So how do we define globalization?
A variety of theorists have attempted to define it as 'a social process', whereby various companies positioned in different countries, holding different cultural values and ideas tend to converge together.
There are many factors that influence globalization. One of them is the use of information and communication technology (ICT).
Businesses, and society as a whole, rely heavily on information and communication technology, mainly as a means to communicate data and valuable information, which is collected and translated to feed into organizational processes and for crucial decision making. With the development of the internet, there has been an increase in the number of opportunities arising enabling firms to succeed financially, particularly private limited companies.
Why does ICT have an impact on globalization?
ICT is an essential resource to business activities due to the development of high bandwidth telecommunications networking, integrated distribution systems, and database systems that allow businesses to operate in a global way. ICT enables communication between different companies via state-of-the-art technology, consisting of telecommunications equipment such as high-tech web cameras and ISDN networks, resulting in high speed data transmission, crucial for video conferencing.
Now that many firms around the world have taken to globalization through ICT, it has caused an increase in competition between both international firms. Therefore, as a result, the benefit to the consumer is that prices set on the internet are frequently lower than prices set in retail stores.
Other factors that have contributed to the drivers of globalization are e-commerce and e-business.
e-commerce is defined as 'an electronic exchange of information at any stage of the supply chain', which relates to the electronic trading of goods, and services. e-business on the other hand is defined as 'an electronic exchange of information with regards to business activities both internal and external to an organization'. e-commerce provides a wider audience of consumers around the world with a wider range of products and increases sales and profit.
Successful companies such as Dell operate their business via the internet, and do not have any retail stores compared to other previous computer manufacturers such as Time Computers and ESCOM Computers who were based primarily within the high street retail sector. Benefits to this way of operating include reduced overhead costs on property and on security for the storage of units. Companies like Dell, which attract customers from all over the world with their high spec products, produce high revenues, some of which can be re-invested into new projects to improve the company's status.
There is another side to ICT that establishes its limitations. One of them is the issue of people having access to the internet. For example, many people in developing countries do not have access to computers let alone access to the internet, meaning that there is a limitation as to how many people can use the services that organizations can provide through their websites.
However, firms are often reluctant to do business on the internet due to security issues, such as computer crime, e.g. hacking, unauthorized access to sensitive data, unauthorized modification of data and unauthorized users planting viruses and logic bombs.
The cost of setting up an internet based business is a major limitation that new companies will have to face and overcome if they do decide to adopt this approach. One of the main set up costs is the installation of hardware components for accessing the internet and also encryption software set-up, which is vital for security to protect online transactions.
Many people have different opinions and perspectives towards globalization. Some believe that ICT has contributed significantly to both goods and services being sold / provided globally. It has also helped to increase the flow of information and ideas that enable businesses around the world to react quickly.
One other aspect of globalization is that various cultures and traditional values from different countries converge together when people do business globally. This has caused a 'borderless world' as well as a global economy.
According to the 'Anti-globalization perspective', globalization has not caused a 'borderless world'. In other words, there are some companies which still exploit their own workers and countries. These detractors say that globalization must be stopped and controlled before it becomes uncontrollable. Perhaps it already is?
Business in Context: An introduction to business and its environment - 4th Edition (Book and PowerPoint Slides) – David Needle.