Regionalism and Globalism

Traditional economy was characterized with regionalism, but the global economies are changing with opening up of the national boundaries to give way to the global trade and socialization. Globalisation can be considered as a new form of regionalism, where the new regionalism reflecting on the whole world in general, and not some subsets of the world. Globalization is facilitated by economic pressures, political processes and on the multidimensional approach to the world. International trade and free trade are some of the factors that characterize globalization. Regional organizations are doing businesses with globalised economies and world politics. This paper supports the fact that businesses operate in the world of globalization, which is a change from the traditional regionalism way of doing business.

Globalisation has become one of the leading concepts in the recent decades; globalization is influencing business life, economy, environment and the societies (House et al., 2004 p. 700). The influence has contributed to both positive and negative concepts. The changes due to globalisation have been connected to rapid changes and competitions in the transfer of information and technology across the national borders. Companies have been forced to adapt to the global changes in keeping up with the changing market and in building competitive edges over the competitors (Chhokar et al., 2007 p. 504).

Globalization has led to small companies seeking the international share in businesses. This is more so with multinational companies (MNCs) like The Coca-Cola Company, Apple, Google and HP among others. International trade has made it possible for small companies to engage in international trade. In the recent decade, it has been noted that MNCs have become very powerful and very large; this has been facilitated by globalization. Some of the MNCs in the world generate huge returns that surpass Gross Domestic Product (GDP) of some nations of the world. MNCs are controlling the global economies and are characterised with both positive and negative effects on the nations they operate, particularly the poor and the small nations (House et al., 2004 p. 331).

It has been noted that MNCs influence the balance of payments, MNCs are characterised with importing capital in servicing the business units; in so doing, other businesses in the region are affected by the importation of capital, which is part of globalisation. Capital imported supports human capital, offices and factories among other outlets (Boudreaux, 2007 p. 46). Surplus related to the capital account results to a deficit on the part of the current, the model leads to the nation doing more imports than the exports of goods and services; this result to improved living standards in the nations of operation. MNCs also import technical equipments not available in the local market. MNCs encourage globalization, and many companies in the world are after the global market share, particularly with the markets that are less exploited in building a competitive edge (Hofstede et al., 2010 p. 349).

Employment in the current world is globalised. People today are working in multicultural societies, a model discouraging regionalism. Companies are setting up new businesses needing different professionals in the world. Taking a critical look at the MNCs, such companies are characterised with importation of labour in matching the local employments with the skills needed in the new jobs. An example is the oil exploration in the Middle East, some of the oil produced is used locally. The jobs are sometimes very demanding that the local population is unable to cope with, Middle East oil Companies have imported labour from Bangladesh, India, China and Philippines among other nations. This is an indication that businesses are turning away from regionalism to globalisation.

Local companies face stiff competition from the MNCs, which forces the local companies to diversify and embrace the changes facilitated by globalization and socialisation in building a competitive edge. Some of the companies form mergers and acquisitions with global companies as a way of globalizing the business; In the recent past, it has been noted that global companies are pursuing local and domestic markets, this after the deregulations facilitated by globalisation has opened up the local markets to the global competitions. It has been noted that deregulation has opened up traditional markets that were impossible (House et al., 2004 p. 547). Most nations are encouraging globalization as a way of doing business basing on the diverse merits.

Companies engaging in globalisation are able to meet the tastes and preferences of the consumer market. It has been noted that consumers in the twenty first century are better informed than the traditional consumers. Information age is shaping the purchase patterns of the consumers, a model that is shaping local and international companies. (Stiglitz, 2003 p. 267) Businesses have to meet the high standards of expectations attached to the target consumers. Consumers across the world have different purchasing powers, and that consumers have rich information base, which drives the high expectations of the consumers on the products and services. International businesses enjoy economies of scales depending on the target industry (Telò, 2004 p. 8).

Information is valuable and most expensive considering the production factors. It has been noted that information in the twenty first century is easily generated and transferred to different parts of the world, an indication that national boundaries are losing meaning with invention of the global businesses (Chhokar et al., 2007 p. 399). Companies adapting to the global information and knowledge are open to global changes that are facilitated by the globalization. The rapid changing global markets are after quick knowledge and information transfer, in gaining more and more global markets and in building a competitive edge over the competitors.

The world is facing technology transfer which is not limited to geographical barriers. Transfer of technology is part of globalization, which affect the operations of businesses in the local and also in the global markets (McLaren, 2012 p. 89). It has been noted that majority of the local companies are crossing the international borders to do business, such companies are forced to engage in higher standards of technical expertise and managerial expertise. This means that such companies in a number of cases have to import international experts, which facilitates the growth of the local market (Stiglitz, 2007 p. 71).

Globalisation has led to the environmental concerns all around the world, it has been noted that global warming is an international disaster that is affecting each and every nation of the world. It is argued that global warming is a reality and all the nations in the world must come together in reducing the effects of the global warming (Boudreaux, 2007 p. 131). The international concerns on global warming are part of globalised business and not regionalized businesses.

Social responsibility in the twenty first century is directed at the global trade where regulations and standards influence the operations of local companies and global companies. Taking a critical look at the Indian factories and factories in Indonesia, it has been noted that the companies pay their workers poorly, to an extent that MNCs influence the standards of the local regulations. An example identifies with the United States Chemical Business Union Carbide company based in Bhopal in India; in the 1980s, the company was characterised with low levels of safety standards, which facilitated the explosion releasing toxic gasses into the air that killed thousands of people in the locality.

Government control of the MNCs is very difficult, considering that some MNCs are powerful than some governments in the developing and poor nations. It has been noted that transfer pricing is one of the common tricks engaged by MNCs. Many businesses are opening the global doors in exploiting different regions. Effects of globalizations on diverse businesses vary with localities, it has been noted that modern communications structures has influenced the way businesses are run across the globe (McLaren, 2012 p. 129).

International businesses have the choice of location depending on a number of variables, it has been noted that most businesses have changed their prime location to China. China is one of the most populated nations in the world, an indication that the global businesses is shifting from regionalization to globalisation. Businesses in the twenty first century have more choice depending on the location of operations (Gilpin & Gilpin, 2001 p. 207). China according to international companies has been identified as an efficient and a cheaper location to operate in. In the recent past, United Kingdom was the choice of most MNCs although the trend has changed with the invention of the Chinese business environment (Tschiesche, 2011). United Kingdom was known for the excellent financial services, while China is known for the low costs associated with the production factors of goods and services. United Kingdom economy over a long time has been boosted by the MNCs in the region.

China is a developing nation with high business prospects; each and every business has a link to the Chinese businesses basing on the market trends. Increased movements of jobs and businesses in the world is forcing different governments to compete with one another in attracting foreign investors, a trend commonly referred to as foreign direct investments (FDI) (Hofstede et al., 2010 p. 304). This is a clear indication that businesses in the twenty first century are controlled by globalization and not regionalization (Telò, 2004 p. 15). Most governments are committed in providing cheap and attractive business environments. Taking an example of Ireland, it has been noted that the country offer ‘tax holidays’ for all the international businesses relocated to that country.

Indonesia is another country targeted by companies engaging in the production of the clothing and apparel industry. Indonesia for many years is known for low wages, an indication that the cost of production of goods and services is considerably low as compared to many nations. Inputs across the world vary with regions (Stiglitz, 2003 p. 200); businesses in the world have better access and freedom to global movements in search of financial advice from the developed nations like in the United Kingdom and also in seeking labour from developing nations.

English is considered to be the business language; more and more nations are learning English in order to align themselves with the changing global business trends. Taking a critical look of China, it has been noted that more and more Chinese people are learning English more than before. Adaptation of English as a business language is an indication that businesses in the world are operating in a globalised environment and doing away with regionalisation.

Multicultural management is a common concept in the twenty first century as more and more businesses align themselves to globalization (Gilpin & Gilpin, 2001 p. 254). Multicultural management is also connected to multinational management where businesses have to learn different ways of doing businesses. Businesses operating in multinational levels face different complex variables, which can be difficult to manage depending on context (Stiglitz, 2007 p. 301). Employment policy connected to multicultural environment is connected to people of different languages, nationalities, religions and cultures. People of different multicultural orientation react differently to stimulus. People are also motivated by different incentives, which can be very difficult for the managers to understand and deal with the issues fairly (Chhokar et al., 2007 p. 775).

Universities across the world are teaching on different cultures as a way of adapting to the changing world. Managers are equipped by the Universities on the best ways of dealing with people from different cultures, which is a proof that businesses are operating in a globalised world and not regionalism. Managers of the twenty first century are expected to be sensitive to the issues of cultures in meeting the vision and the mission of organizations. Taking an example of the Thai workers in Japan, it was noted that Japanese people expected the Thai people to adapt to the Japanese corporate motivation and loyalty. Thai people failed to adapt to the new cultures, managers in Japan had to come up with effective models of managing across cultural issues within the organizations in realizing the objectives of the organizations, and at the same time in keeping the employees committed and motivated in doing the work.

National borders in the twenty first century are less important as compared previous decades and centuries. Markets are stretching beyond the national borders and MNCs are taking a competitive edge with globalization of the markets. Issues of cultures and languages have been on the rise as more and more markets open up due to globalization. It has been noted that consumers in the world are more alike with minimal differences in choice and preferences. Marketing has been critical in identifying the needs and wants of the target customers in the world (Boudreaux, 2007 p. 99). Businesses have to know the influence of culture on the choices and preferences made by the target customers on the products and services. An example of a failed business indentifies with the NoVa automobiles in the Spain, originally from the United States of America. NoVa in Spanish meant that the ‘product does not go’, the sales of the automobiles failed, basing on the fact that the Spanish cultures was not considered in the development and marketing of the products (Tschiesche, 2011). Understanding the host cultures is very critical in having firsthand information on the products and services that the target market is after (McLaren, 2012 p. 187).

In conclusion, globalization has influenced local businesses commonly attached to regionalization to taking parts in the international trade. Globalization has facilitated increased competitions for products and services, greater awareness among the companies and consumers, economies of scale among the businesses, location flexibility among the businesses and increased joint ventures and mergers as a way of gaining global market share. Regionalization has been overtaken by globalization as more and more parts of the world open up to global trade. Governments are competing for direct foreign investments with most businesses preferring India, China and Indonesia among other investment regions. Management of global cultures is also critical in defining the success or the failure of businesses. Businesses are operating in the world of globalisation.

List of References

Boudreaux, D (2007). Globalization (Greenwood Guides to Business and Economics). Westport, Connecticut: Greenwood. 12-165.

Chhokar, J. et al (2007). Culture and Leadership across the World. Hove, United Kingdom: Psychology Press. 127-871.

Gilpin, R. & Gilpin, J (2001). Global Political Economy: Understanding the International Economic Order. Princeton, New Jersey: Princeton University Press. 200-304.

Hofstede, G. et al. (2010). Cultures and Organizations. 3rd ed. New York: McGraw-Hill. 122-363.

House, R. et al. (2004). Culture, Leadership, and Organizations. New York: SAGE Publications, Inc. 199-765.

McLaren, J (2012). International Trade. Hoboken, NJ: Wiley. 35-200.

Stiglitz, J (2003). Globalization and Its Discontents. New York: W. W. Norton & Company. 12-276.

Stiglitz, J (2007). Making Globalization Work. 2nd ed. New York: W. W. Norton & Company. 23-307.

Telò, M. (2004). Introduction: Globalization, New Regionalism and the Role of the European Union. European Union and New Regionalism. 3 (2), 3-17.

Tschiesche, K. (2011). How globalization affects business. Available: http://bookboon.com/blog/2011/10/how-globalization-affects-business/. Last accessed 16th December 2013.