Running head: GLOBALIZATION ON BUSINESS
Why is Globalization Necessary on Business All Over the World
ELS La Verne
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GLOBALIZATION ON BUSINESS
Abstract
Since the 1990s, people’s lives have changed dramatically because the borders among countries
have been disappearing. This has caused globalization. Especially, the alteration of the business
style is remarkable. This research paper supposes that globalization is necessary on business all
over the world through three viewpoints: economy, culture, and the social network. Then, this
research refers to the good impacts that globalization has on business in the world.
Keywords: globalization, business, economy, culture, the social network, free trade, soft power,
Facebook
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GLOBALIZATION ON BUSINESS
Outline
Ⅰ. Introduction
Thesis Statement: Globalization is necessary on business all over the world through three
reasons: economy, culture, and social network
Ⅱ. Economy
A. The step of the trade
B. The free trade and globalization
C. The price competition in the market
D. The new entry of companies in developing countries or rising nations
Ⅲ. Culture
A. Folk culture and Western culture
B. Soft power and globalization
C. Creation of new market
D. Reconfirmation of each country’s strong points
Ⅳ. The social network
A. The history of information technology
B. Globalization and the birth of social network
C. The infiltration of social network
D. The social network marketing and management strategies
E. The new type of product development
Ⅴ. Counter point
A. The risk of the social network
B. The movement for preventing cyber terrorism
Ⅵ. Conclusion
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Why is Globalization Necessary on Business All Over the World
Introduction
A long time ago, a sushi bar was born in Japan. Since then, sushi has been protected for
about 400 years; sushi is a part of Japanese traditional culture. One day, an old man who ran a
small sushi bar was pressing pieces of sushi into shape for his regular customers as usual. He had
been thinking sushi was very important for his culture as Japanese pride, so he had decided to
keep the sushi. A regular customer talked with his colleague that sushi was becoming popular all
over the world. The old man was very surprised because he did not know why sushi as a Japanese
traditional thing was famous in the whole world. After he finished his job, he asked his daughter
about the reason of this movement. His daughter searched it by using the Internet and answered
his question quickly. She said it was true. In fact, since the 1970s, people all over the world have
been recognizing the sushi exists in Japan and it is very healthy; at the same time, the boom of
healthy food has been expanding around the globe. As a result, sushi became famous and people
in the whole world began to eat it.
This story represents “globalization.” According to Web Finance, Inc., (2012)
globalization describes the process of making the connection among countries strongly and the
interaction of the markets and businesses in the whole world. This process has been improving
quickly; as a result, it helps people visit other countries, communicate with other people easily,
and work internationally. In other words, people can have a lot of goods and information jointly,
become aware of several countries’ cultures, and make relationships with other people;
globalization makes people’s lives convenient and forms the base of their societies. Especially,
the style of business has changed dramatically and worldwide businesses are tied to each other
through globalization. World businesses are joined to one another closely and are connected to
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produce new possibilities of business in the world. Therefore, globalization is necessary on
business all over the world through three reasons: economy, culture, and social network.
Economy
“Business.” The most significant element of business is economy. Economy is controlled
by many factors such as the balance between demand and supply, the worth of several countries
money, the amount of consumption, and so on. Then, recently, worldwide trade has been
affecting the state of the economy mostly because the economy is growing by trade. In addition,
the trade is connected to the movement of globalization directly and deeply. In the first place, the
style of trade has changed throughout the history of the world.
The step of the trade. Global trade has existed for only less than 1000 years. At the
beginning of trade, Ancient Mesopotamia, Egypt, Greece, and Roma traded around the middleeast in the Mediterranean and Europe. At this time, trade began to expand beyond the horizons. In
the 1200s, Marco Polo, who was a Venetian businessman, went to China and brought back
examples of the wealth and goods to his home country. Moreover, Marco Polo’s trip led to
establish the trade of spice and silk with the Far East. By the beginning of the 1600s, trade among
Europe, Asia, and the Americas was advancing day by day. In the nineteenth century when the
technology of the steam engine developed, worldwide trade thrived. Goods, such as agricultural
products, printed books, cosmetics, and folk objects of each country, arrived at the new
destinations within a few days. In America, Asia, and Europe, continental railroads connected a
lot of seaports for transporting goods speedily. As the world greeted the 2000s, worldwide trade
advanced more because of the progress of air shipments, cargo ships, large fast seagoing ships,
and better, stronger engines. As a result, products all over the world have been able to travel
within a day. Furthermore, the spread of the Internet also has made fast delivery possible. Thus,
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the style of trade has changed and developed in each period; then, this change has affected the
world economy and businesses greatly.
The free trade and globalization. Globalization is also related to the style of trade and
is one of the most effective constituents for trade. The most typical trade based on globalization is
“free trade.” According to Richard M. Ebeling (2004) the content of free trade is extremely
simple. Each individual can buy and sell some items with other people freely if they agree with
each other. They can also trade the same goods with the same condition whether there is a long
distance between them or not. In other words, all people in the whole world can trade and share
the products of each country among more than three countries independently without national
intervention such as a customs duty and borders among countries. This thought exactly represents
the concept of globalization. Free trade started in the nineteenth century; this idea is connected to
the trade of the present world. This is “Trans- Pacific Partnership” (TPP). Although there is the
restriction of area that is only among the Pacific basin countries, the concept of TPP is similar to
free trade. The systems of free trade and TPP give two good effects for business.
The price competition in the market. The first effect is that price competition occurs
among companies in the world. Many companies of the same market can join the trade without
restraint; as a result, they try to produce cheaper and better quality goods than other companies’
merchandise. The fact that a lot of companies attempt to make cheaper and good quality products
by price competition is connected to not only the improvement of the world economy and the
growth of each market in the world but also the activation of the domestic economy. Domestic
companies make an effort to produce inexpensive and high quality products with liberalization of
trade; then, native people buy them. As an outcome, domestic productivity improves and the
profit of several companies increases. This is also related to the rise of balance on income. Gross
Domestic Product (GDP) reflects these results.
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Source: Center on Budget and Policy Priorities. (2008-2012). GDP fell far below what the economy was capable of
producing
In fact, according to this figure, analysts mentioned the American GDP would keep increasing.
The fact that the GDP of America would increase continuously describes the activation of the
domestic economy. Thus, the price competition in the trade based on globalization influences the
development of domestic and foreign economies and businesses.
The new entry of companies. In addition, companies in developing countries or rising
nations that enter into the world market are also at an advantage of free trade. One good example
of this case is Samsung which is a Korean electronic company. According to Samsung
Electronics Sustainability Report 2011, in 2009 when Samsung had been established for 40 years,
this company got the top sales of global IT companies. This result represents that companies in
developing countries or rising nations can also succeed in the world market. Therefore,
globalization gives the chance to not only developed countries but also other countries in
business through trade. Giving the chance to companies in developing or rising countries is
linked to the activation of the world economy, too. It is also possible to prove that globalization is
necessary on business by another viewpoint such as culture.
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Culture
Globalization is important on business through the viewpoint of culture. In the first place,
according to Polity (2008) culture makes up the way of people’s lives such as language, religion,
values and standards, customs, clothes, diet, roles, knowledge and abilities, and all the other
things that people learn. This definition describes how cultures form people’s identities; then,
business is constituted by these people. Thus, it is conceivable that culture is connected to
business closely. As for globalization, cultures are categorized into two types: folk culture and
Western culture.
Folk culture and Western culture. Folk culture is considered as a tradition that each
country owns and usually does not change. In other words, people’s own ways of thinking and
customs are built based on the folk culture of each country. On the other hand, Western culture is
flexible. According to Western Culture Global (2009) Western culture started in Ancient Greece
and has been advancing through the Scientific Revolution, the Enlightenment, the American
Revolution, and the Industrial Revolution. In other words, this culture has developed to adopt
many cultures, so Western culture has influenced and spread all over the world easily.
Soft power and globalization. Globalization made folk culture and Western culture fuse
in the world. When the American government tried to spread Western culture, the government
used “soft power”. According to Joseph Nye (2004) soft power is the talent to obtain what people
want through charm without force or payments like hard power; the attraction of a culture,
political thoughts, and policies occurs by this power.
Hard
Spectrum of Behaviors
Command coercion
Soft
inducement
agenda
attraction
Co-opt
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Most Likely Resources
force
payment
sanctions
bribes
institution
value
culture
policies
Source: Nye, Jr. J. S. (2004). Soft power. p.8
Moreover, according to this chart, hard power is usually represented by command, coercion, and
inducement. People choose four ways: force, sanction, payments, and bribes, for carrying out
these behaviors. In fact, these ways are used during war and they make people obey by force; so,
some people may resist hard power. For example, the Nazis mass slaughtered the Jewish people;
then, they made the people be frightened and obey by force. However, soft power uses
institutions, values, cultures, and policies for the acting out of agenda, setting, attraction, and coopt. This power can make people approve some ideas or actions by themselves without force. In
fact, during World War Ⅱ, German people approved the idea of the Nazis by themselves through
the propaganda of Adolf Hitler and other members of the Nazis. Therefore, people have been
receptive to Western culture for themselves through the effect of soft power. As a result, this
movement produced two good impacts for business.
Creation of new market. The first good impact is that people made their traditional
culture and Western culture merge and created new objects and systems. For instance,
McDonald’s, which is a kind of symbol in Western culture, has already spread to the whole
world; people who live in several countries have created local menus such as Red Bean Pie in
Hong Kong, traditional Caldo Verde soup in Portugal, Teriyaki burger in Japan, and so on. These
ideas are related to the aid of making new markets. Thus, globalization not only improves the
domestic economy but also helps people create newly started markets based on the mediation
between traditional culture and Western culture for the world’s business.
Reconfirmation of each country’s strong points. Another impact is people reconfirm
the strong points which each country has through a comparison with Western culture. Toyota,
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which is a Japanese car company, is a good example. Toyota introduces the way of thinking as
Western culture and uses Japanese traditional strong points. In fact, according to Toyota(19952012),
The Toyota way is supported by two main pillars: ‘Continuous Improvement’ and
‘Respect for people’. We are never satisfied with where we are and always work to
improve our business by putting forward new ideas and working to the best of our
abilities. We respect all Toyota stakeholders, and believe the success of our business is
created by individual effort and good teamwork (Globalizing and Localizing
Manufacturing).
Toyota is also keeping high quality and safety when this company makes cars. In
consequence, Toyota got the top number of cars sold in the world from 2008 to 2010 and the first
half of 2012 (Ohsman & Hagiwara, 2012). In addition, Toyota’s cars are bought in developing
countries, too.
Source: Toyota. (1995-2012). Figures, Market/Toyota Sales and Production
According to these figures, the number of cars sold was increasing from 2007 to 2011 in both
India and Brazil, developing countries. This result describes Japanese good points, such as high
quality, safety, team work, and the corporate philosophy of Japanese companies, are known and
admitted by not only advanced nations but also developing countries. Therefore, companies can
grow their industries and appeal to their countries’ own strong points to all the countries of the
world through globalization. Information gathered through social media helps that process.
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The Social Network
Information is very important on business. The reason is companies generally act on new
business development, the decision of management strategies, and the product development
based on a lot of information. Recently, information technology is advancing quickly because of
globalization. As information technology is developing, the style of business is also changing. In
fact, employees in companies always use personal computers and the Internet for their
businesses. Information technology has already existed since the past; then, this can be classified
into four main ages.
The history of information technology. The first age is the pre-mechanical age which is
from 3000 B.C. to 1450 A.D. In this age humans began to communicate the first time by
language as alphabets and simple pictures which were usually carved into rock. This age is
represented by Petroglyph. Afterwards, the first numbering system appeared during this period.
After the pre-mechanical age, the mechanical age started. This age was defined between 1450
A.D. and 1840. During this era, the numbering system and machines assimilated. Moreover, the
system of the letterpress printing was invented by Johannes Gutenberg. From 1840 onward, the
big improvement of information happened. The electromechanical age continued until 1940.
People consider this age as the beginning of telecommunication because the telephone was
contrived by Alexander Graham Bell in1876. Furthermore, in 1895, Guglielmo Marconi created
wireless communication as the radio. The electronic age which is from 1940 to now is
symbolized by televisions, personal computers, cellphones, and smart phones such as the iPhone.
These devices are used for communication among people and for getting information. In addition,
people can do these actions more easily and rapidly through the development of information
technology.
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Globalization and the birth of social network. Globalization is related to the history of
information technology deeply. Globalization has influenced the way of communication, the style
of business, and even people’s lives have changed by the deregulation of data-communication.
The deregulation of data-communication made the industry of communication privatize and gave
the competition among communication companies since 1982. This is connected to the cost of
using the Internet decreased and many people started to use it. As a result, almost all people in
the world are utilizing the Internet; in other words, the system of the Internet has spread to all
over the world. Then, the developing of information technology and the diffusing of the Internet
has created a new style. This is the “social network.”
The infiltration of social network. The social network is constituted by a lot of sites on
the Web. These sites are called “social network sites.” According to Danah M.Boyd and Nicole
B.Ellison (2008),
We define social network sites as web-based services that allow individuals to (1)
construct a public or semi-public profile within a bounded system, (2) articulate a list of
other users with whom they share a connection, and (3) view and traverse their list of
connections and these made by others within the system (p.211).
The typical site of the social network is Facebook. In fact, the number of Facebook users
is increasing every year.
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Source: Burcher Nick. (2012). Facebook usage statistics by country Dec 2008- Dec 2011
According to this figure, in the USA, the number of Facebook users increased about four times in
four years. This number has also been rising quickly in other countries. This data describes that
the social network has been spreading among countries all over the world and many people are
using this system. It is conceivable that this system is one of the most important trends in the
whole world. The social network which was created based on globalization brought about two
great effects on business.
The social network marketing and management strategies. One of the good effects on
business is companies can set up their management strategies by the social network. This means
people’s opinions and ideas on social network sites are connected to improve companies’ growth.
In fact, some firms have already made use of social network sites, such as Facebook and Twitter,
for their businesses’ marketing. Moreover, other companies are selling the system or service of
marketing on social network sites. For instance, Radian 6 is one such company. According to
Salesforce Marketing Cloud (2012) businesses require not only to plan, resolve, and inform on
their social network efforts but also to find insights through their information. The content of
Radian 6 offers the best tool for developing companies on how to market on a social network.
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Thus, companies can realize what people want or what the trend is in the world through the ideas
and opinions of the huge number of users all over the world on social network sites indirectly; so,
it is possible that the social network based on globalization makes businesses and several
industries advance more widely and quickly.
The new type of product development. A big influence on business is that companies
can help people cooperate for creating or developing new products. According to the Coca-Cola
company (2009) it provided the site of “Flavor Creator Lab” on Facebook; then, it helped
vitaminwater supporters choose the flavor of new vitaminwater and create the name and label
design for this product. Therefore, companies utilize various ideas which people in the whole
world create or ask people to cooperate in the exploitation of goods directly. As a result, they can
produce good merchandise. Using people’s ideas for creating new products with their cooperation
is linked not only to making superior goods through people’s ideas and views on the social
network but also to responding to people’s needs and satisfying their desires. It is really
important for the growth of business.
The Counter
The risk of the social network. On the contrary, some people mention that globalization
is dangerous on business because of the spread of the social network. The diffusion of the social
network is related to the increase of cyber terrorism. Cyber terrorism is the attack on activities of
terrorists based on the social network and the Internet; moreover, the purpose of this terrorism is
considered the destruction of personal aim, government sources, media information, and
companies’ development. Recently, the amount of cyber terrorism objecting to governments and
businesses in America is rising (Hoover, 2012). For example, Sony’s PlayStation Network
(PSN), which Sony enterprise has been managing, was attacked by hackers who are members of
“Anonymous” on March in 2011. In practice, according to Charles Arthur and Keith Stuart
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(2011) personal information of 77 million PlayStation users flew out through Sony’s problem. As
a result, Sony lost huge money and people’s trust. Thus, it is possible that the social network
gives bad influences on business in the world, so some people disagree with globalization.
The movement for preventing cyber terrorism. However, the countermeasure against
cyber terrorism has already been made or considered. According to President Obama (2011)
cyber terrorism is the most significant problem for economic and national security; the success of
the economy in America will depend on cyber security. In fact, he mentioned some ideas for
supporting the tactics of cyber security; for instance, cyber security would be designated as an
official liability and one of President Obama’s main precedence policies. Furthermore, according
to Siobhan Gorman and Julian E. Barnes (2011) “If a cyber attack produces the death, damage,
destruction or high-level disruption that a traditional military attack would cause, then it would
be a candidate for a ‘use of force’ consideration, which could merit retaliation.” (paragraph 6) It
is conceivable that the U.S. government has been working on the plan for preventing cyber
terrorism seriously. In addition, in Japan, the Metropolitan Police Department has already
established the section for keeping up with cyber terrorism. Therefore, the safety of the social
network will be protected by governments and other national departments as policies soon; the
social network does not give the bad effect on business. Consequently, globalization is not risky
on business all over the world.
Conclusion
Globalization is a good phenomenon on business all over the world. Through the
economy, free trade, and TPP appeared by globalization; people can carry on commerce without
political intervention. As a result, price competition has occurred in the world market; both
foreign and domestic economies have been activated. Moreover, businesses all over the world
have also improved. Through culture, globalization has made traditional culture and Western
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culture fuse. People have been receptive to Western culture themselves by soft power. In
consequence, people have created new goods and systems. People have bred fresh products and
methods which assists in the making of new markets and the improvement of the domestic
economy. People reconfirm the strong points of each country through a comparison with Western
culture. This result has not only grown their industries but also appealed to their countries’ strong
points. Globalization has been linked to the diffusion of the Internet and the development of
information technology. As a result, the social network was formed and has spread all over the
world through social network sites such as Facebook. Based on this movement, companies in the
world can do marketing on the social network; simultaneously, they can set up new management
strategies. Thus, businesses and each industry can advance more quickly and widely. Companies
can also create or develop new goods by people’s ideas directly. This is connected to making
good merchandise and satisfying people’s needs. Through these great effects, it is conceivable
globalization is absolutely essential on business all over the world.
After he knew about the good impact of globalization through his daughter’s talk, the old
man who practiced the humble sushi bar determined to advance into the world market displaying
the advantage of sushi, his business not only succeeded but also showed the strong points of
Japanese traditional culture in the world. Furthermore, many people who live in other countries
have been visiting his head shop in Japan; it has become the talk of the whole world by the social
network. This result also may be encouragement to people who consider starting new businesses
and world industries. Globalization gives the hope and the infinite possibility to people and
businesses all over the world.
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GLOBALIZATION ON BUSINESS
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