Globalization: definition and key concepts

Globalization

Definitions of Globalization

Globalization has a number of different meanings depending on who is explaining and what the context is. An article in the Interdisciplinary Journal of Contemporary Research in Business explains that globalization "…typically refers to the process by with different economies and societies become more closely integrated" (Irani, et al., 2011, p. 1345). The concept of globalization is not new because companies and societies have been relocating and investing in foreign enterprises for more than a hundred years.

But with the advent over the past twenty years of digital technologies (Internet, cell phones, the instant flow of capital -- example, millions of dollars can be sent electronically from a bank in Asia to a bank in Montreal -- and free or very cheap telephone service) the world is more interdependent than ever before in history. And the spread of businesses into many cultures and countries has happened with unprecedented speed. The concept of globalized businesses, and the ability of companies to conduct business internationally using marketing strategies that are adjusted according to the culture that is being approached, is what most people are referring to when they use the term globalization. A very typical scenario for globalization is when a multinational corporation manufacturers products "…in many countries and sells to consumers around the world," and through this process "…money, technology and raw materials move ever more swiftly across national borders" (Irani, 1346).

In addition to the products and financial considerations crossing borders, Irani notes that "ideas and cultures circulate more freely" and as a result of that, "…laws, economies, and social movements are forming at the international level" Irani continues.

Globalization -- Challenges and Opportunities

There are many challenges and changes that societies and cultures are going to go through during the process of globalization, Irani. For example, while many political and business leaders and organizations welcome globalization, for "…billions of the world's people" globalization that is driven by business "…means uprooting old ways of life and threatening livelihoods and cultures" (Irani, 1347).

Writing in the peer-reviewed Financial Executive, Steve Miranda is surprised that there are many companies operating in different parts of the world that have not yet realized "…the benefits of globalization." It is important to realize that Miranda's article was written nine years ago and subsequent to that certainly many companies have indeed seen the light vis-a-vis globalization (Miranda, 2003, p. 1). Miranda takes the cliche, "Think global, act local" to task; he critiques the idea of a company adjusting its product and services "…in accordance with the local language(s), currency, culture and regulatory climate" (p. 1).

Since globalization to Miranda's mind suggests the process of "…streamlining and standardizing communications, business functions and management practices throughout the global organization" then a better cliche to his mind would be to "think local, act global" (p. 1). After all, Miranda continues, while the global offices of any international company will be sensitive to "cultural and compliance issues in the markets they serve," to be truly globalized, the company must function as "…an integrated, global enterprise" (p. 1).

After all, globalization is a strategic priority and it requires the acceptance of change in the way companies have been doing things. Miranda understands that it is no simple task to ask foreign offices to "…cede control over any operations" and to "make the sweeping changes necessary to move to a global model"; resistance within a company is inevitable when these kinds of changes are asked of people and organizations. That said, the real challenge for a company thinking of becoming part of the globalization movement is to "…reengineer processes to be globally efficient, yet locally accountable" (Miranda, p. 2). But moreover, companies must adopt a "collaborative culture" that is "outward-facing," Miranda concludes. An important part of the strategic transition that can help create that collaborative culture is to use the Internet wisely, and to establish "…role-based Web portals" so there can be control over how much "…visibility partner, customers, and suppliers have into their operation" (Miranda, p. 3).

Meanwhile authors Thomas Begley and David Boyd embrace the same concept as Miranda did -- thinking globally or locally or both -- from a bit of a different standpoint. The global "mindset" that companies must have is defined as "…the ability to develop and interpret criteria for business performance" that are not relying on the "assumptions of a single country, culture or context to implement those criteria appropriately…" (Begley, et al., 2003). Begley and colleagues insist that the "truly globalized corporation" sees globalization as more of a "mind-set" than a "structure" per se (p. 1).

The three mind-sets that managers and executives must be able to demonstrate include: a) first, think globally and recognize the things that help to create a "…consistent global standard"; b) secondly, think locally because in the process of becoming "truly global" a company must come to a deep understanding of "local and cultural differences"; and c) third, the authors assert that the strategy should be to "think globally and locally simultaneously" and be cognizant of those situations in which there are "compelling demands" from both global and local elements (Begley, p. 1).

Getting a company into the global mind-set must start with executives and managers, Begley writes; they must pull the "structure, process and power levers to activate it"; and once that happens, there are more challenges as the "…newly globalized lower-level managers will pull their levers to convert employees in cascading fashion through critical parts of the company" (p. 1).

Z.S. Demirdjian writes in the Journal of American Academy of Business that the way that globalization has taken hold in many of the world's economic powerhouses reminds him of a kind of "fever." The author likens the current "globalization fever" to the California Gold Rush of 1845 (Demirdjian, 2005, p. 1). In that gold rush some of the prospectors found gold but others got nothing "…but gravel and sand," hence the implication is that not all companies will enjoy success in the globalized world that is emerging, Demirdjian believes.