This paper discuss about the impact of globalization toward country, some attention are being explain regarding the forces associated with globalization and the impact of these forces on different stakeholders. There are several forces and impact that can influence the international management in term of process and decision. The forces and impact have been identified, the international management can use this information to improve their management process and also to analyze their decision.
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Globalization is the interaction between different parts of location and make them interdependence and integration in term of economies, societies and cultures. Tom G. Palmer of the Cato Institute defines globalization as “the diminution or elimination of state-enforced restrictions on exchanges across borders and the increasingly integrated and complex global system of production and exchange that has emerged as a result”. The result of globalization will reduce the trade barrier for business to enter the new market and this will increase the economic transaction and business. the existing international body institution such as World Trade Organization (WTO), European Union, Asian Free Trade Area plays the big role in encourage the global activity.
3.0 History of Globalization.
The history of globalization is still in subject or issue on going debate, there no correct in absolute in story of when the first of process of globalization. But civilization are being record, we can know the process of the starting point on globalization by referring and analyzing the history of civilization. The example of early civilization that make initial stage of globalization is Roman empire, the Parthian empire, and Han Dynasty.
3.1 Initial Stage of Globalization
The development of Silk Road bring is a important history that create the globalization process at that time. The trading between Roman Empire, the Parthian empire, and Han Dynasty have made the creation of Silk Road.
Another thing that give a important in initial stage of globalization in during the Islamic Golden Age. The Muslim traders and explorers bring a knowledge and technology, crops, and trade to the old world. Moreover, the expansions of Islam make Arab language being learn by other culture and to fulfill the hajj in created the cosmopolitan of culture.
3.2 Modern Globalization
The major starting for globalization in this new era is after World War 2 when the country leader start to interdependent with another and they want to avoid the possibility of future war. The creation of Bretton Woods Agrement has give a significant effect toward globalization. This agreement has result the creation of the International Monetary Fund which now becomes the World Bank, International Bank for Reconstruction and development, and International Trade Organization (ITO) that create the General Agreement on Tariff and Trade (GATT) then becoming World Trade Organization (WTO). This factor is the reason for current globalization, low tariff and barriers provide by WTO and other trade organization, the economic freedom after the dissolve of Soviet Union and faster transportation and easy to communicate developed more globalization process.
4.0 International Management Practice Toward Forces of Globalization.
The international management is process of applying management concepts and techniques in multinational environment and the forces of globalization may influence the process of international management.
4.1 Main Forces Of Globalization
There are the main forced the associated with globalization such as technology, trade and integration, offshoring and outsourcing, migration, transportation, and environmental pollution.
The major forces that enhance globalization is the advance technology, the creation of computer, internet revolution make the way be more faster, connected, and information. The internet social networks such as twitter, facebook, and web 2.0 give people easyly change information around the world. China examples have a significant impact of technology in term of innovation, research and development. The advance technology of China made that country among the competitive country in the world.
4.12 Trade and Integration
The conflict between the incline regionalization of world trade, and financial integration has sparked a global pattern may lead to a relationship between regionalism trade and financial globalization. High economy integration not only will encourage the flow of business but it will also improve the integration of financial markets. This can explained by the economic dependence between the members of the block able to replace the direct capital flows to consolidation quotes assets between members involved. Factors including an increase in the legal correspondent capital markets, monetary policy compatibility, and coordination administration of foreign exchange rate to stabilize the edge competitive between members. European Union Example of high economic integration which already achieve the level of economic union.
4.13 Offshoring and Outsourcing
Offshoring is a one of type of outsourcing that give a meaning which is relocation the business process of company in another country. Business will subcontracting or contacting the part of their process to another parties, the relation of both parties increase the transfer of knowledge, information, and expertise that lead to global relation between country. Such as Apple that not have any manufacturing, thus they us a semiconductor from Samsung to manufacture their product.
The poor economic condition, work opportunities in foreign country make the citizen migrate to another country to have a job. The developing countries have to migrate their workers to develop country where they can get the international expertise and better national income. Another factor the encourage the migration in the multinational company the have the branches in around the world need to transfer their worker to another country, this is call expatriates or impetrates. The low barrier of labor mobility such as Europe also encourages people to migrate.
The transportation make globalization more efficient with the movement of trade, resources, and supporting the movement of passenger and freight between nation. The infrastructures such as road, air road, sea road, give an important to giving an efficient transportation. In Singapore, they have a big port of loading terminal for shipment. This helps the Singapore economy to improve and be competitive to another country such as Malaysia or Indonesia.
4.16 Environmental Pollution
Globalization contribute a lot of environment pollution, this will affect a negative impact of ecosystems. There are direct and indirect effect on environment, the direct effect on environmental is happen during the trading between business transactions such as oil spills, and introduction of exotic species. The indirect effect is such as politic, income per-capita, and change oh policy. The heavy industry in Ukraine have made that country one of most polluted place in the world. During the industrial revolution, Europe faces a problem of air pollution, However, Europe country now days are more concern for the environmental.
4.2 Impact of International Management Practice Toward the Globalization Forces
The international management need to adapt all forces on global forces, the advance technology nedd to gein by management to be more competitive, there a more opportunities to create trade and integration with other global company and they have to take that opportunities, offshoring and outsourcing of subproject or process to other parties in other country to make business gain the advantages such as lower resources, lower material and gain low production cost and increase profit margin. Business can have the verity of human resources form different cultures as result from migration. The high quality of transportation and infrastructure can help management to make the process more efficient and effective, and lastly International management have to control the environmental pollution that can be the result of any business activity by the management.
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5.0 International Management Practice Toward impact of Forces On Different Stakeholders.
International Management is vulnerable to the impact of globalization, globalization creates much impact to the world and either it positive or negative can effect the international management.
5.1 Impact On Different Stakeholders
The impact include of these on different stakeholders Such as the domestic companies, Employment, farmer, indigenous cultures, and different demographic group within that country.
5.11 Domestic Company
The lower trade barrier, easy acces of foreign market bring a negative impact for domestic company. The domestic company that have a limitation in term of expertise, financial or any weakness will not survive in the competition with strong foreign company. In Singapore, they don’t have any obligation to any foreign direct investment from foreign company. Thus, the local companies suffer the most and have to struggles to compete. In a positive side, this brings advantages to customers that receive a high quality product or services from the promotion.
The high globalization give a positive impact to employment, the physical investment in local market create job opportunities for local people. This will change the standard of leaving for local people by the increasing of income per-capita. However, the high level of migration that we discus before give a negative impact to local people, the migration they have a high skill and more experience will have more opportunities compare to local employee this increase the level of competitiveness in term of employment.. In USA, the level of employee turnover is high, the worker being analyze based on the performance.
The globalization is presumed lead to increase the availability of food grains, the low trade barrier will bring flexibility in term of food security, the poor country or poor rural area can enjoy the access of food, and the revenue from crop will earn the foreign exchange. However, the assumption is otherwise. The study by Dr.Deva in India show that, Globalization has increased the migration, the farmers has changed their occupation by working in other country. This effect the decrease the production of crop, the men as leave and only women are forced to farming. In 2003, it was reported in New York times on September 2006, the effect of this phenomena lead more than 17,000 Indian farmers commit to suicide.
5.14 Indigenous Cultures
Globalization can lean both negative and positive impact, if we look at positive impact, we can see the globalization create the work opportunities to indigenous cultures by transferring the local employee, and migration. This will make the societies adapt or acknowledged another cultures and globalization promise the economy growth to a country. In the negative side, globalization made the culture loss their own identity. The social, political and economy have been control and being dispute, the business negotiation, multilateral trade, and trade off made to bring benefit to country. However, the indigenous culture is in a position where much damaged have being made such as their land have been open to privatization, the Farmer who loss their land have to find a work and life in United State (Blaser, 2004, p245).
5.15 Different Demographic Group
Demographic group is a characteristic of the societies or population, it are formed by gender, age, race, income, achievement and political. The globalization made the changes in demographic group might be lead from migration or offshoring and outsourcing. The major changes is raising real income, the free trade and low trade barrier give a cost advantages in any business. China is one of country that gain much benefit after joining World Trade Organization(WTO). Currently, China have a greater attraction in investment and any trade businesses. The globalization forces government to changes their policies, again the World Trade Organization (WTO) encourage to lower trade barrier and lower tariff among the members. Asian Free Trade Agreement (AFTA) members has agreed to reduce the tariff to 5% among their country members.
5.2 Impact of International Management Practice Toward Impact Of the Globalization Forces
International management have to make decision to avoid any negative impact and gain a positive impact. The domestic companied might be the main competitor in the business or the management can choose to have a joint venture or the licensing with the domestic company in particular country. It is advisable to international choose use polycentric strategy to get a awareness and employ the local manager to give more knowledge about their culture. The Foreign direct investment may lead to increase the host country income and may disturb their socioeconomic or ecosystem, International management have to make decision wisely before enter the country.
The Globalization can give a positive and negative impact to economy and different stake holder to Control the impact of globalization, some action must be done such as, the country have to protect the local company by impose the trade barrier in the government industry. Government also has to introduce a regulation to control foreign company. The local companies have to be competitive to compete with foreign company. Thus negative effect can be control by the government and local company.
To reduce the environmental pollution, it is advisable to management to give more concern and produce the green product. A government also can create a regulation to control the pollution that create by globalization.
A migration may lead to low production in rural area, a farmer may loss worker and less people want to produce the crop. The high technology achieve from globalization may help the local farmer and increase the production of crop. Thus, the continues research and development have to be made in order to create more revenue to the crop industry.
Globalization cannot be stop, the country and employee have to be competitive in order to compete in global. The interdependency among country will lead to greater impact in term of revenue, trading and relation. In this modern era we have to be global and go global, and there is high competitiveness in global level. The thing that international must have is competitive advantage to being differ to another competitor. International Management have to prepared by adapt the forces and impact of globalization. The positive and negative effect of globalization can be control by the wise decision making by international management.