How Worldwide Change Affects Globalization in Business

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  • 0:02 Background on Globalization
  • 2:23 How Global Change…
  • 4:08 Lesson Summary
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Lesson Transcript
Instructor: Beth Loy

Dr. Loy has a Ph.D. in Resource Economics; master's degrees in economics, human resources, and safety; and has taught masters and doctorate level courses in statistics, research methods, economics, and management.

In this lesson, we'll explore globalization with definitions and examples. We'll also analyze how global change relates to and affects globalization in business.

Background on Globalization

Globalization is the marketing, production, and distribution of goods and services on an international scale. As technology, transportation, and communication systems expand, financial and trade regulations adapt. The integration of world markets, exchange of population and ideas, and the creation of international institutions have given us a great opportunity to be successful in global markets.

Globalization is an economic term that describes the seamless exchange of wealth among countries. It's created when certain worldwide changes take effect.

Economic markets expand: Being able to buy and sell quickly through foreign markets means that countries with open borders have more opportunities to recruit businesses and improve their employment and growth rates. However, if a country previously protected an industry from competition, opening up the economic market for that industry may prove detrimental. A home country may not be able to compete with lower-priced imports. Either way, the market for a company's goods and services has the potential to expand internationally.

Trade barriers are reduced: Lowering or even eliminating trade barriers results in more imports and exports. This means customers have more choices. The competition should drive prices down. Customers benefit from more choices but may need to carefully scrutinize these products for lower quality. But for countries that make a higher-priced substitute, the effects could be detrimental. Countries that make these lower-priced goods would get an economic boost from exporting. Reducing trade barriers is a huge incentive for businesses looking to expand beyond their borders.

Instantaneous communication becomes commonplace: Being able to communicate from almost anywhere in the world using a tablet or smartphone means anyone can be reached from afar. You can make deals, communicate in real-time, have meetings, and delegate as needed. For example, employees in Japan, Russia, and the United States can do a conference call or talk with a stream of quick text messages. Removing technical obstacles to communicating remotely makes it possible for employees to talk at any time of day, and this makes it easier to work effectively in any time zone.

It's important to remember that there are drawbacks that come along with globalization. In particular, world changes can have some dramatic effects.

How Global Change Affects Globalization

Global change is the impact of human activity on the earth's system, which includes anything that affects our land, water, and air. Some of the most common issues we hear about are environmental, health, and social. It's important to remember that scientists disagree on some of these issues and their impacts, but most agree that these worldwide changes do effect globalization. Let's look at a few examples:

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