Globalisation and the International Business Environment Essay

Globalisation and the International Business Environment - Essay Example 64-65) as the opposite of localisation; it is the process of adapting products for use outside the home nation (think steering wheels in cars or Chinese versions of Windows). Firms must internationalise if they want to sell to markets outside their home country, because foreign markets have different cultures, needs and wants, demanding that firms make adjustments to products and services, organisational structures, leadership and people systems, and supply chains, amongst others. In a landmark paper on the topic, Whitley (1994) observed that the post-war internationalisation process of firms was primarily driven by increases in foreign direct investment by transnational (or multinational) enterprises. This led to increased interdependence of the industrialised economies and changes in the world economy with the following characteristics: (1) the establishment of a distinct global system of coordination and competition, (2) the denationalisation of leading firms, and (3) the international standardisation of managerial structures and practices. It can be said that the natural progression from internationalisation to interdependence and greater integration of the world economy resulted in the complex phenomenon that we now call "globalisation". Globalisation is a concept that is best described than defined because of its complexity. A simple definition, like "globalisation is the integration of the world economy, reshaping business, reordering lives, creating social classes, different jobs, unimaginable wealth, and wretched poverty" (Micklethwait and Wooldridge, 2000, p. xvi), would not do justice to the term because it focuses too much on the economic aspect. Globalisation is much more than just money, business, and wealth. As Stiglitz (2002, p. 9-10) described it, globalisation "integrates countries and peoples, their economies and politics, their cultures and fates. It breaks down artificial barriers to the flow of goods, services, capital, knowledge, ideas, and (to a lesser extent) peoples across borders. It creates new institutions that joined with existing ones to work across borders". There are then good and bad sides, so whilst many condemn environmental degradation, corruption of cultures, and the spread of squalor, poverty, misery, and greed, many also praise the improved access to cheaper medicines and food, better living conditions, gradual eradication of poverty, and increased opportunities for millions of people around the globe. Therefore, whilst many consider internationalisation and globalisation as synonymous terms, the former would refer to an outward process where firms adapt to and increase their presence in international markets, whilst the latter can be described simply as its natural integrating result. Globalisation is nothing new, but in its past incarnations, the inability of previous generations to manage its bad side has made it a factor that led to two of the bloodiest wars that mankind has ever experienced. Knowing this background reminds us of what the philosopher Santayana said about learning the lessons of history so that we would not be doomed to repeat it. Main Drivers of Globalisation Like success which has many fathers, globalisation (according to whoever is the author) has many drivers (Yip, 2003; Johnson et al., 2003; Stiglitz, 2002; Micklethwait et al., 2000; Porter, 1990) that we can summarily classify into five groups. These drivers are the key