The Impact of Globalization on National Businesses

It's now that the saying "the world is your oyster" begins to click in people's mind given that there's a more practical and tangible meaning behind it in our modern world.

It's also in the modern world that the saying has become popular given that it has spread like wildfire across social media.

Social media has enable us to communicate and build relationships with anyone anywhere in the world provided they are also online.

Apart from communicating through social media, being online also enables us to trade and exchange value across the globe, Finance as in money, is a core component of trade and exchange of value.

In essence, one could say we can do online, most of the essential interactions we do offline. The internet is a key aspect of our modern world. Some say we're living in the internet or digital age, I prefer technological age.

Just like the internet is a key aspect of the modern world, it is also a key aspect and one of the main drivers of globalization. This can be defined as the process by which individuals are able to easily and freely interact across borders.

We could view globalization as the next logical evolution of humans and their world. From tribes and communities to cities and nations. And now, global communities or nations?

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Impact On National Businesses

A typical example of national businesses are government agencies that provide public services. These aren't usually seen as businesses per se but they do bring in revenue from the services they offer.

It's just that turning a profit is a bit hard in some sectors given the price of the services they offer and the sheer number of customers they serve. What's interesting to me is that some of them are monopolies that look underfunded.

Another category of national businesses are individually owned and operated. Unlike government agencies, it isn't that uncommon to see this category going multinational when they gain a solid footing or well established on the nation it was founded.

Given that the main characteristic of national businesses is operating within the confines of a national border, globalization seems opposed or against it.

So one should only expect negative impacts. But this isn't necessarily the case. There are positive impacts of it on national businesses.

Positives

In theory, technological advancements to a certain extent, have made it possible for most individually owned and operated national businesses to expand into other national territories irrespective of the size of their business.

But in practice, this may not be feasible because in takes more than technology to operate in another territory. Regulatory and legal constraints for example, we also have to be considered.

Still, technology has enabled national businesses to create better systems that will allow them to operate efficiently and in a more cost effective way.

Increased market access is another major positive impact. Globalization allows these businesses to reach more markets across the world.

An example is with e-commerce brands that sell organic products to other countries where there is a high demand for them. This not only increases their sales and profit, but in also reduces the dependency on a domestic market.

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Negatives

When we shift to the other side, we find that the positive impact of increase market access turns into increased competition. Looking at it from the perspective of the native businesses that reside in the country with a high demand of said organic product, business is booming for them.

But gradually, more organic products flood their market, some better than their product. As the high demand for their product fades, they'll have to up their game to remain competitive and protect their market share.

On the other side of the coin with technology enabling better systems and processes is that businesses lose fat and get leaner. One of the processes by which this is done is through outsourcing jobs and other tasks overseas.

A telling experience was during and after the covid pandemic. Remote work was probably at an all time high during those moments.

Big corporations had to embrace it and a ripple effect that ensued was that most businesses that relied on that influx of workers on a specific location noticed a sharp drop in earnings.

Of course, some eventually went back to the office while others never did.

Job loss is by far the main perceived negative impact of globalization in general. I think it is magnified in a sense that it would be more of a pivot than an end for the individuals that lose their job because of globalization. Besides, there will be more available options to choose from.

In Closing

Another popular saying about the internet is that it is an equalizer, leveling the playing field for all who choose to play.

In a way, globalization reshuffles the field, correcting market inefficiencies. And depending on the position we find ourselves at when the reshuffling happens, it may seem good or bad for us. But often, it is both good and bad.

Thanks for reading!! Share your thoughts below on the comments.

Posted Using LeoFinance Alpha