Globalization of Production
Aparna Perikamana
University of the Cumberlands
BADM 631-50 – Managing in a Global Environment
Dr. Gary E Moss
May 6, 2020
Globalization of Production
Introduction
Globalization is the process of integrating the world as one big market and reducing “developmental gap” (MacEwan, A., 2001). Globalization is the main catalyst in changing the ways in which nations interact (Hanson, H. H, 2020). Globalization can be defined as the transfer of goods, services across the globe that leads to interdependence of different countries and lead to free trade. Globalization can also lead to spread of information, jobs, and technology across countries (Williamson, J., 1998). In other words, globalization can be defined as the process of moving towards a more integrated and interdependent world economy (Hill C. W. L. and Hult, G. T. M., 2020).
Globalization intends to easy access to products and services. It is also expected to influence the distribution of income (Williamson, J., 1998). But in reality, there are both advantages and disadvantages to globalization. Globalization has helped in creating new jobs, transfer of goods across countries and economic growth of some really backward places. It has also helped in exchange of ideas, cultures, knowledge from one location to the other. But this growth is not evenly distributed across the world.
Globalization of products
Every company’s main intention is to maximize profitability. Sometimes, companies are able to maximize profit by fully utilizing globalization. Globalization has made transfer of goods much easier and faster. Globalization helps in product innovation at the same, it helps in minimizing the production cost. Globalization is a force reorganizing the world’s economy, and this is primarily done by using the available knowledge and information (Carnoy, M., & Rhoten, D., 2002). Since information is easily accessible, companies can attain the information bout the production cost in various locations around the globe, the transportation cost, and the assembling cost in different locations. Using all this information, a company can develop a production process that is in the best interest of the organization’s profitability. In other words, the knowledge and information collected from national, regional, and local sources are used to shape the development of the economy of a product (Carnoy, M., & Rhoten, D., 2002). In other words, globalization of products can be defined as the process of collecting goods and services from different locations around the globe to increase the profitability of the organization by taking advantage of differences in the cost and quality of production at different locations (Hill, C. W. L. and Hult, G. T. M., 2020). In this case all the countries involved are benefited.
Product globalization can help the skilled labors in the outsourcing country. But one consequence is that it negatively impacts the skilled labors in the parent country if all the production and assembling is done in the outsourcing countries. Production usually involves many stages, such as design, parts production, and assembly. Each of these stages require different number of skilled labors (Hanson, H. H, 2020). If production and outsourcing is done in the parent and outsourcing countries then it can increase the demand for skilled labor both at home and abroad (Hanson, H. H, 2020). The outsourcing is done after considering the quality – price/wages of the skilled labors in the home country and the outsourcing country. It is more beneficial if the skilled labors are highly skilled and the wage requirement is less in the outsourcing country. This can help an organization can have a variety of skilled team. And it would also help in marketing as the outsourcing company would directly or indirectly market the product. One advantage with product globalization is that it is difficult to monitor the quality of the manufacturing process if there are no company representatives in the outsourcing location throughout the manufacturing process.
References
Carnoy, M., & Rhoten, D., (2002). What Does Globalization Mean for Educational Change? A Comparative Approach. Comparative Education Review, 46(1), 1. https://doi.org/10.1086/324053
Hanson, H. H (2020). The Globalization of Production. https://www.nber.org/reporter/spring01/hanson.html
Hill, C. W. L. and Hult, G. T. M. (2020). Global Business Today (11th ed.). New York, NY: McGraw Hill.
MacEwan, A. (2001). INTRODUCTION: What Is Globalization? The Radical Teacher, 61, 2.
Williamson, J. (1998). Globalization: The Concept, Causes, and Consequences.
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