Impact of Globalization on Business Enterprises
The world is termed as a global village, especially since the 20th century when there is an advance in information technology and e- commerce. This period is also marked with government adopting a free trade doctrine. The technology breakthroughs has aided in speeding the rate of economy liberalization and creating fewer barriers to trade in the international level.
The advantages associated with globalization has being lauded by protagonists of corporate globalization, who embraces the ideology that says ‘ the more you let free markets rule, and open your economy to free trade and competition, the more efficient and flourishing your economy will be ‘. But recent observations have shown that all that glitters in the globalization engagement for some organizations are not gold. Thus, the problem associated with globalization on how it affects the human resource in small scale commercial companies, especially in developing countries will be the focus of this write-up.
Problem Of Globalization In Small Scale Commercial Organizations In Developing Countries
The identified problem with globalization associated on small-scale commercial enterprises in developing countries has to do with the inequalities these organization has with Multinational Corporation(MNCs); Where the small scale commercial companies experience labour lost and rigorous competition, which leaves them wit5h little room for development.
The Multinational Corporations dictate the market forces, thus stampeding the growth of these small scale companies.
Relevant Facts Surrounding The Problem And Prospect For Development
It is a well known fact that developments from globalization have a continuing effect on employment, working condition and industrial relations, not only in the commerce but also in contiguous sector and related activities as manufacturing, marketing, transport, finance, logistics, management, communications and data processing.
There are often high hopes in various countries that investment in commerce and the infusion of new commercial technology and kwon-how would result to encouraging economic growth, directly or indirectly generate significant number of new jobs, and contribute to improved working condition. However, these hopes are frequently balanced by contradictory concerns, mainly related to fear of an emergent global social order almost entirely dictated by market. (ILO, 1999). Globalization has brought prosperity and inequalities; this is acting as a test to the limits of collective social responsibilities.
According to public Services International (2005), globalization is characterised by the fact that the most powerful companies- the multinational Enterprises- think of the whole planet as their sphere of operation. They are able to shape national and global politics and policies to suit that end by making offers to many countries, that government cannot refuse and by their lobbying. Other companies which are not multinationals are forced to compete nationally with them and behave as if they are operating in a global market.
At a simplistic level globalization is assumed to be expressed as a natural progression of business organization which start with household level, moved historically to the village level ,and so on , till it gets to the national level. “The problem with globalization is that it is not just a natural progression, it stands to benefit some and make losers of others, the unequal power relationships within and between nations, states and other group in society mean that the judgement about whether globalization is good or bad depends on the nature of those power relationships.
” Multinational corporations do not just influence national government, but they have very close relationship with many inter-government organizations. This gives them advantages of wining contracts from International organizations like World Bank, IMF etc. this place these multinational corporations in a better position to enjoy most benefits accruing from the globalization process. Globalization also effects labour and human resource in commercial firm.
Due to globalization the growing interdependence of markets, increasing proportion of the world labour force is engaged in activities that are linked to international trade and capital flows. This makes market to be interlinked. This has resulted to increased foreign take-overs through mergers and acquisitions, resulting in modern distribution circuits associated with new technology innovative management styles, different approaches to work and new employment arrangement.
This tends to destabilise the traditional employment arrangement in developing countries and thereby leading to job lost and fear from job insecurity. This problem can only be turned around to the advantages of the small scale companies, when they get the same opportunities available to these multinational corporations and cheap raw materials and labour cost. Also if the various governments gives them rebates in tariffs when exporting and importing their goods and raw materials, this will place them in a better position to compete and share the advantages available with globalization.
For the problem of inequalities and the disadvantaged position of small scale commercial organization in developing countries be solved, it is recommended that international organizations like ILO, should put in place guidelines and measures that will make multinational corporations give room for small scale commercial organisation, operating in national level, to thrive in their operations with the existing traditional labour arrangement in place.
Also, individual government in developing countries should formulate policies to protect their indigenous small scale industry, so that their countries shores will not be a dumping ground for the Multinational Corporation. This will make room for these small scale companies to thrive and develop, thereby creating a good ground for competition them and then Multinational corporations.
- ILO (1999), “Human Resource Implications of globalization and restructuring in Commerce”.Tripartite meeting on the Human Resource Implication of Globalization and Restructuring in Commerce. Geneva. Public services International (2005), “Globalization and Public Sector Trade Unions” http://www. world-psi. org/globalization/ (9th Dec. , 2005).
- Richard, W. M. & Jose De La Torre (2001), “Introduction to the Symposium E- commerce and Global Business: The Impact of the Information and Communication Technology revolution on the Conduct of International Business. ” (Journal of International Business Studies, vol. 32, issue 4. p617+).