Abstract
As globalization continues to be a reality around the world, the rules and context of business activity have been affected. Globalization increases the complexity of businesses and drives managers to be globally oriented. With globalization, people from various cultural backgrounds get together virtually and interact. National boundaries of countries are becoming less relevant. More significantly, the impact of technology and particularly information and communication technology (ITC), is the other characteristic aspect of the 21st century. ITC is essential in today's business and modern globalization as business partners are constantly in communication around the globe. This chapter discusses the effect of globalization and the global business environment as it is shaped by various economic and politic-economic blocks around the world.
TopGlobalisation
Globalisation refers to the rising trade and financial integration of the world economy (Kose, Prasad, & Terrones, 2003). This suggests that governments as well as business people need to open their minds, as the failure of one nation’s economy, does not affect that country’s economy alone, but the entire world in some instances. At the same time, globalisation requires all economic players to consider the whole world as a market to buy from and sell their products. In this century, businesses are considerably made of global markets, together with competition, innovation as well as management processes. As a result, and in some instances, this trend is driving the convergence of individual tastes for worldwide brands at the expense of local preferences. This phenomenon is furthermore strengthening the position of political dominance of the most industrialized nations, and helping the emergence of new political and economic players. It is also resulting in the growth of nongovernmental organisations (NGOs), the integration of capital markets worldwide, the increasing ubiquity of communication and information around the world, and the spread of technology to the farthest reaches of the planet (Tallman, 2009).
The western world and the Europe in particular, have been experiencing rapid social, cultural and technological change over the past few decades (Catenacio, 2003). Additionally, wave after wave of immigration has resulted in diversity being a dominating feature of modern life, whether it is valued for its contribution to a cosmopolitan society, or its impact on critical thinking towards a new way of life. All these facts have implications on how businesses must run and require specific leadership skills and shaping managers’ performance in terms of their duties and responsibilities.
Generally, globalisation has specific implications considering two areas of business: (Nieuwenhuizen & Oosthuizen, 2017).
Globalisation of Markets
In this regard, markets tend to merge in terms of buyer’s choice, which in the end affects all types of products (consumer products, industrial products as well as the services) to be at a certain standard. The global markets offer a number of benefits including reduced marketing costs as well as the establishment of new market opportunities (Nieuwenhuizen & Oosthuizen, 2017).
Key Terms in this Chapter
Economic Blocks: Agreement between countries, usually in the same region, where difficulties to trade are lowered or eliminated between the member states and adopt common economic policies.
European Union: It is a political union of 28 European countries with a vision of establishing common economic, foreign, security, and justice policies.
Politico-Economic Blocks: A politico-economic block is created when countries sign agreement that allows them to politically and economically collaborate, support each other, and adopt similar policies along political and economic lines.
Financial Markets: It is a market where individuals or organizations trade between themselves exchanging securities, commodities, bonds, or stocks.
Global Financial Institutions: Institutions that provide financial relief and financial advice to governments around the world.
Business Environment: The combination of internal and external factors that impact on the functioning of the organization. Those may include the mission and employees, the company’s partners as well as macro-environment factors such as economy, technology, legal among others.
African Union: The African Union is a continental union comprising of all 55 countries of the African continent. It was established in 2001 and launched in 2002. Its main objective is the economic integration of the continent’s sub units.
Globalization: Globalization is a process whereby business organizations, governments, and regional economic blocks are integrated in the global network of trade.