Impact of Globalisation on the Economy


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Question :

This assessment will cover following questions:

  • What are the key factors influencing organisations operations in the global landscape of 2019/2020 as well as in the future.
  • Examine the challenging issues of globalisation and its impact on the economy.
  • How total global strategy is one of the effective method of market growth.
  • Explain the clear definition of globalisation.



Answer :


Business logistics is a group of related activities that all are involved in the movement and transfer of products and services and information that is from raw materials to the finished goods to the consumers. Logistics is very necessary in globalization. Globalization is the process through which different economies interact and integrates in different forms like doing business, integration of different people, government, companies and many other for various types of reasons. In the present essay the major discussion will take place on the different factors which currently the companies who are operating at the global level are facing. Also, the discussion will take place on the different drivers which leads to globalization.


Critically evaluate key factors facing organizations operating in the global landscape of 2019/2020 as well as in the future

Globalization –

The term globalization is defined as the process of integration and interaction among governments and companies of different countries and the process is driven by information technology and investment. There are various types of globalisation such as economic, cultural, technological globalization  etc.

 As per the author Janssens, Maddux and Nguyen (2019) there are various factors that drives the globalization. These factors are divided into various categories such as cost drivers, government drivers, competitive drivers and changes drivers etc. One of the major factor is market drivers. This driver depends upon behaviour of people and structure of distribution channels. Market drivers influences different global strategy levers such as market participation, uniform marketing approach, product standardization offering, integrated competitive moves etc. Market drivers are of different types that are global channels, global customers, homogeneous need of buyers and transferable marketing. Another factor that drives globalization is cost driver. It involves economies of scale. Scale of production can be increased by firms through standardization, participation in different markets and concentrating on core activities etc. It is also having risks like vulnerability and rigidity to disruption.

According to Michalaki and (2015) the new global economy of 21st century has converted the political, economic and social landscape in indelible manner. The new economy is based on a culture of innovation. Economic life cycle analysis refers to the technique that helps companies to evaluate environmental impacts related with different phases of the life cycle of a commercial product, service or process. It is also known as cradle to grave analysis or life cycle analysis. It helps global firms to evaluate the potential impacts that are associated with inputs and releases. It also assists firms to interpret the results that helps business to make more informed decisions.

Further, as different nations undergo economic development and open their markets they will experience new changes in the structure within their labour sector. One of the major assumption regarding globalization is that it will consistently force the economies of different countries to become more efficient and productive as globalization exerts pressure. Further, local conditions majorly influences and alter glottalization's impact mainly in relation with quality and nature of employment. As per different authors, the productivity of an overall economy depends not only on what is occurring within different industries but it is also affected by the reallocation of various types of resources across different sectors. Countries with a comparative benefit in natural resources has the risk of stunting their procedure of structural transformation. These types of risks are aggravated by different policies that permit the currency to become overvalued and place high cost on companies they hire or fire employees.

According to the author Eriksen (2018) there are various STEEPLE factors that affects the companies in both positive and negative manner. Economical factor is also one of the major factor that impacts the operations of companies. For Example – Cost of purchasing raw material from different suppliers. Centralized way of buying raw materials can majorly affects the lower material costs. Further, another factor that influences the operations of firm is storage and transportation cost. Companies should consider storage and transportation that affects major part of revenue of the firm.

Moreover, organizations must consider the benefits and cost related with buying inputs against the location of various suppliers that majorly affects the operational cost of the business. Example – There are situations when it is cheaper for the companies to purchase raw material from countries like Thailand rather than sourcing the raw material from local areas. Further, it is also significant for the firms to consider perish-ability and non-perishable of the goods, timescales, disadvantages and advantages of proximity supply chains. Another factor that affects the operations of firm is differences in skills of labour available in different countries.             Global firms should also consider availability of labour and their skills in various countries. This will affect the logistics and supply of products of the companies. Christopher (2016) critics that there may result in negative impact on the performance of the organizations. It involve poor quality of labour available at lower cost, culture and politics such as trade union., giving away competitive advantage by training offshore suppliers. All the above examples affects the development of globalization in its life cycle. Therefore, all national economies, global firms enters into different stages of depression, recession and recovery within their economic life cycles.

As per the view of Balachandran and (2016) strategic drift is defined as the response of the firm when it goes through a changing environment. There are various unexpected challenges and situations that may arise in the environment at any time when developing and driving strategic changes within the organization. There are various reasons to address strategic shift such as change in demand of consumers, change in structure of market and competition, change in internal strategies and change in macro environment factors etc. Eriksen (2018) critics that strategic shift may lead to wastage of valuable resources, time and money etc. Therefore, it may result into increase in the total cost of operations that may lead the companies far away from gaining competitive advantage.

According to Michalaki and (2015) another major factor related with globalization is various views that challenges or supports the existence of globalization. Total global strategy means the plans developed by companies to target growth beyond its borders. The strategy helps to increase the sale of products or services in foreign countries. Global strategy involves three different types of strategies that are global, multinational and international level strategies.

Lasserre (2017) argues that how the companies ever operate global strategy in a diverse range of countries across the globe. During last half of the twentieth century, the firms have faced various barriers related with international trade fell and wave has influenced companies to adopt global strategies to achieve competitive advantage. There are some industries that have gain advantage more than other industries. To develop a successful total global strategy it is very important for the firms to understand the features of global industries and also the dynamics of global competition. Global strategy resulted in different types of strategies.

Kandil and (2017) critics that global companies faces different challenges while adopting integrated global strategy in different countries across the world. One of the major challenge is resources and management support. IT also include unifying technology, sharing data of customers, cultural norms and local competitive landscape etc. Further, there are various myths related with globalization. One of the major thing is that, globalization is an inevitable process. globalization emerges from set of rules and institutions that are developed by human beings for a particular goal to give primacy to specific economic values and processes and place them above all. Another myth is that globalization will alleviate poverty. But, in half century since this major push began and the world has become poorer and more hungry as compared to previous years. Global economic inequality has increased dramatically as an outcome of economic globalization and present rules of trade.

As per the author Janssens, Maddux and Nguyen (2019) there are possibilities that global firms can adopt a global strategy in different countries across the world in 2019 as well as in the future. There are various companies that are focussing on finding new opportunities for promoting growth of the business. There are different ways in which firms can adopt integrated global strategy to enter into different international markets. It involves calling government to reinstate barriers related with trade or to offer some type of support by becoming a subordinate partner to the multinational company. Further, firms can also adopt different tactics that successful firms have adopted tactics to compete with other companies.

Frynas and Mellahi (2015) has pointed out in their paper that, global strategy refers to the combination of different strategies like international, global and multinational etc. While developing integrated strategy firm has to differentiate between three forms of international expansion that is capabilities, resources of company and international position etc. If, firm is still focussing on domestic markets then the strategies of company outside home country may be seen as international strategy.

According to the author Eriksen (2018) there are various advantages of integrated strategy. One of the major advantage is that it helps to expand the existing base of customers. It is possible to market the products or services to oversee clients with the help of online channels like social media platforms, website of the firm etc. Further, it also assists the company to access the market of foreign countries and provides various opportunities for branding that helps to attract new buyers and prospects. Dwyer (2015) critics that there are various challenges that companies faces while using integrated strategy for different markets. One of the major disadvantage is that firm has to face challenge of foreign culture. Although, global strategy assist management to attract new clients but one of the drawback is the cultural differences between different nations. It can derail the marketing efforts of the businesses. Another major challenge is financial risk. Adopting totalist approach requires significant amount of funds and time.

According to Christopher (2016) firms may also use adaptive strategy while entering into a new market. As an organization enters into a new market it has to cope up with the demographic and cultural differences among various countries. Some companies adopt the model of standardization in which company appeals to universal requirements in its marketing. Alternative to this is adaptation strategy. Under this, companies forego universality in the favour of tailoring the marketing activities to appeal to specific demographic and cultural factors of the people living in the country to promote the goods or services in new market.

Balachandran and (2016) critics that, a new market may respond to the brand messaging of enterprise but not its products. In this situation, companies can choose to change or even manufacture its products to incorporate particular requirements or cultural practices. Example – Businesses that serve the requirements of the immigrant groups may offer packaging that features the native language of that country or develop the product that closely mimics a difficult to import product in common use in that group's domestic country. Full adaptation strategy also proves cost prohibitive as they normally require developing new marketing campaigns from the base. Repositioning may also result into major lon term or short term loss of market share.


From the study of the present essay, it is concluded and inferred that in this highly competitive world for a business to be successful it is very necessary to go for globalization. This is pertaining to the fact that in the business environment the competition is at its peak. Thus, to face it the companies have to increase their operation to other countries as well and for this they go for globalization. However, this is the reason behind the increase in companies going for globalization. The present essay focussed on and discussed in the different drivers which leads to globalization. With the analysis, it was found that different drivers are like market drivers, cost, competition, and government driers. Along with this the discussion also outlined the different factors faced by companies which are operating at the global level. These factors are like structural changes, neo liberal free market ideology and many others.

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