Impact of Globalization on International Business Practices

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Acknowledgement

This research would not have been possible without the support of my research supervisor and family. So I would like to thank them for their utmost support throughout this research.

Declaration

I hereby take an oath that the content of this research is my own unaided work and it represent my personal ideas and not of the university. I also declare that this research has not been submitted earlier for any educational purpose.

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Impact of Globalization on International Business Practices

Introduction

According to Drucker (1995) globalization has developed from international trade. Friedman (2000) stated that the world has become progressively interwoven. He further states that globalization is “the inexorable integration of markets, nation-states and technologies to a degree never witnessed before in a way that is enabling individuals, corporations and nation-states to reach around the world further, deeper and cheaper than ever before” (p. 9).

All this is conducted through government trade agreements and communities, global organizations, multinational enterprises and cross-border alliances through joint ventures, international mergers and acquisitions. Even though, most nations of the world are part of the WTO, which has advocated for and embraced globalization, the world is only partially globalized (Schaeffer, 2003). After the significant gains of the 1990s, the cross-border flows necessary to sustain a global economy continues falling; and fewer than ten percent of the world are actively participating in the consumption of global goods and services (Schaeffer, 2003).

The meaning of this word has resulted in ambiguous positions and interpretations in different ways. Some authors have associated this term only to the economic sphere, considering a process involving several national economies into one global economy. But others agree that globalization is present in the technological activity, commercial, cultural and social, among other areas.

The truth is that the complexity of this has forced entrepreneurs to undertake new challenges to attract other customers. The emergence of globalization is a process that has been developing hand in hand with development of communications and technology.

According to the Real Academia, globalization is "the tendency of markets and businesses to increase, reaching a global dimension which transcends national borders." (Schaeffer, 2003, pp 25-185) Some people have objected to the benefits of this process, justifying this phenomenon favors only the most developed economies and countries. Others however, see it as a paradigm shift in which we can now link them in real time with a person who is the other side of the world.

Aim of the study

The main objective of this study is to analyze the impact of globalization on international business.

Literature Review

Globalization has been evolved from international trade, as it was called by Drucker in 1995. The global economy is now facilitated by trade agreements for various regions of the world, such as North America Free Trade Agreement (NAFTA), the Caribbean Community (CARICOM), and the European Community (EC); Multinational Enterprises (MNEs), mergers, acquisitions and joint ventures across borders, and where the global economy is comprised of the flow of goods, services, people, money, information and ...