Saturday, March 17, 2012

Research Paper on Globalization

Research Paper on Globalization

The process of globalization has defined the development of the world economy during the last couple of decades. Basically, this process affects the world at the present moment as well and, what is more, the impact of globalization steadily grows stronger. At the same time, the impact of globalization is not limited by the economic sphere only. Nowadays, it is obvious that even though the process of globalization was stimulated by the growing economic cooperation between countries, at the present moment economic integration of countries contributes consistently to the political and cultural integration. As a result, countries start to form international alliances and unions, such as the EU, which overcome national borders. Moreover, the number of international organizations, such as WTO, that facilitates economic, political and cultural relations between countries is constantly growing.

On the other hand, the process of globalization produces a profound impact not only on the development of countries but it also affects the development of companies. One of the major characteristic of the process of globalization on the corporate level is the emergence of multinational corporations that play the leading role in practically all industries and nowadays they are viewed as leading powers in the world economy. At any rate, it proves beyond a doubt that it is multinational corporations that, to a significant extent, define the economic development of many regions, the implementation of technological innovations, scientific researches and progress at large.


Such a shift on the corporate level naturally affects the role of nation states, which also changes consistently. In fact, nowadays, it is possible to estimate that in the result of economic development, technological and scientific changes, new political trends, the world is entering a new stage of globalization, which effects cannot be predicted absolutely precisely, but still it is possible to forecast what the world should expect in the future under the impact of the new stage of globalization. In this respect, it is possible to refer to the book “The Next Global Stage” written by Kenichi Ohmae, in which the author attempts to forecast the future development of the world under the impact of major global trends that could be observed even nowadays.

On analyzing the future perspectives of the process of globalization and the world development, it is necessary to underline that the economic development will be determined by four major dimensions: communications, capital, corporations and consumers (Ohmae, 85). Basically, even nowadays it is possible to observe the shift to the growing role of these four dimensions that produce a significant impact on business decisions, while in the future their role may become determinant. In this respect, it should be pointed out that the development of communications is, to a significant extent, defined by the development of new technologies which provide larger opportunities for the development of communications. One of the major characteristics of the contemporary communications is the facilitation of the process of communication and elimination of geographical boundaries. What is meant here is the fact that the contemporary communications provide ample opportunities to maintain contacts between people in different parts of the world. In actuality, companies can use contemporary communications to develop links with their business partners or affiliates.

In the future, the role of communication will grow even more because the process of globalization has practically eliminated boundaries between countries. Therefore, companies got ample opportunities for the development of their business in different parts of the world but, in order to provide the effective work of its affiliates or maintain the permanent contacts with business partners. In practice, this means that communications are strategically important and may play the key role in the international market expansion of a company, for instance, because, being deprived of effective communications, a company will more likely be doomed to failure. Obviously, communications can provide a more effective system of control over the production process that is important for the maintenance of the high quality of products and services. For instance, companies based in well-developed countries can develop their business in developing countries where the qualification of the labor force is consistently lower. Consequently, such companies need to control the production process and communications are extremely helpful in this regard.

Moreover, it is obvious that knowledge and information are major factors that determine the commercial success of any company, especially companies focusing on the implementation of innovation. At this point, it is necessary to underline that communications contribute to the more effective sharing of knowledge and information between different units of a company. In actuality, it is possible to develop projects, involving specialists that live and work in different parts of the world and, due to the contemporary communications, they can interact effectively in spite of their geographical location.

Also, logistics is one of the key elements of the stable and effective functioning of contemporary companies and communications contributes consistently to the improvement of logistics, while in the future it will play even more important role. In this respect, it should be said that the development of e-commerce, for instance, makes the shipping and logistics practically impossible without the use of contemporary communications and in the future this trend will grow stronger.

The capital is traditional an important, constituent element of the contemporary business and, according to K. Ohmae, capital will be of a paramount importance in the process of business decision making in the future (131). In fact, the free movement of capital that could observed nowadays indicates to the perspective of the large progress of direct foreign investments, which increases the cooperation between countries and facilitate consistently the penetration of companies into foreign markets. Even though the effects of the free movement of capital in the form of investments may be quite controversial for local economies, the development of the future economy is hardly possible without it. On the one hand, significant investments of multinational corporations can undermine the position of local companies, but, on the other hand, they stimulate the development of the local economy through the partnership with the local suppliers, partners, etc. The major trend that could be observed in the movement of capital even nowadays is the growing cooperation between developed countries. Investments of companies based in the US, Europe and Japan constitute the dominant part of the global investments. In such a way, the capital tends to the internationalization and makes economic links between companies located in different countries stronger.

Similarly, the role of multinational corporations grows stronger too because in the contemporary world they play extremely important role and the major part of all foreign investments are made by multinational corporations. In the future, their role will remain very significant. At the same time, K. Ohmae warns about the necessity of the change of traditional approaches to business development used by companies (147). In fact, he does not give some direct recommendations concerning the most effective ways of the development of business in the future, or the most effective management strategies he still give insight into the future of the process of globalization that will inevitably effect the strategic development of companies.

In this respect, it is worth mentioning that the behavior of consumers will still be very significant and it should be taken into consideration by companies that are entering new markets. To put it more precisely, K. Ohmae indicates to the necessity of the adaptation of business strategies to the local, specific cultures (168). The process of globalization will increase the significance of the ability of the company to get adapted to the multicultural environment. In fact, companies will need to be able to work in different cultural contexts that means that they should be able to meet the needs and expectations of consumers that have quite different socio-cultural background, traditions, values, etc.

In fact, consumers play traditionally important role in the functioning of companies. This trend may be easily traced at the present moment as well as in the past. The substantial difference that companies should expect in the future is the mentioned above cultural diversity they should get ready to adapt to. In other words, they should develop flexible strategies of their business development in order to make their adaptation to local markets more effective and easier. At the same time, one of the major trends that will define the future economic and, in all probability, political development of the world is the decreasing role of nation states. In this respect, it should be said that K. Ohmae lays emphasis on the fact that the significance of nation states will steadily decrease, while regions will become determinant in the economic development of the world (207). What is meant here is the fact that, as K.Ohmae attempts to forecast the future development of the world economy, he reveals the trend to the regionalization. Basically, the nation state will be less important compared to certain regions, which may occupy either a part of a country or stretch out over the territory of several states. In this regard, the researcher draws the example of the contemporary China, which economy tends to regionalization even nowadays, to the extent that, in spite of the existence of the authoritarian political system, the country is able to develop its regions the economic power and potential of which varies dramatically. For instance, Dalian in China may be viewed as an example of one of such regions. On analyzing the future development of the world, K Ohmae indicates to several regions, which are particularly perspective to him, such as Hainan Island, the Baltic Corner, Petropavlovsk-Kamchatsky in Russia, Sao Paolo in Brazil and some others (224).

Basically, he underlines that these regions will be particularly attractive for the economic development and may become major economic centers in the future. In fact, they may be compared to contemporary economically significant regions. The trend to regionalization will accompany the natural process of the decreasing of the significance of the nation states. Their traditional protectionist role will become weaker and absolutely irrelevant to the objective reality of the future globalized economy. If nowadays, nation states can form trading blocs, influence the economic development of the entire country, than in the future the role of regions will more likely to outweigh the significance of nation states and trading blocs. In actuality, there will be no need in the development of protectionist policy in terms of nation states because even nowadays fiscal barriers between countries disappear. In the situation when national economies are actually open and are not protected by any fiscal barriers, it will be quite logical that regions that are economically advanced or that have larger economic potential will develop faster than backwardness stricken regions. It is possible to name different factors that can influence economic development of regions, such as intellectual and educational potential, qualification and the cost of the regional labor force, natural resources, etc.

In such a situation, K. Ohmae argues that the proper geographical entity that should be taken into consideration in the process of business decision making is region, which, according to the author, should have at least ten million people and be a part of a country (226). Consequently, it is possible to forecast the emergence of new economic centers and the further development of the existing ones as economic centers in global terms which are open for all companies of the world and the global capital may be accumulated.

At the same time, the trend to the regionalization will make the role of nation states absolutely insignificant. In fact, the current integration of European nation states into the EU may be viewed as evidence of the decreasing role of states in the world politics and economy. In the future, the protectionist functions of the nation states will become absolutely irrelevant and, therefore, paradigms for making national political and economic policy will be obsolete. K. Ohmae argues that even nowadays national political and economic policy can hardly encompass solutions and money flows involving other countries.

Furthermore, the competitiveness that grows stronger in the contemporary world under the impact of the process of globalization will remain one of the central factors that will define the economic development at large and development of businesses of particular companies. Nowadays, it is possible to trace the link between globalization and growing competitiveness because companies, especially large multinational corporations got larger opportunities to enter new markets and develop new businesses. At the same time, the market expansion will be one of the main priorities in the economic development of companies because it can provide them with ample opportunities not only to enter new markets but rather to gain a larger share of the global market.

On the other hand, the future competitiveness will be, to a significant extent, defined by the development of more common platforms, which do not obligatory refer to economic sphere directly. In fact, K. Ohmae underlines that such platforms as Windows, Internet will become more and more significant and their global spread will enhance the competitiveness and make the position of companies more equal or competitive. At any rate, it can provide them with the same platform on the basis of which they could develop their businesses and it is their strategies and decisions that will define the extent to which the effectiveness of using these common platforms will be high.

Among other common platforms, it is possible to single out English. At first glance, language has little in common with the contemporary business, but in the future, English can become the universal platform, the natural basis of communication between people. In this respect, it is necessary to emphasize that the use of common language will contribute to the elimination of cultural barriers and, therefore, it will increase the communication and interaction between people and companies that will naturally contribute to the more effective market performance, increase productivity and effectiveness of work.

Finally, it should be said that K. Ohmae indicates to the significant impact of the changes, which are occurring and will occur in the borderless world in the result of the further development of the process of globalization, on political and economic leaders (294). He underlines that global changes will need the change in the traditional leadership style and political and economic leaders should take into consideration all the changes that could occur in the future and react respectively to the changing environment in order to take really effective decisions.

Thus, taking into account all above mentioned, it is possible to conclude that K. Ohmae creates a noteworthy forecast of the future development of the world. To put it more precisely, he attempts to forecast how the process of globalization will affect the world and business. In fact, the changes suggested by the researcher are extremely significant and can change the traditional view on economic and political development of the world completely. Obviously, in the condition of the increasing integration, elimination of geographical boundaries, decreasing role of nation states and emergence of closer economic integration and cooperation, along with regionalization, the change in consumers’ behavior, needs and expectations, will inevitably lead to the change of management and leadership style in both politics and economy..
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