Chapter 6: Conclusion and Recommendations
2.2 Electronic Technology
2.4.1 Cultural diversity in the global context
content will become even more extreme (Internet 16).
The development of new technology has become a mechanism for media globalization; as a result of lower costs. As a new impetus, the Internet has changed and will continue to change the character of information commerce and people's lives in general. Regional barriers being broken down; and media contents reaching global readers, without establishing local platforms are but two of the consequences of the Internet (Internet 16).
contents (Internet 17).
The Internet is a particularly suitable medium for the transmission of cultural contents. The Internet offers a range of choice to the public as well as access to the desired content is immediate (Internet 17).
Economic globalization is not a recent practice. Companies in the economically developed countries have for longer than the past five centuries been interacting on a trade basis with countries across its borders (Khor, 2001). In his 1776 landmark treatise, An Inquiry into the Nature and Causes of the Wealth of Nations, Adam Smith from the United Kingdom introduced the doctrine of laissez-faire to international trade. 'Laissez-faire' means 'freedom of enterprise and freedom of commerce'.
Adam Smith advocated the fact that all nations would gain from unregulated, free trade that allow countries to specialize in products that they were the best acclimatised to because of inherent natural and talent advantages. This theory of trade is known as the Theory of Absolute Advantage.
The theory states that a countries import should consist of products manufactured more efficiently across its borders while exports should comprise of products manufactured more efficiently at home (Shenkar and Luo, 2004).
The fundamental nature of trade theory is that foreign trade - exports and imports - is derived from differences between the domestic and foreign prices of goods. In conditions of free trade (no restrictions on trade flows) the simple dictum applies that a country will not produce a good which could be bought cheaper elsewhere in the world (Du Plessis, Smit, et al, 1994).
The most significant aspects of economic globalization are the abolition of national economic barriers, the international broadening of finance, financial and productivity activities, and the increasing power of multinationals (Khor, 2001).
Michie (2003) cites the salient characteristics of globalisation as being categorised in two categories; qualitative and quantitative.
Qualitative:
Breadth of change: The changes entail a variety of fields, such as the economy, society, population movements, business sector, politics, military and culture.
Political basis: The process has been made stronger by the economic and social policies of deregulation and liberalisation now incorporating most countries in the developed and developing regions.
Financial domination of the economy: Financial dominance has reached unprecedented levels in terms of intensity and financial activities in relation to the size of economies and also in terms of the number of countries involved in financial transactions.
• Social and organisational changes: Production decisions and operations in general have evolved largely as a result of technological advancements.
Transnational corporations: The most important changes relate to the scheduling of production across countries.
• Technological basis of globalisation: The above changes would not have transpired on the scale that they have been had it not been for the electronic revolution. Electronic technology impacts every facet of the globalisation evolution, ranging from people movement, products, factors of production to the organisation of production. Enhancements and development have occurred in the technological arena as well as in the costs of transportation.
Quantitative:
• There has been an escalation in the number of mechanisms of interconnectedness across borders; ranging from the traditional trade flows to foreign investment and related incomes, to various types of collaborative business ventures.
The extensity or geographical reach of interconnectedness has been increasing.
• The intensity of cross-border flows has also been escalating.
The interconnectedness between countries (Michie, 2003) results in an array of transactions and flows, of which the following are most prominent:
• "International trade in goods and services.
• Foreign direct investment
• Portfolio investment
• Profits, interests and dividends from the various types of foreign investment Inter-organisational collaborative partnerships
Movements of people across borders for leisure or business activities or in search of jobs."
In a competitive environment, survival and maintaining a profitable organisation within a country's borders is difficult. Therefore, why does the need arise to increase the burden of pressure on the firm's management by internationalising operations?
The answer to this lies in the need to challenge the competition in order to achieve the objective of ensuring sustainability of the firm.
Selling the firm's products or producing goods abroad, is regarded as a variation on an existing business strategy, pursued because existing markets or supply resources are inadequate or too expensive to maintain (Hofstede, 2001).
Measured in constant prices; the total value of world exports in 2000 more than tripled between 1980 and 2000, while foreign investment grew more than twenty-fold during the same period. This suggests that even a firm without international aspirations may soon find that its domestic market is under threat from foreign competition. Repeatedly this has happened to established but unsuspecting domestic firms that have been complacent in monitoring and reacting to foreign competition.
Globalization is often viewed as a threat, affecting even unbiased observers. The effort to fight it is however, easier said than done and probably without positive outcomes (Shenkar and Luo, 2004).
Instead of fighting globalization, it should be acknowledged, studied and the best ways of obtaining positive outcomes for the largest number of constituencies should be sought. Globalization produces winners and losers, and it supposedly comes at the cost of poorer countries.
A common complaint is that globalization deprives countries of their sovereignty.
This allegedly occurs due to the increasing stature of international organizations such as the World Trade Organization whose members are not elected into office by popular vote and because to some, globalization means Americanisation and therefore a threat to their identity and values. Another complaint is that globalization enhances the monopoly strength of large multinational organizations. A further criticism against globalization is its unfriendly attitude towards the environment. Environmentalists conclude that firms relocate because they attempt to escape from the tough pollution rules in their home country. However, in reality, environmental compliance is only one of the many criteria taken into consideration when assessing investment and location decisions.
The globalization challenge is one of maintaining a sense of balance between the public interest and that of those who suffer its consequences in the short term.
Globalization is also associated with other negative consequences. Global capital flow results in less regulated emerging markets susceptible to fluctuations of international capital or foreign exchange markets (which could result in a financial or currency crisis) (Shenkar and Luo, 2004).
Globalization is a complicated occurrence and its consequences are often indistinct.
Globalization brings with it winners and losers as well as promises and threats. While trade benefits all participants; and with globalization being correlated to higher overall economic growth, it is of little solace and consolation to an employee who is displaced due to foreign competition. It is devastating to communities when major firms move their operations offshore (Shenkar and Luo, 2004).