The Effect of Global Economy to Business
Globalization has corresponding effects on the workforce today considering the many factors that may affect the interaction and responses as well as business activity and practices within an organization. The primary effects of globalization on the workforce are competitive pressures and the need for a reduced cost. It has a special power that pushes the company to adapt to the demand of global economy in order to survive and gain much profit. Thus, each company has an obligation to adjust and deal with those effects that globalization brings.
In this way, the demand for global competitiveness is extended to the workers in terms of skill and tact or work ethics. Workers are expected to possess not only technical skills but also moral virtues related to work such as hard work, diligence, initiative, being reliable and good people skills. The Effect of Global Economy to Business Globalization has many promised benefits or opportunities to business today but this one calls for competitiveness that a company must acclimatize.
However, there are many factors have to be considered if one wants to carry its principles and practices. According to Preston and Windsor, “the world economy has expanded rapidly during the last decades through the growth of trade and investment” (p. 57). This growth in global economy as they elaborated, has increased the scope of international linkages, which usually involve and dominated by multinational corporations. These multinational corporations that dominate world market are influenced by policies of different political structures and economic alliances.
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As noted by Preston and Windsor, the policies that govern multinational economy are defined by two dimensions: the geographic or political scope and functional scope (p. 65). The former according to them refers to jurisdictional dimension for instance the European Union that set control over the European countries; while the latter refers to the kinds of activities over which the regime is intended to have some influence. Functional scope is open to all participants who have intention of joining.
These policies greatly influence business firms as they soar high in the global market and in turn they develop new internal policies in accordance with the international policies. Different organizations provide different sets of policies in terms of nature and scope such as in the case of EU, NAFTA and UN. As Christopher Dent observed, he said, “the global impact of NAFTA remains uncertain but it consolidate the structure of the world economy into rival power blocs and hence reduce the essence of international trade relations down to power-based rather tan rule-based negotiations” (p. 139).
Dent therefore noticed that global economy by nature is about power that encourages competition among its members. Dent further added that world economy that is dominated by multinational enterprise “operate in their own divisional demarcations while transcending the redundant frontiers drawn by nation-states” (p. 225). In his analysis, globalization therefore “encompasses a complex array of dynamic, interacting forces whose own parameters are not easy to establish” (p. 225).