Globalization and Its Impacts

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Globalization and Its Impacts

Globalization is an accelerating process in today’s world. Countries and spaces are encompassed in spite of their geographic distances. Cross-border flows of information, capitals and labor have played an important role in economic, social and cultural development and the world becomes flattened with globalization. Globalization benefits the participating countries by motivating their economic growth, pushing forward social and cultural development, and changing the working pattern of people. However, globalization may also raise costs enlarging gap between the developed countries and the developing countries, increasing risks and economic fluctuation, and putting greater pressure on organizations. In this process, the role of governments has to be adjusted since the governmental intervention environment has significantly changed. Organizations also have to adapt to the challenging business world based on diagnosing of the new situation. This essay aims to examine the benefits and costs produced by globalization and its challenges for national governments and organizations. In analyzing the impacts of globalization on organizations, Ikea is studied as a case. In general, this essay purports to comprehensively evaluate globalization.

Concept of globalization
Definition of globalization
There are different definitions for globalization. For instance, Ritzer (2007, p.1) defined globalization as “an accelerating set of processes involving flows that encompass ever-greater numbers of the world’s spaces and that lead to increasing integration and interconnectivity among those spaces.” This definition emphasizes the combination of different spaces and the role of flows in globalization. This definition touches the core of globalization. Scholte (2005, p.59) referred globalization to “the spread of transplanetary - and in recent times also more particularly supraterriotial – connections between people. A global [relation] … can link persons situated at any inhabitable point on the earth. Globalization involves reductions of barriers to such transworld social contracts.” Scholte’s definition of globalization focuses on breaking of geographic barriers from the perspective of people’s living and working. Reduction of barriers is a key characteristic of globalization. However, globalization influences not only people but organizations in both the private sector and the public sector. In this essay, globalization is defined as combination between spaces with flows of information, materials and labor. In this process, the countries heavily depend on each other in their economic and social development.

Characteristics of globalization
According to definition, globalization has some important characteristics. First, cross-border flows are results of globalization. Globalization does not simply connect countries and spaces, it deepens economic, social and cultural cooperation between them. Flows carry such functions of cooperation so that countries depend on each other in their economic and social development. Globalization removes or reduces barriers between countries and spaces so that the free flows are encouraged. Intrinsically, only with the cross-border flows, can globalization exist. Second, cross-border flows facilitate globalization. Flows stimulate exchange and transactions between countries. When they realize the benefits and interests of international cooperation, they will be motivated to take more active attitude toward globalization. In fact, globalization depends on efforts of countries and governments. Reduction of trade barrier is a good example. If they implement supportive policies for cross-border flows, globalization will be accelerated. Third, connectivity is a key feature of globalization (Robertson, 2007, p.15). Traditionally, activities were generally restricted by geographic factors and borders of nations. Globalization fundamentally changed the...
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