationaleconomy,the value of peaceful andcooperativerelationshipsbetween
nationsisincreasinglyimportant.
International relationshelpcountriestomaintainpeace.The growthinthe rate of terrorismandthe
race towardsnuclearweaponsraise concernsforthe global citizen.Itispossible thatitwon'tbe the
asteroidcollidingwiththe Earthor a deadlydisease thatwillwipe off the entire population,butthe
wars andgreedbetweenhumannations.Thereby itiscrucial forthe countriesnotto attack each
otherand to formamiable affairs.Ineverycountry,there is aspecial departmentcalledthe
DepartmentOf ForeignAffairsandTrade.Thisdepartmenthandlesexternal affairsinvolving
international trade,marketdevelopmentandinvestmentpromotion.Bymaintainingdiplomaticties
withpowerful nationssuchasthe UnitedStates,itcan protectdevelopingcountriesfrom
international threat.Notonlythat,these countriescanalsolearnhow togovernand whattype of
policiessuitthembesttoachieve highereconomicprogression.Peace andsecuritywithinthe
countryensuresthatpeople cango abouttheirdailytasksof earninga livingandraisingtheirfamilies
rather thandedicatingthemselvestoarmedconflictswithneighbours.Thus,thishighlightsthe
importance of keepingthesetreatiesinplace.
2. Globalisationalsogeneratesgreatereconomicefficiency.Free trade allowsforexchange of resources
and thisisparticularlyimportantforsmall countries whichlackresources.Singapore,forexample,is
not endowedwithnatural resourcesanddependhighlyonneighbourssuchasMalaysiaandThailand
to importgoodsand servicesforsustenance.Some countriessuchasIndiaand SouthAfricaare
endowedwithhighamountof workingpopulationwhile some countriessuchasJapanand North
Koreaare blessedwithforwardtechnologies.The basisof all trade iswhenthe countries recognise
that theycannotbe self-sufficient.Theycannotproduce all goodsandservices.Eithertheywill lack
the raw materials,ordo nothave the productiontechnique orhumancapital toallow itto happen.
Therefore,itisimperative thatthe countrieshave anefficientallocationof resourcesand
concentrate onproducingthose goodsandservicesthattheyhave a comparative advantage in.
Throughspecialisation,thiswouldincreaseworldouputandsoshouldraise livingstandards.
Competitionfromforeignfirmsalsoencouragethe domesticfirmstobecome more competitive.In
orderto keeppriceslow,theyhave tolowercostsandbecome as productivelyefficientaspossible.
To become more attractive,theyneedtoraise the qualityof theirproductsandinnovate andalso
renovate theirproductstocome up withunique productdifferentiationthatcanleadto lesselastic
demand. Onthe otherhand,consumersare now able to increase theirconsumptiondue toavariety
of choices.Whatisnot available withinnational bordersisnow easilyaccessible fromother
countries.
Globalisationalsohelpscitizensinacountryto maximise theirsocial welfare. Byincreasing
consumption,theyalsoenjoyhigherstandardof livingandminimize poverty.The entrance from
foreigncountriesinthe formof bigmultinational countriessettinguptheiroperationsindeveloping
countriesishighlywelcomed.Thisisbecause theycanbenefitfromforeigndirectinvestmentand
increase theirinflowinfinancialaccount.Moreover,thisalsocreatesjobsforthe citizen.Asone area
isbeingdevelopedforindustrialisation,itisinevitablethatthe effectwillasotrickle downtothe rest
of the populationthere.More convenientfacilitiessuchasan efficienttransportationsystemand
infrastructuressuchashealthcare, properhousingand shopswill mushroomin the areaswhere
developmentoccurs. The tax imposedonthese multinationalsisalsoasource of revenue forthe
home countryas it can be usedto fundgovernmentdevelopmentprojectsforgreaterwelfare forits
citizens.
Last but not least,globalisationhelpstoimprove the technological andtechnical state of acountry.
As we know,advances intechnologyare one of the mainreasonsthatglobalisationhasescalated.
Developmentsininformationandcommunicationtechnologyhave changedourwayof life,whether
it isat home,at work,at school or at leisure.The internetandthe developmentof digital technology
(computer-basedtechnology) inparticular,have made the mostsignificantimpactinthe fieldof
informationandcommunicationtechnologyinthe pastdecade.The internet,forinstance,has
transformedthe wayinformationspreadsfromanera of ‘snail mail’toan immediate information
available atthe tipsof one’sfingers.Thisisparticularlyconvenientforbusinessesthathave their
operationsoverseasastheycancommunicate easilywiththe regionaldepartmentmanagersand
seniorofficersthroughvideoconferencesandalsoe-mails.
3. The advancementintransporttechnologyhasalsoimproveddramatically.Airlinescannow be used
to transportcargoes andassistin internationaltrade.There isalsohigherconnectivityasmore airline
routesare beingintroduced.Notonlythat,landandrailroadsalsoare more efficientdue tothe
implementationof environmentallyfriendlyandcost-savingcarsandtrains thatalso run onlow fuel
and energysaving.The advancementof seatransport has alsochangedthe waywe do business.
Supertankershave increasedthe scale of trade betweencountries,asthese massive containerships
are able tocarry largerquantitiesof goods,includingoil andgrain.Asaresult,trade has become
increasinglyinternational.
In conclusion,globalisationhasresultedineasiermovementof resourcesbetweennationsandthis
helpthe societyasa whole tobecome more progressive financiallyandsociallyandachievepolitical
stabilityaswell askeepinguptodate withthe latesttechnology.
