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1. Globalization
Globalization theories

2. Table of Contents
1. Introduction ................................................................................................................................2
1.1 Pros and Cons of Globalization.............................................................................................2
2. Globalization theories..................................................................................................................3
2.1 Pro Globalization theory.......................................................................................................3
2.2 Anti-globalization theory......................................................................................................5
3. Globalization and Firms...............................................................................................................6
3.1 Advanced Information technology ........................................................................................6
3.2 Market Research..................................................................................................................6
3.3. Employ Diversity and Training..................................................................................................6
3.4 Multilingual Websites ..........................................................................................................7
References.........................................................................................................................................8

3. 1. Introduction
Globalization is the process of diverse operation and integration between different organizations,
individual and different country’s governments. International trade and investment are the main
drivers of globalization thus it heavily depends on Information technology.Globalization has
affected the culture, environment, political system, social factors and norms. Economic
development and growth along with human resource prosperity are the benefits of globalization.
Open accesses to international markets along with open trade in international and domestic market
have increased the growth rate of globalization all over the world. Advancement in Information
technology and production technology are the two other main factors behind rapid globalization
(joan, 2013).
International organizations like NAFTA (North American Free Trade Agreement), United
Nations, Association of Southeast Asian Nations (ASEAN) and SAARC etc are playing their role
to increase globalization. Due to the rapid changes in how the exchange of goods and services
happen, the world has turned into a global village, and the theory of ‘borderless world’ is in
practice all over the world. There are numerous benefits of globalization; joint benefits are derived
from the specialization production of goods and services thus the cost is minimized along with
providing the best product or service to the customer’s at best possible price. Globalization
condense the social and economic cost as by achieving higher efficiency and effectiveness hence
providing economic growth in developing and under developing countries (Manzella, 1998)
1.1 Pros and Cons of Globalization
Globalization increase wealth and income in the globalized economies as according to a survey in
1960’s globalized economies has growth rate of 4.7% as compared to non-globalized lapping
behind as the growth rate was only 1.4% (Boundless, 2015). The relation between globalization

4. and annual growth rate has positive relation and it demonstrated benefits of economic
development, standard of living and international trade. Globalization increases the standard of
living, economic growth rate, Gross domestic product (GDP) and diverse range of choice for
consumers but small scale firms find it hard to compete to the larger multinational companies in
terms of cost and revenue. Hence it is difficult for small or medium scale industries to compete in
the global market as they have limited resource and no benefit of economies of scale thus
governments have to financially support them (Boundless, 2015)
2. Globalization theories
Different globalization theories are argued all over the world. Few individuals are in favor of
globalization as in their opinion it bring numerous benefits like increase in standard of living,
wealth, income, GDP and per capita income thus according to them globalization benefits exceed
its cons. On the contrary, many scholars and economists believe that due to globalization small
scale and medium sized firms are forced to be cost effective thus they can’t compete the large
firma and are forced to shut down resulting in jobs lose. Hence there are two totally opposite
theories listed below:
2.1 Pro Globalization theory
Pro globalization theory composes the beliefs and perspective that globalization is more beneficial
to the international community thus its advantages overlaps its disadvantages. Globalizations allow
specialization in production of goods and services thus wide variety of goods is available at best
possible price. This give advantage to consumer s they can get maximum monetary value return
on their purchases. A diverse range of goods are available according to different specifications as
change in size, color, packaging, weight and prices give benefit of choice to consumer.

5. According to a study, in 1990’s globalized economies on average has GDP growth rate of 5% as
compared to others non globalized economies lacked with only 2.2% GDP growth (Boundless,
2015). More over another argument believed that according to the per capita GDP growth rate in
the developing countries became wealthier thus globalization benefits are not only limited to
developed countries only. Another study showed that the growth rate in globalized economies in
1960’s was 4.7% on the contrary the non-globalized economies has growth rate of only 1.4%.
(Boundless, 2015)
Globalization has limited government or state invention inform of free trade. Popular transitional
organizations likethe International Monetary Fund (IMF), Organization for Economic Cooperation
and Development (OECD), SAARC, NAFTA and World Trade Organization (WTO) etc have
limited any political interference.Nike, Levi, Coca Cola and other big companies have established
their factories in under developed countries providing employment and somehow increased
standard of living. They pay taxes to the government which in turn are used for public betterment
for example Coca Cola has one of its mega factory in Vietnam. (Smith, 2002)
Globalization has provided the opportunity to be specialized in certain goods thus a economy could
earn foreign revenue through export of goods they have cost benefit for example south Korea
export includes 6.3% cars, 5.5% transmission apparatus and 9% cruise and ships thus rather
producing all kind of products South Korea is producing goods at which it have comparative
advantage and imports other of its requirements (Boundless, 2015).

6. 2.2 Anti-globalization theory
There are many individuals who think that globalization has inverse effects on the entire
international community. Under developed and developing economies are at loss as they can’t
compete with the technological capabilities of Developed economies like USA and UK etc.
Moreover small firms and medium sized firms also close down as they can’t compete the large
multinational companies. Multinational companies have accumulated monopolistic powers in
international markets thus charging their own choice of price and forcing their competitors to close
down.
Large companies manipulate their powers and exert them on under developing economies as a
survey in 1998 of special zones in China revealed that large companies like Ralph Lauren, Nike
and Adidas are paying only 13 cents per hour thus forcing the acceptance of meager wage rate this
affect the income of the workers and their living standard. In America the workers doing similar
jobs get US $ 10 dollar thus globalization affect wage payment in weak economies and results in
depleted living standards. (Smith, 2002)
Another report revealed that According to research of David Landes (1999) the difference in
income per head between the rich economies like Switzerland etc and poor non industrial countries
have risen massively, its about 400 to 1 ratio. Whereas 200 year ago before the globalization, the
difference in income per head between rich and poor economies for example South Asia and
Europe was only 1:5 thus globalization further empowered the rich countries (Smith, 2002).

7. 3. Globalization and Firms
As a firm wants to expand in foreign market, globalization affects its operations. Although
globalization provides numerous benefits a company wanting to expand as more customers,
increased revenue and better expansion opportunities. Increased consumer market gives expansion
opportunity to the firm moreover profitability can be increased.Listed below are the factors needed
to be cater as a company wants to expand in foreign market.
3.1 Advanced Information technology
An advanced Information technology is needed to operate in the foreign markets and to remain in
touch with its suppliers and distributors. Without the technology structure a company cannot
operate in foreign market. Specialized employees would be required to operate the I.T structure.
3.2 Market Research
As the firm is entering a new market, market research is essential as there are huge differences
between culture, preferences, laws and tastes of company’s country and the foreign country thus
market research is essential to minimize risk. To be competitive and minimize the risk of losing
investment before entering into any market a company have to do market research.Identifying and
investigation of potential demand for the company’s products is needed, to secure the sale a
company can innovate its product range according to specification and demands of other country’s
consumers.
3.3. Employ Diversity and Training
Employees are the base of any firm thus when a firm plans to expand in foreign market its human
resource structure changes. The organization’s hierarchy is redefined thus changing span of control

8. and chain of command. Hiring and recruitment from foreign country must be done to expand our
operations. A head manager must be posted to look after the work flow. I.T structure would help
the company to build string communication channel between its divisions (Morse, 2003).
3.4 Multilingual Websites
Online shopping and search engine is increasing thus to manage their overseas business, a
company would’ve to establish their website with a portal for employees to for data sharing. The
consumers with low or no English knowledge could get information about your products thus it
could be a source of marketing of company products. It could be used to gather information
regarding preferences and consumer taste too. (Gordon, 2014)
4 Conclusion
To conclude globalization has changed the trade and production of goods over the past 100 years.
A company has to be competitive and achieve economies of scale to gain cost benefit and operate
in international markets. Competition from large firms has resulted in closer of small firms hence
to capture market shares in foreign market a company has to be cost effective, have advanced I.T
infrastructure and have access to large capital reserves to finance its operations.

9. References
Boundless. (2015, july 21). Benefits of Gloablization. Retrieved from Boundless:
https://www.boundless.com/management/textbooks/boundless-management-
textbook/globalization-and-business-14/globalization-101/benefits-of-globalization-470-3958/
Gordon, J. (2014). How to Prepare Your Company for Globalization. Retrieved from Chron:
http://smallbusiness.chron.com/prepare-company-globalization-78025.html
joan, J. (2013). What Is Globalization? Retrieved from Globalization 101:
http://www.globalization101.org/what-is-globalization/
Manzella, J. (1998, January 1). The Impact of Globalization, Trade Agreements and Emerging
Trade Blocs on U.S. Industry. Retrieved from The manzella report:
http://www.manzellareport.com/index.php/u-s/469-the-impact-of-globalization-trade-
agreements-and-emerging-trade-blocs-on-us-industry
Morse, C. (2003). Anti Globalization (Vol. 2).
Smith, M. K. (2002). Globalization. Retrieved from the encyclopedia of informal education,:
http://infed.org/mobi/globalization-theory-and-experience/