What is globalisation?

I don’t know if you have noticed, but many of the online master’s degree programmes we at Robert Kennedy College offer either have the word Global or International in them. Why do you think that is? Is it because of “globalisation”?

Business globalisation. Photo by Jp Valery on Unsplash.

I know the word is self-explanatory, but we have to start somewhere, so let us begin with the meaning of globalisation. According to the BBC, Globalisation is the process by which the world is becoming increasingly interconnected due to massively increased trade and cultural exchange.

How has this come about?

The first thing that happened was transport became cheaper and faster. We invented the wheel, then the steam engine, then the combustion engine, and so on. People and goods were able to be moved around the world almost overnight and in large quantities.

Then the communication boom. From snail mail to the telephone, it took a bit of time. Then came the era of mobile phones and the internet, and everything changed. The changes seen just in the last 25 years have been miraculous. The world has been brought closer together (Only in business. In every other way, the world is still pretty divided). Companies have become truly multinational and cross border trade – a mundane reality. At this rate, Gene Roddenberry’s vision in Star Trek of an Earth utopia could become a reality (fingers crossed here).

Advances in communication technology changed how we do business. Photo by Stellan Johansson on Unsplash.

Now, if you combine the two (travel and communication), what you get is globalisation.

To understand this better, let us take Apple Inc. as an example – Designed in California, Made in China. The iPhone may be designed in California, but everything that goes into the iPhone is global. The phone itself is manufactured in China with semiconductors sourced from Italy and Germany, memory chips and processors from South Korea, wi-fi and Bluetooth from Japan, and minerals from Mongolia and the Democratic Republic of Congo.  

While this looks impressive, what is really impressive is the Supply Chain Management that must go on behind the scenes. Apple sells upwards of about two hundred million iPhones a year globally, and they bring out new models of the phone every year. This means the material has to be sourced, the components manufactured, the phone assembled/manufactured and then shipped to ensure they reach the customers’ hands-on time. All this has to be carried out like clockworks across multiple countries. Let’s face it, none of us has any patients anymore, and if there is a delay, I am going to Samsung (Oops, I already have, but for a different reason).

How does Apple Inc. sell 200 million iPhones a year? Supply Chain Management! Photo by Kyle Ryan on Unsplash.

For all this to happen, the communication behind the scene has to be real-time, continuous and spot-on. The shipment planning has to be on-time and seamless. Because remember, you are operating across countries here.

There are a lot of positives to globalisation, such as creating jobs and new income in poorer communities, thereby giving them food and a roof over their heads, making a cheaper yet high-quality product for the customer, and keeping manufacturing costs low, thereby enabling the company to invest the money into some other aspect of the business (hopefully no into the pockets of the executives), just to name a few.

While it is hoped that working with companies from developed nations, the local business partner will be able to adapt the best business practices from the developed countries and raise the standard of living of its employees, the reality is companies still need to secure future contracts with the “big fish”, and the way to do that is by giving a lowball quote on future services. They get this done by cutting corners, cutting wages, and cutting the workforce by increasing the workload.

While this is more likely with companies operating in blue colure job segments, it comes down to the laws of the nation they are operating within at the end of the day. If the countries have strong labour laws and enforce them, then this is less likely to happen.

Photo by Tingey Injury Law Firm on Unsplash.

Then there is the question of what happens to the people whose jobs just got outsourced? Are they being retrained and upskilled, or are they just let go? Do companies pass on the cost-benefit of outsourcing to the end-user?

So, while outsourcing and globalisation can be great to the bottom-line of any organisation, companies must ensure ethical business practices of their partners because no one else will. Companies must also provide training and upskilling of their employees before outsourcing because a strong and happy workforce is the backbone of any organisation.

If you are ready to be an efficient and knowledgeable global/international business manager, consider joining one of our 100% online master’s degree programmes. Chat LIVE on WhatsApp with one of our Education Advisors today.

Sahil Devasia

Sahil Devasia has a bachelor’s degree in Physics, Mathematics and Computer Science with an MBA in Marketing. He has a wide gamut of professional experience, from the Merchant Marines to the Banking and Finance industries and has been associated with Robert Kennedy College since 2015.  His favourite song is Bon Jovi’s - It's My Life and his ambition in life is to be the “World’s best Dad”. 

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