Globalization is defined as “the shift toward a more integrated and interdependent world economy” (Hill, 2009, p. 6). There are different aspects involving globalization. One primary facet includes the globalization of markets that merges “historically distinct and separate national markets into one huge global marketplace” is classified as the globalization of markets (Hill, 2009, p. 6). The advancement of technology has increased international communication, resulting in the fall of national barriers, and the escalation of cross-border trade. Consumer preferences are crossing international borders and cultures enhancing global market trade. Products such as Coca-Cola soft drinks, McDonald’s hamburgers, and Sony PlayStation games are examples of the success of global market creation. Another primary aspect of globalization is the globalization of production. This process includes “the sourcing of goods and services from locations around the globe to take advantage ...view middle of the document...
His theory was comparative advantage that explained how countries can comparatively become more efficient at producing goods at a lower opportunity cost. Ricardo’s theory of comparative advantage was later further refined by two Swedish economists, Eli Heckscher and Bertil Ohlin. This theory is known today as the Heckscher-Ohlin theory.
There are two major driving factors behind globalization. The first major driving factor is the declining international trade barriers following World War II. One example of such declining trade barriers was the establishment of the General Agreement on Tariffs and Trade (GATT) that reduced trade barriers worldwide to further increase the free flow of goods. Another example of declining trade barriers includes countries removing foreign direct investment restrictions. The removal of FDI restrictions has led to the third example of declining barriers which is the increase in firms’ cross-border investments.
The second major driving factor behind globalization is the “changes in communication, information and transportation technologies” (Hill, 2009, p. 34). Examples of such technologies include the invention of the television that allows people to remain up-to-date on current international events and advancements. The developments of the microprocessors and computers are technologies that have helped link company operations around the world into sophisticated, informational networks. Plane travel has also decreased the time and distances between international firms allowing them to conduct business more efficiently and more often.
The effects of globalization and advancement in computer technology have affected my community by enabling my family to communicate and stay in touch across great distances. Within my workplace, globalization has created the opportunity for my organization to export its products internationally through free trade. Transportation technologies make it possible to ship these products to other countries. The advancement of computer technology has also allowed my organization to monitor the customer’s satisfaction of its products and services sold.
Hill, C.W.L., (2009). International business: competing in the global marketplace.
New York: McGraw-Hill/Irwin.