Globalization
Economics Management

Consequences of Business Globalisation

An excerpt about Globalization and Anti-Globalization Movements.

A framework, developed by Prahalad and Doz in 1987, called the Integration-Responsiveness Grid, assumes that a multinational company will design its corporate strategy and organisational structure based on its vision of the nature of the business  in which it operates.

  • Global economic different contexts make companies achieve a minimum scale of economy in production, technology and logistics operations in order to be competitive worldwide. The multinational company feels the need to globally integrate its activities while maintaining a centralised management of geographically dispersed activities in order to achieve a consistent and well coordinated strategy in all of the countries where it is operating.
  • The requirements for the local adaptation of products in the different national markets can create the need for a local and quick response by the multinational to be more competitive. Hereby, the coordination level required is not high and a more decentralised management of operations can be implemented around the world.

Despite the preconception that most of the businesses have been dominated by globalizing forces, there is currently a debate being held amongst International Business Schools who speak about a view halfway between the both extremes, Labelled Semi-Globalisation (Ghemawat, 2003) or Regionalisation (Rugman and Verbeke, 2004). They defend that the economic globalization is not as strong as it seems and that it has been widely exaggerated, because there are more important obstacles and we are still a long way from a situation in which corporations really behave globally.

Most multinational companies are not considering their business as a global integration or fragmenting it into different national markets; on the contrary, it is more common for them to consider their business as Semi-Global or Regional (Ghemawat, 2003 & Rugman, Verbeke, 2004).

This view defends that, instead of planning their strategic locations on a country-to-country basis or on a global scale, multinational firms only do so at a regional level. Therefore, European firms, for instance, prefer to locate their operations’ centres primarily in Europe, those in the USA give priority to expansion in America, and Asian companies prefer to explore business opportunities in Asia before trying into other parts of the world.

According to the previous authors mentioned, the reason for this Regionalisation is explained by the big distances between North America, Europe and Asia. The costs

associated with internationalisation increase the further away the target country is and managing an internal structure in more than one region is complicated due to geographical and cultural distance, economic, legal and administrative differences.

That is why, most of the world’s leading multinationals develop regional behaviours.

The Anti-Globalisation movement is a worldwide protest movement led by activists from a wide variety of backgrounds who are opposed to the neoliberalism and the Capitalist System. The essence of the movement lies on the fact that economic globalisation is an unfair and unsustainable model of development because it enriches only the multinational giants and developed countries, therefore, contributing to an unequal distribution of resources to the detriment of the Third World countries.

The different Anti-Globalization groups all over the world have been working for over a decade organising protests and summits with a wide media repercussion. Some of the events they have carried out include the 1999 Seattle protests leading to the cancellation of WTO meeting, the successful World and European Social Forums they periodically hold and the cancellation of the Third Conference on Development Economics that the World Bank had planned in Barcelona in 2001.

This Anti-Globalization movement has several intellectuals known worldwide for their opinions. These include Joseph Stiglitz, 2001 Nobel Prize Winner in Economics or Waldon Bello and Susan George, who have written numerous articles and books against globalisation.

 

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