Globalization Effects in the Business World

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Abstract

This paper is an examination of the effect of what impact has been brought about by globalization to the whole world in general, through looking at it from the business world. The paper focuses on the business world since globalization has been defined as integrations of economies of many countries, making them interdependent, which have been brought about by international trade. This has been because of eased barriers of international trade in many nations that allows countries to expand their investment to other countries without many restrictions that were there decades ago. As for now, selling and operating in foreign countries is easy, with more nations opening up their market to allow direct foreign investments, which have been known to accelerate economic growth. Recently international trade among nations has increased interdependency, and this is having both negative and positive impact in the business world, with positive ones outweighing the other.

This paper conducts a literature review from previously carried out researches, which give highlight on the issue, as well as highlighting the trends since globalization become an issue of the whole world. The paper does use two markets, the American markets and Indian markets, to give an illustration of impacts in these two markets, which are used to represent the developed and developing countries. Are there more benefits or challenges in one of the two markets than the other is, or is globalization a positive phenomenon for all markets across the globe. The biggest impact in the business world has been the liberalization of foreign direct investment that continues to increase the international trade. The paper also includes findings of an online interview carried out through issuing of questions to the participants concerning the issue, and feedback is analyzed.

Consequently, through such trade and interdependency, many countries have benefited economically, with many developing nations increasing their GDP. Considering globalization has enabled corporations to enter foreign markets, businesses have been forced to adapt to strategies that cater for a global market other than just their domestic market. This has been in an effort to create competitive advantage in the whole globe for the multinational companies. This has further led to diversification considering every market has its different needs and interests from others. Further, due to degradation of environment and exploitation of some people especially in developing countries by the multinational corporations, people have reacted to the issue. This resulted in companies being posed with more responsibilities to the society, concerning corporate social responsibility.

Production has increased across the whole globe with companies seeking to establish their production where there are more chances of realizing reduced costs of production. This has seen many countries enter foreign markets especially in developing countries where labor is cheap. Hence, developing nations are benefiting in several ways, such as economic development due to increased investments in these countries that have seen many people secure employment. More so, as result of increasing trade, demand for goods and services has increased, changing the items demanded. Currently, due to emergence of many businesses, service industry is facing more demand and making the biggest contribution to the GDP of many nations. For instance, Indian GDP is currently made up of 57% services. Despite such benefits, the paper also addresses challenges that are facing the business sector due to globalization.
Globalization Effects in the Business World

Introduction and Rationale

Globalization has been a phenomenon in the last decades of the last century, though it has no specific definitions, there are several characteristics to it, which help defining it, although it varies with the person defining it, which is influenced by their experience with globalization. The main characteristic of globalization is interdependency among nations economically. The process happens through opening of world international trade, advanced communication across the whole world, international financial markets, growing multinational companies, foreign direct investments, and interaction of people through migration and increasing mobility of people across borders as well as goods and capital ideas (Goyal, 2006). He further cites that it does not just include the free exchange of the above mentioned, but also negative issues such as infections, pollution and diseases. In general, it refers to the free integration of economies across the world through unrestricted trade and financial flow, exchange of resources between countries such as technology and ideas and labor as well. The main idea behind globalization is interrelation between countries where trade is free and anything can be exchanged, and its biggest exchange has been through businesses engaging in direct investments across other nations. Such exchange has had a tremendous impact to the whole world, especially in the business world.

Globalization has been recognized by many people across the whole world as a key determinant in prosperity of a country. Globalization, defined as a process through which organizations seek to expand their businesses to the whole world or across geographical borders has led to an economic interdependency of countries facilitated by technological advancement especially in communication that play a major role in globalization. The most affected area has been the business world where many businesses are no longer affected by domestic factors only, but also international factors. Currently it has become a competitive advantage to go global, considering for most businesses, the market for their commodities and services might be in other countries, making it necessary to enter such markets. Hence, expanding ones business to a global scale is not seen as an offensive strategy as it is a defensive strategy, with businesses doing it to defend their positions considering failing to do so will result in a weakened competitive position. Hence, businesses expand globally in order to remain competitive, just as they are offensive in seeking more revenues (Fernando, 2009).

The result has been businesses going global to serve other markets outside their original starting place with an aim of reducing costs and maximizing output. As such, a new kind of interdependency across the globe where business laws have changed to accommodate all needs of the different markets has risen. This has been facilitated by advancement in communication, with a growing demand for items of communication such as mobile phones everywhere. Such demand and ease of doing business globally has impacted the business world in a significant way, with some developing countries such as China and India that were poor several decades ago prospering at fast rate, due to many investments in such countries targeting the big market. This has left a question about the biggest beneficiaries to globalization considering many international organizations are because of developed countries investing in the developing countries, where labor is cheaper and more available. Does this leave the developed nations at a disadvantage or has it affected positively in these countries too.

More so, communication, has contributed to a rapid growth of globalization considering information is one of the biggest drivers of businesses currently. Businesses rely so much on the power of information concerning other markets and regions in order to understand their needs better. This has enhanced economic interdependency that has created more opportunities across the developing world. For instance, many people in the developing nations are able to benefit from employment when big corporations enter their market since they will need labor. In addition, they have benefited from increased technological advancement through technology transfer, as well as greater access to the developed markets through export of goods produced in these countries.

Moreover, many people cite globalization as a major contributor to inequalities cross many nations and regions such as urban centers and rural set ups considering majority of the investment happen in the urban areas. More, businesses that arte unable to engage in global expansion are at a disadvantage since there are not able to compete with the bigger organizations. This creates a bigger gap between the two types of businesses. However, for a better highlight of effect of globalization in the different markets as well as settings, an evaluation of two major markets is necessary. In this project, an evaluation of the American market is compared with the Indian market, which is a developing nation while the U.S is already developed. Above all, globalization has managed to alleviate some problems associated with poverty in some of the developing nations while creating more opportunities for economic development across the whole world.

Questions Explored

Globalization has hence raised many question across the whole world with many people embracing it as a positive economic driver while others feel is causing a lot of inequality among nations especially developing nations. One of the biggest questions has been whether globalization has had a more positive impact in the developed or developing nations. Considering the difference of the economic status between the two markets, there is bound to be different impacts of globalization. Another questions has been the challenges emerging globally especially with communication advancement. Many nations may view globalization as a positive phenomenon, but is does not come without posing new challenges to the whole world. In general, has globalization been more positive or negative to the whole world? Another question revolving around the globalization issue is the changes it has caused in the business world, such as products on demand globally and ways of doing business, as swell as changes in delivery of products and services, not forgetting international business laws. Considering it affects the whole world, there are bound to be changes such as outsourcing that has already taken root, and other production strategies such as Just-in-time strategy aimed at reducing costs and enhancing quick delivery and production, which are facilitated by communication advancement. The main concern is to highlight the impact of globalization to the whole world using the two markets, developed and developing markets, with a focus in the business world.

Through a literature review on the issue, a lot can be highlighted concerning the two markets. The literature review will concern what has already been written before. Many researches have been conducted in the past and act as a starting point in this project, providing credible information concerning the market. A part from a literature review, a follow up of the two markets using online-based interviews will be conducted to give a further insight on the current trends set by globalization across the two markets. Online-based interviews are presented using questions that people across the two markets can answer. Through the internet, a follow up is easy and does not require having to e in the two markets physically. The two markets are different geographically and in terms of population, but the focus will be on the general impacts across the two markets, that will represent the whole world. The research will give an illustration of which market is experiencing more impacts of globalization compared to the other.

Literature Review

The effects of globalization have been many across many nations or the whole world with the intensifying of interdependence among the economies. All companies are competing for the global market, enhancing diversity across the whole world and improved living conditions from the benefits of exchanges across the whole globe. Globalization has had a big impact in the growth of economies across the world especially in terms of GDP. This has consequently resulted in continued alleviation of poverty in many developing countries. India has been used as a perfect example of a nation that has been impacted by globalization positively. Other effects have been on the small domestic enterprises that have not been able to take full advantage of globalization, and they remain marginally undermined by globalization. Most of them happen to be in rural areas; hence, rural benefits from globalization have been minimal. More so, globalization has affected the international laws of doing business, where in a quest to make better dealings between corporations and to drive economic growth through encouraging foreign investments, many nations have loosened their trade laws and restrictions to allow an easy business climate, with the emergence of big multinational corporations.

Referring to the Indian market, a brief overview of its economic growth before they fully embraced globalization and during globalization enhances a better understanding of the impact of globalization from a practical view or example. In India, globalization has had a positive influence in the economic growth rate because of opening to the world trade. In the 1970s, the growth rate of India was quite low, standing at less than 3% (Goyal, 2006). When India opened its doors to foreign investment and eased the trading restrictions, in the 1990 to 93, its GDP grew by 5.3%, and 6.2% in 1994. In 2003-04, their growth rate was 8%, which was quite an achievement. This was because of globalization that did not only change the GDP, but also the contribution of sectors to the GDP. Previously before globalization in India, majority of the GDP was made up of the primary sector. Currently, the services industry contributes 57% of the GDP, because of globalization impact that has seen India rise among the top in services exportation. Other areas such agriculture that were among the top contributors to GDP has slowly dropped contributing just 20.5% from a high of 35.2% in the 1980s. The industry has also been going down in terms of its contribution to GDP, from 26.1% to 21.9% currently (Goyal, 2006). This shift has been bas a result of globalization that has increased the demand for services. India has a large population; hence, they have the human capital to provide services. Many business investments prefer India for its large population that allows cheap labor. Several impacts of this globalization in India are due to change of policies that restrict entry into the international business. This has been the same case with china, where they were poor nations before opening up to the international trade, but now are the second biggest economy in terms of purchasing power parity after America.

For those who see globalization as negative issue, they have laid their emphasis on several dimensions, with the main being the difficulties that small domestic enterprises face in the developing nations. Such enterprises are not able to take full advantage of the globalization considering it requires more capital than they can generate. The big corporations realize full advantage since they have the resources to provide diversity to the consumers. The enterprises are left out and most seize from business due to stiff competition. This has resulted in persistent poverty in the rural areas where most of the small enterprises are found. More so, many people are looking forward to be employed in the multinational corporation, which has resulted in much rural urban migration (Kumenit, 2008). He further cites that in an effort top reduce costs; the multinational companies are pushing for lower labor in the developing nations to, “retain competitiveness which in effect could erode the values of democracy and social justice,” (Kumenit, 2008). This has raised an issue in their accountability of these corporations to their employees and the community as whole.

On to the contrary to the above, those who are for globalization argue that its key characteristic that has had a positive impact is its ability in liberalizing of international trade and expansion of multinational corporations and foreign direct investments, and the emerging cross-national flows in finance. This is what has led to the intensified competition globally, which many people feel has resulted in better services and products, as well as diversity as mentioned earlier. Much of this has been a result of nations easing their barriers and restrictions to international trade. Many policies have been implemented with the aim of making it less hard to conduct economic transactions across borders. Consequently, due to technological advancement and the reductions of previous barriers and restrictions, moving of people, communication, and goods across borders has reduced in terms of cost, making it possible have a global market where a company can transfer its production to new areas near its consumers.

Currently, the number of companies that are merging and acquiring each other has been on the rise, with many domestic and multinational companies viewing it as the best strategy to expand their territories. For instance, a company in India that wants to access the American market can team up with one of the American companies in India. This way, it shall have a better chance of going global and entering other markets. This has led to the emergence of big multinational corporations through the different types of teaming up in business, such conglomerations, which have access to many countries. This way still, costs can be reduced through economies of scale, an advantage that many companies are seeking to realize. When two companies merge or become a team, they complement each other in terms of resources, facilities, ideas and technology, and enhance combined business practices. For instance, it is usual to see a manufacturing firm in several countries, with established manufacturing plants within a short time. For instance, a company like general motors has several plants in several countries, and several assembling plants. This has raised new forms of business practices such as outsourcing where a manufacturing firm will have different parts manufactured in different countries due to the ability of free entry into other countries, or services. For instance, the American Caterpillar company has a plant in India, where some manufacturing goes on, as well as general Motors. This has also led to a rise in international unions that make policies of international trade among countries such as the UN, International Monetary Fund, IMF, World Trade Organization, WTO, among other trade unions.

The institutions serve the purpose of setting up rules that establish a leveled ground for all the countries transacting using the particular institution. These trade unions are served with the responsibility of constructing globalization in a humane way that ensures companies and corporations abide to set rules put at the international level by the trade unions. An example of rules that can be put in place is labor rules that fight for the workers right from exploitation. More so, the trade unions establish policies of doing business in the international arena, with an aim of ensuring that all players benefit from globalization, considering some countries would have the power to exploit others especially the undeveloped (International Confederation of Free Trade Unions (ICFTU), 2001).

With globalization, where there is integration of almost everything across countries as it was defined earlier, people are becoming more aware of what corporations should be doing, for not only profit maximization for the shareholders, but also being good corporate citizens. Due to the ease of communication across the whole worlds thanks to globalization, the corporate world is under pressure from the people, and it has become apparent that these corporations and companies despite their size exist not for their own self-interests, but for the interests of the people. This has resulted in a new strategy of doing business, which is corporate social responsibility. The business firms have to be kin to the interests of the community, where people are concerned with how they tackle issues that are a risk to the community. For instance, companies that are addressing the environmental issues are gaining a lot of competitive advantage. This means that companies have to commit themselves to establishment of sustainable development, and collaborating with the community in its endeavors to improve the living conditions of people. Prior to globalization taking full effect, corporate citizenship by companies was not regarded, and companies only had to make profits. However, this has changed and companies are aware that people are much interested in how the company treats its people including employees. Most of the issues that the society is concerned about today are environmental maintenance, health of people, working conditions such as safety and adherence to human rights. Companies that do not abide to these rules do find themselves under tricky circumstances, considering stakeholders are interested in seeing responsible practices in business, and are demanding transparency in all areas of businesses (Kercher, 2006).

Moreover, across all nations, people are increasingly becoming aware of the issue of corporate citizenship and are expectant of good practices in business. This has changed the strategies of doing business, where any business has to think about the society before they make profits. Many companies for instance are using green strategies in many of their operations such as packaging, and advocating for green energy in response to concerns raised by environmentalists. Regardless of the jurisdiction under which the business operates, the society across the globe is concerned about the role of business in environmental and social issues. Concerning the social issues as well as environmental, many rules and policies have been implemented internationally to ensure that all corporate organizations take part in creating a better living conditions. This has been especially in environmental issues such as pollution caused by the big corporations in their exploration of resources. Many companies have had to deal with installation of equipments that ensure minimal pollution. For those that have not, they have been in the ream light of debates. No longer can businesses conduct their operations without considering such matters.

Such big businesses across the whole world have brought people together from different parts of the world. The interaction of people in businesses because of globalization has led to demand for more services than goods in many countries, and as such, countries with a big human capital stand a chance from benefiting this way, considering many corporations are seeking to reduce costs. This has been because of liberalization in the foreign direct investments that are employing more and more people as they expand to other markets. This has also led to changes in the strategies used for business where companies have to fit diversified markets and consumers. Currently, globalization has led to many businesses adapting to different strategies based on new ideologies and trends to have equilibrium between interests and rights of individuals within the community. The changes are designed to increase competitive advantage across the whole world where the organizations design their strategy in a design that does not only fit their domestic market, but also the global market.

Another impact of globalization, which has been a major one, is communication advancement across all countries. Due to the ease of restrictions on in international trade, companies such as Motorola, Nokia, Sony and Apple are able to enhance communication across the whole world by producing mobile phones among other communication devices across the whole globe. Without globalization, such technology would not be available in many nations that never traded before with the producers of such technology. Technology has advanced across the whole world because of globalization, enabling every country to connect to any part in the world. This has enabled communication between companies with ease, allowing management decisions to take place faster. More so, the communication advancement has further enabled business operations such as outsourcing where a company can hire the services of another in some operations. For instance, many American companies are outsourcing their IT operations to Indian Companies. Doing business in another country has never been easier.

More on the business, globalization has seriously affected the business cycles as cited by Cerqueira (2010), in their research concerning the evolution of business cycles. He cites that increased trade between countries can increase synchronization of business cycles, trough the increase in spillovers of demand and supply. In their research, though they cited that globalization could work both ways, to reduce or increase synchronization of business cycles, they say that from majority of the empirical work it is evident that an increase in trade causes an increase in synchronization of business cycles. Further, this is asserted by Kose, Prasad & Terrones, (2003), who cite the same, saying that businesses have changed over time. They say that financial linkage is likely to result in higher degrees of business cycle synchronization through generating larger demand effects. This is illustrated through an example of consumers from a different country with a significant amount of investment in a certain stock market, when stock goes down, an induced decline in consumption and investment goods in the countries where the stock is. More so through financial linkages that transmit effects could increase spillover in macroeconomic fluctuations.

Many international financial institutions have risen, to take care of the many emerging global corporations needs for financial aid.

Considering that globalization means integration of economies, people goods and services, as a result, people are having a say in the businesses, especially in terms of formulating organizational policies, with the inclusion of governments and leaders.

Research Design

As mentioned earlier, the research will involve a detailed analysis of the American an Indian markets as the two markets to represent developing and developed markets. This will serve to make the results more practical to every body than using generalization that may not give clear illustration to everyone. The analysis of the market will involve several procedures, with the first one being to conduct online-based or electronic interviews with people who are recognized as professionals in the business sector. The participants will most likely be business executives in the various companies that are already engaged in international trade, as well as domestic to give their view on what have been the effects of globalization to their firms. Questionnaires can be passed to the participants through the companies or at individual level. Feedbacks were followed on 20 business executives in every market, and their comments were compiled for analysis.

The interview will contain formulated questions under different topics, giving focus to each industry, the services industry and production industry, which have been most affected. Then a follow up of the questionnaires will follow, where the participants will have to submit in their responses for analysis. An analysis will be conducted, and the questionnaires will be compared to each other to look out for correlations between the two markets. The questions will be looking at the stock exchange in the two markets and the new trends of doing business that have been a result of globalization.

More so, there will be a keen analysis, follow up, and observation on the two countries’ stock markets, and the booming industry in the two markets. This will be used to give a highlight of the differences between the two markets. Another analysis will revolve around the trade between the two countries will illustrate how the two markets benefit from each other, and whether there is any that has more advantages over the other. After the analysis, a comparison with the literature review conducted concerning the general impacts of globalization above will be compared, for correlations that could give highlight concerning the issue. The literature review above gives a general overview of the impacts of globalization to the business world in many of the countries. A comparison with findings of the interview and keen follow-ups of the two markets will give a highlight whether the two markets are credible in being used as a representation of the two types of markets, developed and developing. An analysis of all the findings from the follow-ups of the interview and the literature review will be used to draw a conclusion answering the questions aligned in this paper, and other conclusions that could be related to this topic.

Discussion of Findings

From the interviews carried out through electronic questionnaires, it was evident that globalization in both countries has had more positive results in the business world than there are negative. Many of the participants cited that globalization has made economies so interdependent that any slight change in one country could affect others in a significant way. The major issue has been the ability to progress the economy and expand businesses. Another issue that raised by many of the participants is the added responsibilities to the companies because of increased awareness on CSR by the society. Mergers and acquisition were another issue raised, with many citing that because of globalization, they are forced to merge or acquire others to remain competitive, and it is seen as a strategy to expand. The growth rate of the Indian economy is bigger than the American, and this was the explanation given to difference in the stock exchanges.

Among the 20 CEO in India, the major comment among all was concerned with outsourcing which has become the major player in the Indian economy. This was recognized by 17 of the CEO who are in the outsourcing industry as one of the major impacts of globalization in the Indian market (Rosati, 2011). Rosati, CEO of Elance, cited that due to cheap costs, India has benefited from outsourcing, but also recognizes that Indian outsourcing companies might loose to china for the same purpose (Rosati, 2011). Another of the CEOs who sent in his response was Ursula Burns, of Xerox, who is currently in talks with the United States president concerning outsourcing, who cited that outsourcing is a big success in India (Thibodeau, 2011). The growth of IT and Business Processes Outsourcing (BPO) in the recent years has been quite rapid with many skilled personnel in India employed in both foreign and domestic companies. The foreign companies are mostly American and European, setting up their customer care in India where there are cheaper costs of business. Most of these foreign companies are taking advantage of the big labor force that is educated in India, which comes in cheaper than their developed market. The domestic companies are mostly IT companies that enter into business to provide services for other foreign companies. Many companies are seeing this as a way to reduce costs considering the low costs of labor in India.

The other finding about the Indian business world is that many of the CEOs in India are taking the opportunity of growing internationally through teaming up with other international companies. 13 of the CEO cited that growth of companies has been tremendous, and accessing the international markets has become easier through teaming up with other companies. However, around seven of CEO of small companies have expressed that smaller companies are not able to grow, since the MNEs are able to compete better, and when two companies merge, diversity is offered to consumers, and this renders the small companies under threat of being faced out if they fail to find partners whom to grow with. 4 of these CEOs cited that this has resulted to large corporations, which the small companies cannot compete against. More so, they site that all the profit goes to the MNEs that are foreign owned, benefiting their countries more, through taking advantage of the poor people in India looking for employment, without needing health care benefits unlike American workers who have to have healthcare benefits.

In follow up of the stock market in India to have a highlight on the biggest stock, the following data was found, asserting IT sector to be at the top in terms of market capital.

Sectorial Overview

Sector A/D Ratio Market Capital (Cr.)

IT – Software 00.88 606,181.28

Refineries 01.00 383,662.06

Power Generation/Distribution 01.73 361,884.96

Bank – Private 02.20 330,536.24

Oil Exploration 01.80 329,878.03

Source: NDTV Profit, 2011

From the table, it is obvious that the IT-Software industry has a higher market capital than all the other sectors, suggesting that IT services are more needed, probably because of the outsourcing industry. In India, the IT and Software industry employs more than 2 million people to work in the IT and BPO outsourcing, which has led to the big investment in this sector.

Further, from a follow up of the two stock markets, using the Dow Jones to represent the American market and Bombay Stock Exchange (BSE Sensex) to represent Indian market the following was found. It is better to invest in the Indian market than the American market. The reason is that Indian stock market is performing better than the American market with a growing GDP of 7% every year. The BSE is growing more than the Dow Jones stock market. In a comparison for the past two decades, it shows that the BSE has grown at a faster rate than the Dow Jones stock exchange. In 2008, for instance, Dow Jones traded at 8600, while the BSE traded at 9690. In 2001 to 2002, Doe Jones was trading at 8235, while the BSE was facing a low of 2595. It is clear that within the 8 years, the BSE has grown faster to overtake the Dow Jones. In 2009, the Doe Jones was at 8409.85, while the BSE Sensex was at 1116.94, showing a big growth, while the Dow Jones was falling. It shows that the Indian stock grew with a difference of 28% from the American stocks. In 2010, the Sensex was at 20445 points while the Dow Jones was at 10804 points. This can be explained by the fact that America is already developed, and many of the American companies are choosing to invest in India where there is cheaper cost of production and labor as well as a big market.

Dow Jones U.S. Total Stock Market Sectors

% Chg Money Flow Tick Up Tick Down Up/Down Ratio

Basic Materials 7.39 532.07 11,377.66 10,845.58 1.05

Consumer Goods 3.54 817.46 13,656.48 12,839.02 1.06

Consumer Services 4.34 639.30 21,530.93 20,891.62 1.03

Financials 8.04 2,380.32 67,123.28 64,742.97 1.04

Health Care 3.32 897.41 13,170.31 12,272.90 1.07

Industrials 6.25 915.92 17,968.04 17,052.12 1.05

Oil & Gas 6.19 665.47 18,125.71 17,460.24 1.04

Technology 5.87 1,528.70 29,125.20 27,596.50 1.06

Telecommunications 4.02 349.12 2,814.44 2,465.32 1.14

Utilities 2.52 254.35 3,765.40 3,511.04 1.07

Source: Wall Street Journal: Market Watch, 2011

From the Dow Jones stock market, it is obvious that people have invested more in the financials unlike the Indian market that has invested most of its stocks in IT_ software sector. To understand the probable reason behind this would require looking at the comment of the 20 business executives from the American market concerning the effect of globalization on its market. One of the many issues raised by the CEOs was much positive, citing that their companies are able to grow and expand in to new territories. Many have cited cost reduction has become possible in developing countries, and many of the American companies are establishing their customer care centers in India where cheap labor is available. In addition, they are basing their production in these countries too, since production is cheaper, and the market is big. Therefore, the American companies are making huge profits through reduced costs and being open to a wider market. On the other hand, several of the participants raised the issue of Americans loosing their jobs to India where most IT services are outsourced, as well as business operations. This has left very many people in the American market unemployed, and businesses changing their trend from conducting operations in their domestic area to outsourcing. This has led to more and more investments in India than there has been in America, enhancing growth of the economy, which is contributing to the growth of the stock market.

All of the 40 executives who participated in the interview from the two markets responded positively concerning corporate social responsibility. All of them agreed that they can no longer do business as usual, and they have to consider the interests of the society in every country especially for the multinational entities, that are having much influence in the community. All of them have to be conscious about environmental issues, anti-corruption, health and the safety of workers. Most have cited that this has been due to increased awareness among the people. In response to ensure companies adhere to good business ethics and

Comparing the findings of the follow-ups on the stock markets and questionnaires issued, it is evident that there is a correlation of several factors. The first is the changing strategies of doing business, where American and Indian firms are engaging in business through outsourcing, where the Indians are exporting services to America and other countries in Europe. The biggest impact of globalization in India has been the ability to outsource, because of communication efficiency. Another impact has been economic growth of developing nations due to international trade. Awareness across all nations due to interaction and exchange of ideas has grown, with inventions coming from both developing and developed nations unlike before when innovations were reserved for the developed nations with the technology. Developing nations too, are advancing in terms of technology due to globalization.

Conclusion

Currently, from the findings and the literature review, globalization has had a far more positive impact to the whole world, or the two types of markets, developed and developing. However, a difference exists considering that developed markets are moving to the developing markets to seek more market for their goods, and expand their businesses. The developed markets are moving their businesses to the developing markets in an effort to seek cost reduction, which they are realizing through the cheap labor that is available in the developing markets. This has resulted in increased profitability for the multinational companies through reduced labor and accessing markets that have not been served. Hence, many companies have moved their businesses to the developing markets to reach more consumers at a reduced cost.

On the other hand, the developing nations are benefiting from the entry of the multinational companies through availability of employment for its citizens, and a chance of acquiring new ideas, technology, and accessing international markets through collaborating with the multinational companies. Businesses in the developing markets are having a chance to expand to other countries with ease considering they also have the chance of entering the markets freely. Opening up to international trade has resulted in increased investments from the foreign investors through foreign direct investments. This has resulted to improvement in the economy of the developing nations significantly (Fernando, 2009).

Considering the two markets, the American and the Indian markets, it seems that Indian market has had more benefits from globalization than America has. Currently, the Indian market is growing at a faster rate than the American market considering most of the companies are basing their business in the developing markets to realize more benefit. However, the American firms are doing better in terms of revenue considering at reduced costs in India they are able to produce in large amounts, while the Indian market is benefiting through increased investments in their country that is providing more job opportunities, hence to the whole economy. On the other hand, considering many companies in America are transferring their services to the Indian market, many people are rendered jobless, but the firms remain highly profitable. This has resulted in more investments in the Indian stock markets where there is potential to grow (Fernando, 2009).

Changes in the way businesses are done are many, with the major one between the two markets being outsourcing of business operations and IT services among others in the Indian market. Other changes have been emergence of added responsibilities to the companies, which has also come as a challenge to some. In India, as evidenced in the findings, it is obvious that business trend has changed where many businesses no longer rely on their domestic markets or places of origin for production and services to the customers. Through communication technology, businesses are able to transfer some of their business operations to other countries. Production can be done from anywhere in the world. This has led to greater demand for services than goods. More so, demand and supply of goods and services has generally increased.

More so, there has been emergence of other institutions of international trade seen from the literature review that ensure there is fairness in conducting trade to avoid absolute advantage of for the developed nations in the developing nations during trading. These unions are served with the responsibility of ensuring there are policies to be followed by all the businesses engaging in the international trade. They ensure that companies follow business ethics in their practices, and that they are mindful of the communities they serve.

One of the challenges posed by globalization has been the corporate social responsibilities firms have to handle. Many firms have to be conscious about pollution of the environment, practice transparent businesses free of corruption, which means abiding to many rules such as Sarbanes oxley Act. They are also faced with ensuring the safety of people and ensure maintained development for the society. Currently there is a stiff competition globally, and companies have to be very innovative to survive, which requires a lot of investment in research and design. Another challenge has been to the small enterprises that are facing competition they cannot cope with and have to seek partnership or risk going out of business. In addition, consumers and stakeholders are more aware of responsibilities of the company, hence are concerned with the activities of these companies. More so, due to mass production everywhere, developed countries like United States are faced by threat of counterfeit goods, which ruin the market. This issue is happening in many nations currently where counterfeit goods are on the rise because of globalization where any good can enter the market (Ball, 2003). Another challenge has been the inequality caused by the globalization especially for the small enterprises that are reduced to extreme disadvantage while the bigger corporations get bigger. However, in a general overview, globalization has taken a big step in eliminating poverty and driving economic development.

References

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