The definition of the term “globalization” is versatile and multipurpose. Globalization can be defined as a continuous process that makes countries and citizens interdependent. Furthermore, the process of globalization involves integration in terms of economics, politics and culture. It is important to note that the phenomenon of globalization has penetrated all spheres of human activity since the middle of the 1980s. Nowadays, the notion of globalization can be reviewed from four basic angles: trade; investment; migration; extremely rapid dissemination of information.
At present, globalization is driven by many factors. These factors involve economic, political, technological and socio-cultural forces. Major driving forces of globalization are as follows: development of transport; improvement in the sphere of communication; transnational companies and corporations.
Development in the area of transportation is one of the leading forces that drive globalization. Nowadays, transport system is becoming increasingly important, as it transports not only human resources, but also goods and commodities around the globe. Effective transport system should include seaports, airports, highways and railways due to the increased mobility of humans, goods and services in the process of globalization. With the help of highly efficient network of transport, merchandise can be easily and rapidly “moved” around the globe. As a result, people and their activities become integrated and bound to each other.
One more force that is pushing globalization forward is development of the sphere of communication. Technological advancements have made communication among people more convenient and affordable. With the help of Internet, mobile phones and e-mail, information “travels” at the speed of light.
Transnational corporations are accelerating globalization as well. Companies run businesses outside their native countries in order to expand new markets. Consequently, business area is becoming exceedingly united and integrated.
As a result, advancements in the sphere of transportation, efficient communication and international corporations are three leading forces of globalization.
What Role Does Information Technology Plays in Globalization
IT or Information Technology is a driving force of the globalization process. Advancements of computer’s hardware and software as well as improvement of telecommunication provided the humanity with access to information and knowledge. Moreover, information technologies accelerate the expansion of goods, commodities, information and resources to every corner of the world. The list of technological advancements that influence globalization is enormous. However, the most efficient information technologies are as follows:
- invention and extension of personal computer;
- creation of World Wide Web;
- appearance of Work Flow Software;
- open-sourcing and supply-chaining;
- mobile and digital technologies.
The invention of personal computer, the work of which was based on Windows, has destroyed all the barriers and restrictions concerning globalization. As a result of invention of computer, huge masses of information can now be obtained, analyzed, modified and transferred. Furthermore, such technological advancements as modem and fax have had a positive impact on the process o globalization as well.
The appearance of WWW (World Wide Web) is probably the most influential factor of globalization. The Internet speeds up globalization as it gives a unique chance to share knowledge instantly around the globe.
The Work Flow Software is considered to be an invention of crucial importance for companies and organizations as its discovery has enabled them to transmit documents and tasks from one employee to the other. As a result, when this software was adopted, the workers of the company were provided with a unique opportunity to process data in various locations. The “revolution” of Work Flow Software has become apparent, when employees of the same company started sharing information via e-mail, as everything could be delivered to co-workers without leaving the workplace.
Open-sourcing has been widely used by individuals and businesses with the purpose of viewing the source code online. “Apache” is evaluated as the most successful and efficient tool for open-sourcing. It could be regarded as a huge impulse for the development and correspondingly globalization. Supply-chaining is a strategy of integration among suppliers and customers. Wal-Mart is said to be a good example of supply-chaining. In fact, globalization helps companies and corporations design their supply chains. That gives an opportunity to each company to find producers that sell goods at low prices in different countries on various continents.
Finally, invention of digital and mobile technologies affects the progression of the process of globalization. With the help of mobile phones, computers, laptops and digital cameras, companies are able to cooperate with one another more frequently. For example, the ability to communicate with the help of instant massages allows people and companies to negotiate on a regular basis. One more invention that pushes globalization forward is Skype.
As a result, information technology has become a driving factor behind globalization. In case companies succeed in combining all IT advancements, together they will definitely create a powerful and reliable global market.
Potential Benefits Globalization Offers to Companies
It is obvious that globalization involves integration of economies around the globe at local, national and international levels. It promotes expansion, dissemination and transportation of commodities, services, people, knowledge and money around the world. The phenomenon of globalization offers a vast range of benefits to companies. One of the most positive aspects of globalization in relation to businesses is the fact that companies and corporations have an opportunity to broaden their horizon which leads to enhanced collaboration between them. Owing globalization, companies have an opportunity to merge with other companies or outsource some sectors. Furthermore, companies can communicate, negotiate and transfer information at a rapid speed.
Moreover, globalization has provided companies and corporations with a chance to decrease costs and increase efficiency of business functions. The notion of “outsourcing” is widely applied in business sphere and this process gives an opportunity to a company to innovate more quickly, grow larger, expand markets, and hire a lot of qualified specialists. Furthermore, globalization assists in rapid transactions, quicker transportation and enhanced selection of mobility with the purpose of finding the most profitable and beneficial location. One more advantage of globalization in relation to companies is the fact that it allows companies and corporations to empower users and buyers. With globalization, consumers have a vast variety of products and can choose what goods fit them most. Another positive impact of globalization is based on the fact that nowadays even small businesses can join the global market. In fact, globalization results in an increased competition among companies. Huge corporations and tiny companies need to be aware of the fact that globalization influences business affairs in a positive way.
Risks of Globalization
Despite the fact that globalization influences companies and corporations positively it still has some negative consequences. Outsourcing services, low wages and interdependence of economy can be viewed as a negative side of the process of globalization. As a result of globalization, small businesses become less popular, deprived of income and unprofitable. Small companies disappear because of enormous multinational companies. For example, with the expansion of Wal-Mart stores around the globe many small businesses decay. Establishment of Wal-Mart stores in many countries decreases retail activity and opportunities of employment. Furthermore, emergence of every new Wal-Mart store unfavorably influences small retailers. For instance, existing retail stores suffer from considerable sales declines that usually exceed 30 percent. Taking into consideration the recent statistics, after one retail store of Wal-Mart was opened in Chicago in 2006, eighty two out of three hundred small stores on that territory got no profit and were finally closed down in two years (Angotti et al.). In order to survive, small businesses are obliged to adapt to these changes.
Besides, globalization transfers jobs to less developed countries as the workforce has to be paid less. For example, the percentage of unemployed workers increased in the USA when China joined the WTO. This is a direct result of globalization, as nowadays China is “littered” with numerous multinational companies and corporations such as Wal-Mart, McDonald’s and Starbucks.
Types of Pressure that Drive Organizations to Change
In order to increase its effectiveness, many companies require drastic changes. There are numerous types of pressure that drive organizations to change in order to achieve desired results in future. These forces may be of two types: external and internal.
It is necessary to note that majority of changes start with a shift in the environment of organizations. Globalization deals with the fact that production and all other parts of organization can be easily outsourced and transferred to other parts of the world. Very often organizations are caught by surprise, while some other organizations are ready for new situations.
Besides, technological advancements are forcing organizations to implement effective changes. Moreover, the pressure of the crisis is the factor that makes an organization willing to change. For example, senior managers feel the need to reevaluate the whole performance process of the organization in order to increase efficiency and reach progress. Consequently, management creates a so-called “vision” and motivates the employees.
One more pressure that drives a company to alter is based on reorienting. It influences all organizational components. For instance, senior management uses the strategy of “urgency” and motivates the staff to solve the problem.
Adapting can be considered a pressure that encourages companies and corporations to change in order to revive business affairs. Adapting involves middle management and deals with changes in customer service in response to numerous complaints.
Reasons Why Employees May Resist Changes
As a rule, an adequate reaction to change is resistance and opposition. Very often entrepreneurs and managers support the idea of changes. On the contrary, changes usually threaten the workforce. There are many reasons of why employees reject changes. First of all, employees may be not aware that a company or corporation needs changes. Furthermore, the workforce may be satisfied with the current state of affairs. Very often, employees maintain the status quo because of salary, personal rewards and a feeling of accomplishment. In the course of time, employees become satisfied with the knowledge they have, skills they have obtained, and even with disadvantages of their job. Moreover, workers are afraid that they will be required to work more for the same salary.
As a result, the reasons for resistance are as follows:
- fear of the unknown;
- inappropriate timing;
- personal prejudice or bias towards changes.
In such a way, workers are willing to reduce the risk of failure. In order to avoid or minimize resistance to changes, managers are obliged to provide sufficient information and enhance the awareness of employees about possible changes.
What Can Managers Do to Overcome Resistance to Change
Nowadays, changes within organizations occur increasingly often. Furthermore, these changes are rejected by employees who are afraid that their working conditions will become worse. In order to overcome resistance to changes, managers have to follow certain regulations and determined strategies. First of all, managers should primarily refer to personal concerns of employees. Friendly communication may appear to be successful. Managers are required to explain the peculiarities of changes and estimate how these changes will influence employees. As a rule, people are extremely sensitive to a loss, but not to a gain. That is why the task of a manager is to prove that employees will not suffer from negative impacts of changes. Furthermore, managers should deliver information that meets the expectations of workers. Managers may give logical arguments that prove that the change will be beneficial not only to the company, but to each individual.
Why Polaroid Needs to Change
As a rule, companies and corporations require changes for numerous reasons: crisis, technological advancements and new opportunities, internal and external pressure. It is usually assumed that Polaroid has failed to succeed in the process of transition to the digital world. As a result, this company went bankrupt in 2001. In the course of time, the Polaroid has changed not only its name, but business culture as well. However, after selling-off of assets, “new” Polaroid is considered to be nothing more than “administrative shell”. In case this corporation does not apply a vast number of business strategies, including motivation of employees, it will never bring back the popularity of Polaroid that was gained in 1937 by E. H. Land.