The inevitable forces of globalization and regionalization have re energised the world economic scenery over the past century. Global trade and income flows have seen unprecedented growth. Intra-regional economic connections have become stronger with the propagation of regional trade agreements with common currency areas. Globalization is the world-wide process of the internationalization of trade, communication, and economic organization. In the economic sense, it is seen in international trade agreements, increases in the volume of international trade and emerging economic interdependency. The process is driven by the growth of capitalism which involves the transformation of the social structures and culture of pre industrial and non-capitalist societies.
Globalization process includes the opening of global trade and internationalization of fiscal markets, advancement of communication means, emergent significance of Multinational Corporations (MNC’s) and increased population migrations, which imply growing mobility of people, capital, ideas, goods, data, as well as pollution, infections and disease. Through globalization, an economy is able to generate networks, which gives it access to cross border trade and transactions, free global flow of capital, portfolio investments and foreign direct investments.
Firms are driven to internationalize for cost reduction, search of new markets and to exploit reductions in trade barriers to strengthen competitive advantage. Globalization is a point in the process of internationalization, where competitive strategy is no longer shaped by national origin, but from assets that can be developed anywhere in the world. The driving force of Globalization is technology. The advances in transport and communications, the growing importance of intellectual capital, and collaborations of organizations have been made possible by a reduction in barriers to trade and transfer of resources. Globalization is not new and runs the risk of protectionism. Cultural heterogeneity is a barrier to full globalization since the few products or brands that are truly global, incur substantial additional costs.
Regionalization enables firms to operate within trading blocs, with a narrower range of cultural diversity but still offering economies of scale or scope. The three main trading blocs are the EU, NAFTA and ASEAN. It is extremely crucial to regulate the importation of goods to protect local manufacturers. Lack of import regulation in many developing countries will not sustain the work force leading to layoffs (Anderson, et al., 61).Regionalization is crucial to regulate imports to protect the country from poisonous goods. When there is no regulation of imports, illegal goods are sneaked to the country, Dangerous weapons may also find its way to the country i.e. explosives and poisonous foods.
Non tariff barriers restrict imports but are not in the usual form of a tariff. An example is imposing Quotas, administrative delays, Local content and quotas embargoes. Non tariff barriers enable governments to make crucial decisions to protect producers in their country. Failure to do so, local industries will close down resulting to loss of Jobs. Non tariff barriers are permitted in very limited circumstances when there is a need to protect safety, sanitation, and health.
The threat of cyber terrorism is real and exists in varying degrees due to globalization. For instance, the development of IT and the internet provides numerous opportunities for theft to take place in areas such as intellectual property and online banks. In addition, the internet is a viable ground for committing unscrupulous crimes such as fraud and extortion. Through the use of internet, Cyber terrorist develop codes that enable access to vital information, thus making it easy for them to hack into people’s personal and intellectual property. This is a setback resulting from globalization
The development of Information Technology (IT) and the impact of globalization has revolutionized many organizations and had a positive impact on their operations. The competitive nature of the business environment has made organizations to become innovative and find creative ways of dealing with the competition. In this regard, technology plays a crucial role in the workplace. However, globalization and technology has reduced human contact since many people communicate on the social sites. All a person needs is a phone or a laptop to log into the internet and meet virtual friends to chat. The social sites such as facebook, Twitter, and MySpace have the friends’ lists, containing people from all over the world. They include people that the person may not know. Even for the ones that they know, it is easier chatting via phone than scheduling a face-to-face meeting. This reduces personal touch among people and has a negative impact on the social development of a person.