Globalization and the Modern Economy

What is Globalization?

Globalisation is defined as the development and active process, whereby businesses, organisations and institutions, embrace and advance their operations internationally, across fiscal and economic borders.?With the advance in technology and the ease of travel, we find that although fiscal borders are clearly defined, economic borders are eroding.

Accordingly, globalisation may also be granularly defined as the seamless sharing and movement of information, technology, goods and services between countries, manufacturers, service providers and consumers. This value sharing and benefit, may be observed and enjoyed via multiple avenues, such as business, politics, economic, geopolitics, all the way through to technology, travel and tourism, cultural, and media.

Notwithstanding, the above, since the world is even now so integrated, linked and connected, the majority of the world’s population does not give notice to the integrated, and inter-related globalised business environment every single day.

However, the business world is shrinking, and companies must acknowledge that there is massive evolution within the business environments.

Simply put, companies that do not accept and embrace globalisation, as well as start building globalisation structures within their businesses, run the risk of losing their competitive advantage and leverage, which may allow their competitors or other businesses to move in and take over new opportunities which may arise in the global marketplace.

What Are the Benefits of Globalization?

The evolution in the international economic environment, coupled with breakneck speed of globalization, businesses may be impacted in a multitude of ways. However, businesses and organisations which decide to embrace the globalised world and intend on international expansion may find several benefits, which may including the following:

1. Introduction to new cultures and ideas

With access to information and knowledge, there has never been an a more informed or easier time to have exposure and access to foreign cultures, foods, movies, music, and art. This seamless sharing of information and resources, including people, goods, art, and information, is the very reason that an individual living in South Africa, can have Chinese food delivered to their home, whilst listening to the latest American musician, or watching a streamed documentary, filmed in Antarctica.

2. The sharing of knowledge, technology and innovation

Businesses and organisations are connected around the world which allows advancements in knowledge, technological and collaboration to be shared quickly. Accordingly, this also benefits research institutions which allows the transfer and sharing of knowledge, which would ensure that scientific advancements in Europe, can be integrated and utilised in the United States in short period of time.

3. Better economies of scale

By embracing the new globalised world, would allow companies and organisations to leverage better economies of scale, and lower costs to manufacture and produce their products. This encourages better international competition, which may contribute to lowering prices and allowing more options?for customers and consumers.

5. Exposure to new customers, markets

Organisations and businesses which embrace globalization, have the added advantage of broadening their customer base, whereby they may find and expose themselves to new customers and additional income streams.

6. Lowering the costs of doing business

Many countries have development more favourable regulatory environments for businesses and organisations which may look to set-up their head quarters within these countries.?These may allow for better and favourable administrative and tax.

What are the Challenges of Globalization?

Whilst globalisation has many benefits, businesses and organisations must be wary of the risks and pitfalls and other challenges which may be present.?Some of the difficulties that may be encountered by companies may include the following:

1. Recruitment of employees and staff

Staff and employee recruiting may be sited as a major obstacle, where cross border unknowns, creates many challenges for human resources and recruitment teams. There are different employment regulations and laws within countries that must be adhered to.?Furthermore, the skills and experience within countries can vary dramatically and drastically.?These hurdles can be avoided with a clear plan, which includes the right vetting and interview process, coupled with in-depth research into the regulatory environment.

2. Exposure to taxes, tariffs and export fees

The benefit of having lower production costs can be lost, if there are additional tariffs and export costs within export countries.?This can be managed with an in-depth research into the various tariff and export costs that can be reasonably expected be exposed to.?However, companies and businesses must have an bi-annual or annual review policy in place, since regulations in countries are constantly changing.

4. Employee, payroll and regulatory compliance

One other major challenge experience is managing a payroll system across multiple jurisdictions, including the maintenance of employee regulatory compliance and the ever-changing tax laws.

5. Retaining cultural identity

We are finding that in this new globalised world, we are noticing an erosion of cultural diversity.?The bombardment, through the easily accessed international streamed movies, social media platforms, and access to information, cultures are losing their distinctive features which make them unique.?This is exacerbated by the perceived success and accomplishments of certain cultures, and the desire of other countries to emulate, or even mimic and imitate them.

How Globalization Changes Your Daily Businesses Operations

The seeking of benefits and mitigation of challenges encountered whilst embracing globalisation has changed how businesses function and operate.?Where a company or organisation makes the decision to commence undertaking business trade and operations globally, the business enterprise has to prepare to change corporate structures and internal processes. The organisation must embrace as structure that develops agility and scalability which allows better adaptability and a quicker reaction time.?This would assist better integration into new markets and make their global organisation more comfortable and acceptable to a symbiotic and collaborative working structures.

Companies see many aspects of their businesses change once they enter the global marketplace. For example, globalization makes the workforce more diverse. This diversity is an overall positive change, but it creates some challenges, such as language barriers and differences in cultural expectations.

Beat your competitors, Embrace the Global economic environment, win new markets with the Right Partner.?In the recent past, costs and ever-changing regulatory hurdles and challenges were stumbling blocks for companies that were seeking to embrace the international business environment.

However, by partnering with a globalization expert, these challenges are identified, and plans are developed to mitigate risks, without stifling exponential international growth.

The right partner assists the organisation to develop the correct Entry, Doing Business and Exit model, before there is any capital outlaid for the global expansion.?Furthermore, it is imperative that the global expansion partner research the ideal TESCM model for the organisation and reviews it annually for its relevance.