Jacob Harry

Professor Henderson
IMS 3310.0E1
Globalization
Every day, the world becomes more interconnected, in large part due to the easier flow of
technology and information. With this growing connectedness, the economies of each nation are
becoming more intertwined, and various cultural and financial boundaries that may have existed
before may not necessarily be around forever. Globalization has proven to be both a boon and a
hindrance in many ways, and cannot be dismissed as one-hundred percent positive or negative.
In order to appreciate this complex facet of business, we must address both the pros and cons of
globalization and its effects.
There are multiple benefits that a business can reap if it happens to be in an economy that
largely embraces globalization. When a given nation trades with another, they will (at least
theoretically) be able to offer one another valuable goods at a more affordable rate (versus how
much they would have to pay to make that same good themselves). For example, an automobile
manufacturing company may be headquartered in a country wherein rubber is abnormally
expensive for one reason or another. If they are forced to use expensive rubber that is made in
their home country, they will have to cover the cost somewhere, likely by raising the price of the
car itself, which in turn harms the consumer. However, globalization has the potential to lessen
this problem by allowing that same company to utilize rubber that is imported from a nation
where it is far more efficient and therefore less costly to produce. In turn, this company may be
able to offer their automobiles to nations that are not as far along in terms of manufacturing.

Because of comparative advantage and strategic trading, they stand to produce the same car at a
lower price, which allows them to sell it in less developed markets at more affordable prices. In
other less common cases, a valuable resource (like metals that are difficult to find, or crops that
can only be grown under the most ideal conditions) may simply be impossible to acquire in a
given country or region, which necessitates importing anyway. Because of importation, a nation
that would otherwise never have access to a good or service can now enjoy the benefits that
come with it.
In addition to the cost saving possibilities for individual businesses, globalization has a
broader effect on countries themselves when they pursue a path of globalization. Globalization
has been rather conclusively linked with an overall boost in the quality of life and lower rates of
poverty for nations that have more trade-friendly policies. Under less restrictive conditions,
critical goods and services like pharmaceuticals and crops can be offered to nations that
otherwise like the infrastructure or means to make these products themselves. If a country excels
at producing penicillin for example, they can offer it to nations who are less capable of producing
it. As a result, these nations will have an easier time of fighting illnesses, which raises the overall
quality of life. For individual businesses, it benefits their employees not only in terms of
financial gain, but in terms of living a better life. As the textbook points out, many countries
(such as Myanmar and Syria) have not embraced globalization, which has hurt them severely. Its
no coincidence that many of these nations are among the poorest in the world, as their insularity
makes it much harder for them to keep up with the rest of the world in terms of both
manufacturing and technological innovation.
However, for all of the benefits of globalization, it is not without its drawbacks. Chief
among these issues is one of jobs. When a nation opens itself up to trade with fewer restrictions,

this usually has a positive effect on unemployment overall, but certain industries are typically hit
harder than others. Industries that are not as far along (or outright obsolete) can suffer heavily
because they are unable to handle a sudden burst of international competition. If an already
struggling automobile company suddenly has to face 10 major competitors from across the world
instead of just 3 domestic competitors, the probability that they have to cut back on their
workforce or outright shutter their doors rises significantly. This same principle also applies to
industries that are not necessarily struggling, but simply havent gotten off the ground yet, so to
speak. If a tech company from a less developed nation is doing modestly well in their own
country but then has to compete with an innovative and massively successful company like
Apple or Microsoft, it is very likely that they and their offerings will become obsolete in the
minds of the consumers.
Furthermore, there is a discrepancy among individual nations with regards to who
benefits the most because of globalization. This effect also applies on a smaller level, wherein
some businesses thrive because of less restrictive trade and economic policies, while others are
significantly hurt by the very same practices. While some nations and regions have exceled in
some aspects of manufacturing and innovation, others have lagged behind, for one reason or
another. This may be due to the resources that it actually able to offer a given nation may
simply not have much that can be offered to potential trading partners, and as a result is left out
in the cold. This problem can also arise because of less quantifiable factors, such as the history of
the nation, its relationships with potential trading partners (is there any historic hostility or
cultural clash between them?), and the business environment that it has had for a while. Other,
less adaptable countries may find it difficult to compete in industries that are by their very nature
evolving rapidly. When a country or region is unable to meet the demands set by other nations, it

may turn off potential investors and trading partners, which further causes the nations economy
and its businesses to stagnate and decline at an accelerated rate. A one-size-fits-all method of
globalizing simply cannot work equally for every single country, as no two of them hold the
exact same political, economic, or social conditions.
Perhaps one of the biggest drawbacks to globalization, however, is the security aspect. By
opening up trading policies with other nations, a given country runs the risk of exposing itself to
the less respectable and more criminal elements of the business world. Predatory or otherwise
unethical groups (whether they be profit or politically-motivated) may find it easy to take
advantage of a countrys laws, corruption, or overall political climate to steal from or otherwise
undermine domestic businesses if sufficient restrictions and protection policies are not put in
place. As we often see in today, intellectual property theft and counterfeiting technology are
major problems, just as business espionage has the potential to cost companies incredible
amounts of money.
Ultimately, it is not accurate to state that globalization is either a perfect practice or
utterly without merit. As with many aspects of business, globalization boils down to a set of
tradeoffs. Any nation or region that seeks to globalize should consider its unique circumstances
(where it currently is in terms of stability, what it can offer the rest of the world, and what it risks
by doing so) before it seeks to significantly alter its trade or economic policies. A careful balance
must be maintained between financial and security concerns if a nation is to see the full benefits
of globalization while avoiding its inherent pitfalls.