DQ No 1.1: Describe the shifts in the world
economy over the past 30 years. What are the implications for businesses in the
worldwide market? How have changes in technology contributed to the
globalization of markets and production and made the world “flatter”?
DQ No 1.1 Answer:
The Shifts in the World
Economy over the Past 30 Years
Over the past 30 years, the world economy
has shifted toward the world in which barriers to trade and investment are
declining. The economy is expanding from national into a global in terms of
cultures, language, education, goods and services etc. In the past, there were
little international business but it has almost changed now, and economy of a
country has relied upon others. There were more of dependent or independent
economies but now it has changed into an interdependent global economic system.
The growth of companies in countries like China, India, Latin Americans, and
Africa plays a more vital role in past 30 years global economy. As a result, more
and more economic activities have been transferring from the Europe and the
United States to these countries.
Implication for
Businesses in the Worldwide Market
The implication for businesses in the
worldwide market has been changing more rapidly than ever before. Consumers are
becoming more powerful than what they are used to be so that their power is
also growing quickly in developing nations. It is also true that more and more
people in the world have become wealthy and rich so that there are spending
more for goods and services. For instance, developing countries like India,
China, Brazil and other Asian and Latin American countries have shown a
potentially huge market in “their backyard.” Due to the fact that many multinational
companies are seeking more opportunities for expanding their businesses in
these developing nations. So, it can be said that all the enterprises in the world
are becoming global for exploiting emerging opportunities though there is
intense competitions in the markets.
Changes in Technology
contributed to the globalization of markets and productions
The declining rate of trade barrier has
played a tremendous role in making the globalization of markets and production.
However, the internet has been a major force facilitating the globalization with
much more advanced communication, information processing. Likewise, transportation
technology has been playing a major component for shaping the global markets
and productions. The web has made it much easier for buyer and sellers to find each
other, wherever they may be located and whatever their size. It allows businesses,
both small and large, to expand their global presence at a lower cost than ever
before. Advanced telecommunication enables companies to reach to their global
customers easily and quickly. As transportation
costs associated with the globalization of production declined, dispersal of
production to geographically separate locations became more economical and
common these days. As a result of the technological advancement, the real costs
of information processing and communication have reduced dramatically over the past
two decades. These developments make it possible for a firm to create and then manage
a globally dispersed production system, further facilitating the globalization
of production. Low cost global communications networks such as the World Wide
Web (WWW) are truly helping the firms to create electronic global marketplaces.
References
Hill,
C. W. (2011). International Business: Competing In the Global Marketplace.
New York: McGraw- Hill .
DQ
No 1.2: Free market economies
stimulate greater economic growth, whereas state-directed economies stifle
growth. Also, a democratic political system is essential for sustained economic
progress.
DQ No 1.2 Answer:
Free Market Economy and
State-Directed Economy for Economic Growth
Free market economy is an economic
system that allows individuals and corporation to own property and other
assets. The right of ownership in free market economies encourages vigorous
competitions among individuals and the organizations to improve efficiency,
offer new products, create superior advertising campaigns, and so on to
increase their personal capital and wealth. Thus, it can be said that when an
individual person or organization becomes rich and wealthy then whole economic
system of a country is likely to be better and prosperous.
On the other hand, state-directed
economies do not allow individuals and corporations to own substantial quantities
of property and other assets. In such state-directed economies, everyone has to
work for the betterment of state rather than their personal improvement. Due to
the lack of accumulating personal capital growth, people have no incentives
like in free market economy to increase efficiency, invent a new product, and create
a superior advertising campaign. As a result, command economies cannot play
effectively in comparisons to free market economies so that dynamisms and
innovation are absent in command economies.
Democratic Political
System for sustained Economic Growth
The political system of a country is
very important for shaping its economic and legal systems. A democratic system
of a country can be defined as a system of the people, for the people by the
people. In other words, unlike a totalitarian system, a democratic system tends
to place a high value on individualism (Hill, 2011) . It is also possible to have democratic
systems that emphasizes on a mix of collectivism and individualism so that a
country with democratic system is likely to gain a sustainable economic growth.
The major reason for this is that democratic systems allows an equal
participation for all people so that there is higher chance of being accepted
for longer period of time which means that all private and public companies
have more choices or freedom to do economic activities, and it may turn in a
sustainable economic growth. Another important reason for this is that it helps
to establish the transfer of power through elections, and therefore, it creates
a political stability as an essential prerequisite for a rapid and sustainable
economic growth.
References
Hill,
C. W. (2011). International Business: Competing In the Global Marketplace.
New York: McGraw- Hill .
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