Globalisation can have both positive
and negative impacts on nations and firms.
Ill- effects of globalisation
A As a result of
globalisation, many MNC’s have established well in local market. As a result of
this the activities of domestic companies in greatly affected.
A The products produced by the MNC’s give more value for money
than products produced by domestic companies. Because of this factor, domestic
companies are smashed out of competition by the dominance created by MNC’s. as
a result, many domestic firms are driven to a situation of having to hand over
the majority or complete equity to their foreign partners.
A In many cases the
products produced by these MNC’s companies have completely replaced traditional
/ indigenous products. This has resulted in the total collapse of traditional
crafts and local industries.
A One of the most
common criticisms is that the technology that MNC’s bring in may not be the one
suited to the host country but that
suits the objectives of the MNC.
A Another common
criticisms is that MNC’s dump obsolete technology to the developing country.
A The impact of
globalisation have adverse effects in developed countries like USA. As a result
of globalizations, American jobs and wages levels are severely affected by the
influx of cheap imports and shifting of production to low cost overseas
locations. As a result, unemployment has
become very common in USA.
The adverse effect of
globalisation in USA is as follows
A Millions of Americans
have last jobs due to imports or production shifts abroad.
A Unemployment has
become common in USA. This is because of the fact that lower level management
jobs in USA are now outsourced to India via internet facilities.
A Most of the MNC’s
like Sony, IBM, Philips now have their base in countries like India and China.
Both these countries have a rich source of cheap labour which is very technical
and efficient. So these transnational giants are planning to have their product
developed in India/China at a low cost with the same level of quality delivery
which in usually done in their home countries. Hence more service and white
collar jobs are slowly moving out of USA to India.
A As most of the work
in USA is outsourced to India, the job market in USA has fallen steadily. The
wages in USA job market has hit a rock bottom.
BENEFITS OF GLOBALISATION
1. Foreign capital, if property
utilized, can make substantial
contribution to the economic development of the nation. Example China.
2. Standard of living
can go up as the company earns more from international trade.
3. Increase of
competition from MNC’s will make the domestic companies more quality concious.
(Example) many lcal companies in India are forced to go global as part of their
survival techniques (Couter – competition strategy) from the attack of MNC’s
companies.
4. The Customers gets
more value for money. They now have more
choice to select the best. (For example) The student is requested to enter into
a perfume shop and browse through the list of different brand of soaps
available in shelf. (More choice of soaps to keep ourselves clean).
5. ‘Change’ and
innovative ideas are very common in International trade. What is in vogue today may not exist
tomorrow. It becomes obsolete quickly. Hence continuous improvement of quality of
product is a most in international marketing.
6. More inflow of MNC’s
means scope for more job opportunities, increase of salary & wages.
7. Globalisation also
keeps a tight lid on the inflation of prices of various items. As a result of tough competition, the price
of various products is always kept under check due to global competition.
