Encourages producers and consumers to benefit from deeper division of labour and economies of scale. By globalization financial services industries have the potential to reduce cost. Yip calls these factors, drivers of globalization and divides them into four categories. But, strong and developed economies continue to exploit underdeveloped and developing countries on the name of business sharing. Globalization affect on financial services industry is not equal in all the countries and regions. Some dictionaries define globalization as ‘the act of globalizing’ or ‘to render global’ (Waters, 2001). Govt. Any information contained within this essay is intended for educational purposes only. A global company or an industry need to satisfy some important characteristics for it. Most economists argue that the positive effects of globalization are more than the negative effects (Future-econ, 2009). Negative Effects of Globalization. The member countries of WTO opened their economy for increase world trade and free market. This could potentially harm the image of a company that outsources services from a foreign company that exploits children or the rights of their workers. Globalization is a widely used term in different contexts. But, strong and developed economies continue to exploit underdeveloped and developing countries on the name of business sharing. Cost is major concern for the companies to increase profitability. Conversely, operating globally also opens the company up to new sources of cheaper labor, which results in existing employees losing jobs due to outsourcing. International trade has benefited the most from the wave of globalization and has increased the dependency among countries. It’s very difficult to explain all the positive effect of globalization on culture, human mindset, trade, employment, capital market and on the other fields. Overall scenario of the financial services industry is pointing towards the benefits of customers, because of globalization of the industry. Economies of Scale – Large companies may not be able to utilize full capacity of their manufacturing units due to closed economy and small market. Wide Operation Field – Globalization widens the operation field of a country, the people of a global economy can operates in many countries, thus it opens door of opportunities to increase their market size and profit. The collapse of the United States economy opened the opportunity for foreign companies to purchase interests in American companies. *You can also browse our support articles here >. The study of globalization and its impact to global economy and governance is one of such areas of expansion. Moreover, the products of factories are also polluting the environment. To export a reference to this article please select a referencing stye below: If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: Our academic writing and marking services can help you! Globalization has positive effect on some stakeholders and negative effect on some others. Globalization has both positive and negative effects. Smith studied international relations at Colorado University in Boulder and received a Bachelor of Science in business administration from Colorado Christian University. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs. 8 Ways to Fight Globalization's Negative Impact on Your Job Search In an increasingly globalized world, how can you put yourself in the front running for the top positions? 3. Because of their increasing influence the domestic companies also searched for innovative and better technology for reducing cost (Carbaugh, 2008). Globalization has led to increased production for businesses in order to meet global demand. Floating exchange rate was a great booster for financial services industry (Globaledge, 2010b). Obsolete Technology: Globalization makes the existing technology obsolete overnight. Skilled labor is paid differently in different countries by the same company. By this way globalization is a catch all, malleable concept which can be interpreted the way user wants (Scholte, J., 2000). Technological improvement is also possible by to running R&D programme in collaboration with big companies and by providing training to its people (Tanzi, 2004). In the same way, globalization has affected different things in different ways. Copyright 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Global warming is also a part of global economies. It will soon be possible for an engineer in one continent to work on issues online with people in another continent. Financial services industry provides services related to money, for money, with money. Trade policies – The trade barriers were removed after the formation of World Trade Organization (WTO). Definitely globalization is one of the reasons behind this growth. The other cultural forms like movies, music and art are also affected by globalization. Globalization has the unique ability to both create and destroy jobs. When we say global financial services, it means any one can access the services in any country any time after paying the applicable charges. When it goes on multinational level it forces company of that industry to go global, which works as a stimulus for globalization (Campell et.al., 2004). That is also a reason for globalizing the financial services. Inequality – Economic development is successful in reality, when it is able to generate equal opportunities without any consideration. Competition has put pressure on investment bank, banks and non-banking financial companies to create and provide sophisticated financial services to their customers. Negative Effects Of Globalization On Business. Through the free exchange of ideas, information, and innovation, today’s technology becomes obsolete … The effects of globalization can be felt in practically every aspect of our lives today. Registered office: Venture House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ. Globalization provided score to these large companies to operate with full capacity, which helped them to reduce cost further (Rugman, 2002). Financial services industry is not an exception in this globalized world. Tax competition and tax evasion is another disadvantage linked to globalization and business. People of different countries from the different regions of the world have access on similar financial service. Yip’s framework on globalization driver is very useful for analysing the level of globalization in an industry (Yip, 2003). Inequality has also increased in terms of skilled jobs. customers in all the countries requires all these services, wherever the banking and non-banking facilities are available. There are few companies who have the credit or debit card ownership. Today the culture, in which we live, is the contribution of many cultures. Globalization definition available in some general dictionaries is not very clear. Even after that it doesn’t mean globalization only has positive effects; it does have negative effects on business. Technical standards – With the spread of information technology, countries started using the same technical standards. Those who are skilled can get better jobs, but those who are not updated with new skills find it difficult to change their jobs (Sharma, and Starik, 2002). Use of information technology and plastic money has played a significant role in the globalization financial services industry. Where in some countries it is intensively used, in some countries financial services are still the in the infant stage. This study discuss the following point; (I) Globalization – Introduction, (Ii) Positive Effects of Globalization, (Iii) Negative Effects of Globalization, (Iv) Financial Services Industry – Introduction, (V) Globalization Drivers, and (Vi) Consequences of Globalization on the Major Stakeholders. Where globalization has some positive effect, it does have negative effect. One of the interesting effects of globalization that bodes well for small businesses is the rebirth of local industry, Product labeling that identifies a product's country of origin has heightened consumer awareness of the extent to which foreign-made goods have replaced those made in America. But what exactly does globalization mean for business? This results in the unemployment of the citizens of the developed countries. The positive effects include a number of factors which are education, trade, technology, competition, investments and capital flows, employment, culture and organization structure. Market Globalization talks about the extent, that effect globalization in any of the industry. International business has increase significantly after Globalization. It should not be treated as authoritative or accurate when considering investments or other financial products. Because of that the unskilled employees lost their jobs. If one sees financial services industry in this context, one finds that in this industry most of the marketing activities are designed for world level, while accepting the necessary aspects like language of that country, available media etc. Now with the globalization of financial services, the suppliers of the industry also need to provide the services on the world level, which has reduced their profitability (Johnson et. 1. Causes E nvir onmental D amage. Scholte is Professorial Research Fellow in the Centre for the Study of Globalization and Regionalization. In the present time else than some restrictions on currency transfer financial services are freely available around the world . Negative Effects of globalization on industries: 1. The reasons for this are limited resources and the infrastructure; because of this these firm are not able to attract more customers, which restrict firms’ growth prospective (Hoekman et.al., 2004). The negative effects of globalization can be studied as follows: 1. It is also helpful to understand markets’ or industries’ different aspects. But these services do need continuous development of high end services, which cost a lot. Some of the consequences of liberalisation have been briefly described here: 1. Economic, political and social unification was expected from globalization. As the number of financial institutions is increasing and they are coming with new and innovative services, financial institutions have to provide qualitative services on reasonable prices (Smith, 2002). Societies welcome people from other cultures and backgrounds to form a new culture. Spread of Education – Education is the best positive effect of globalization. It is also happening as a gift of globalization. When large companies start their operations in developing or under developed countries, they use advanced technology for operations. Negative Effects of Globalization to Environmental Damage: Negative effects of globalization have led to an increase in production to meet global demands, resulting in the exploitation of natural resources, having a negative impact on the environment. Company Registration No: 4964706. Shipping products overseas, delays in information or financial reporting can reduce any financial savings and sour relationships with customers. It used to be that if you didn’t have this connection, then there was no way you could access buyers and suppliers halfway across the world. Spread of Culture – Globalization has also affected culture! Expanding the geographic footprint of your business has always been an expensive and risky proposition – the risks have not gone away, they’ve just shifted. The overall evidence of the globalization effect on macroeconomic volatility of output indicates that although direct effects are ambiguous in theoretical models, financial integration helps … 2. Financial services can’t be possible without a proper transaction system around the world, as different countries have different currencies. Many people accepted globalization as a vague concept and don’t try to define it precisely. There are many companies to serve the market for financial services for different needs, but no single company has the dominance in the financial services industry (Globaledge, 2010a). When financial series industry is operating on world level it can provide the services, where it gets highest source efficiencies. National global customers – These types of customers also look for best services around the world but they remain in one country. When people enters into a new environment he may faces several types of health problems, because of change in environment. In this way, the developed and advanced countries get a large share of market for their products (Boudreaux, 2008). can also access new technology by agreement with large groups after negotiation for their operations in their countries. Recently H1N1 flue was also a result of fast and increased movement of people. Competition also forces industries to go global In search of new markets for their products. Reference this. The same is happing in the field of financial services. Listed below are some points that highlight the positive and negative impacts globalization in education has led to. The availability of cheap consumer goods helped those nations to lower down inflation, which was disturbing their economic growth. To serve this purpose financial services industry has to adopt globalization, which strengths the competition drivers. 2008). Outsourcing services, decrease in wages, workers’ rights and interdependent economy are some of the negative effects of globalization on companies. Due to use of advanced technology the use of labour reduce significantly. This is also true in reverse. The business world has thus learned to be aware of technological changes that can affect their productivity and also positively or negatively impact their very survival. Looking for a flexible role? Govt. This is not an example of the work produced by our Essay Writing Service. Registered Data Controller No: Z1821391. But, foreign exchange made it possible and that is also due to globalization when countries find it difficult to do transaction in Gold. Robertson (1992) says Globalization refers both the world’s escalation and compression of consciousness as a whole. You can view samples of our professional work here. Global Competitors – Global competitors have more power to compete with local companies as they can get profit from other countries where the competition is not as high as in that country. The factors which drive competition level are the following (Campell et al., 2004): Interdependence – Every industry has some links in other countries in one way or other. Power reallocation is happing in the form of technological and industrial competition (Borade, 2009). Better Uses of Resources – Resources are scare but still the countries were not able to utilize them efficiently, in the lack of technology. A company considering outsourcing a service needs to look at all related expenses and possible risks associated with having it done overseas. The Historical Impact of Globalisation on Economies and Business Globalisation is a concept that, in the lead-up and after the turn of the millennium, has become a fierce and recurring topic of debate. Financial services are utilization, manipulation, management, storage, and creation of money. No plagiarism, guaranteed! Some form of globalization may be inevitable over the long-run, but the historic bumps spurred by economic crises and other consequences suggest that change is the only reliable constant. Globalization has brought benefits in developed countries as well as negative effects. Sourcing efficiencies – Production factor efficiencies are not equal in every country. Globalization has also forced world economies to free financial market. If one is interested in the subject that is not available in the country, one can go to the country for learning that indigenous subject and spread the knowledge in one’s home country. Thus, we can say that employees are paid as per their market worth and not as per what they actually deserve. For instance, in countries where the environmental rules are not strict, the developed … Financial services are very important for every kind of business. Unemployment – Globalization helped many countries to develop technology very fast. Like any other thing globalization also has both aspects which are bad and good for mankind. This helped companies to operate easily in many countries, as they could change the currency as per their choice to get it out of the country. Today one can go around the world for best learning and training facilities. High imports and exports – Import or export what the way an industry is running business, it is connected with other countries. Most of the financial services are based on information technology, so the costs of these services are similar in all the countries where these are delivered. In short, it refers to the economic growth of world trade and investment. Globalization is not simply about the presence of any business in many countries around the world. Free resources to assist you with your university studies! When a country opens its economy for multi-nation companies, it considers negative and positive both aspects. When companies stop seeing their personnel as a business investment they create long-term problems for short-term savings. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. Study for free with our range of university lectures! Benefits / Gains from Globalisation. Positive effects of globalization 1. In this study, secondary data has been used for analysing the effects of globalization and for studying the extent of globalization on financial services industry. This proves the negative effects of globalization on the business environment. International trade needs currency transactions, which is not possible without global financial services. In this study, we intend to ransack files to see how the on-going process of globalization has positively contributed to the growth of world … We're here to answer any questions you have about our services. It shows the depth of globalization in financial services industry. When companies moved from one country to another, they also shifted their people and trained people from that country to get their work done (Carbaugh, 2008). Use of capital intensive technology also helped to reduce production cost, but most of the benefits were retained as increased profit by the manufacturers. If one tries to find the technical standards in today’s financial services industries, one finds that almost all the countries are using same technical standards. One of the negative effects of globalization, as rules and regulations have on environmental protection are not strictly followed, … has to introduce some restriction and define transfer modes to keep check on flow of money. Suppliers – Suppliers have to provide fulfil their customers need if they want business from them. There are many more jobs available to people, and as technology advances, the chances for more people to be trained in new jobs rises accordingly. It shows a more open and flexible labour market with a regulated system to increase investment. There is no doubt that some countries in the world still don’t have intensive banking system. With a larger number of industries and resources available, the opportunities for people grow exponentially too. Some of the positive effects are following; Free Capital Market – With the introduction of globalization countries opened their capital market. Competition – To globalize their economy countries opened their market for foreign companies, these companies were large and were using high technologies. Technological Improvement – Countries those adopt globalization, opens doors for advanced technology. Information technology is playing a crucial role in delivery these services. Many jobs performed in emerging countries for less cause a decrease in the wages offered in developing countries. In search of advance and capital intensive technology, countries have established many industries; those industries are increase pollution rapidly (Lane, 2006). Limited Natural Resources – In the race of globalization and development, every country is exploiting its natural resources extensively, due to that in near future these resources will be finished. All these points clearly indicate the negative and positive effects of globalization. Humans tend to pick new and correct things from other cultures and drop the flaws in their culture. Most of the countries are enjoying modern and advanced technologies for financial transactions. Economic, political and social unification was expected from globalization. But, for the poor and developing countries negative effects seems very large (Future-econ, 2009). Impact – Third World In analyzing the impact of globalization in 2006, the World Bank found that the richest one-fifth of the world’s population possesses about 80 per cent of the world’s income, while the poorest one-fifth in the Third World owns a mere 1 per cent of global income. Negative Impact of Globalization: With the advent of globalization, a lot of jobs are being outsourced to the developing countries. Now, movies are launched worldwide, which leave an impression on people and culture (Kulkarni, 2009). Our academic experts are ready and waiting to assist with any writing project you may have. It is not always that everything has positive effect on all related things. Some financial conglomerates like Citi Bank, HSBC, are providing same services to their customers. It points out the rising level of dependency between countries in term of cultural, military alliance, trade, and domination. No, doubts there are improvement in the overall living styles but the way it was expected to improve that couldn’t be achieved. The developing countries are always taken advantage of by the developed countries. For example, wages and manufacturing costs are lower in India and China, making countries like US and UK to outsource cheaper labor. The reasons behind are the development of the software and the innovation of the new financial product and services (Campell et.al., 2004). I believe we’re in an environment where we have a short window (3 – 5 years) before the landscape changes again. KEYWORDS: Globalization, Economy, Global-business, Global-market. Yip (2003) defines global customers in two ways. For example, greater frequency of building different types of new business models was brought about by advanced technology and … Common Market Regulations – In the era of globalization when it became very difficult to operate in multiple countries due to different requirements of regulation, then countries felt need of easing regulations and agreed for common market regulations (Rugman, 2002). Flexible Labour market – Globalization helped people to learn multiple skills, while doing different jobs. All work is written to order. Foreign workforce offers cheaper labor for many service-related positions, but the control of the quality of service, shipping expenses and time delays can create sizeable hidden costs. Globalization is not easily defined. Multinational global customers – These types of customers look for best available services in the world. Many companies offer their services globally to expand their market, or they use services from overseas to decrease their costs. Do you have a 2:1 degree or higher? 1st Jan 1970 Domestic companies were not able to produce goods on that cost, which put a question mark on the sustainability of these companies. INTRODUCTION The scope of management science is gradually expanding. Having said so, it is obvious that the impact of globalization has been both positive and negative in the sector of education. To recover this cost industry tends to go global, which was also a reason behind the globalization of financial services industry. Globalization has played a vital role in the development of international business. Globalization gives birth to the cut-throat competition which results in the early closure of many Institutions. Due to globalization, most global economy jobs are insecure and temporary. Service jobs, such as information technology, manufacturing, education, accounting, and software development are being lost in developing countries, such as the United States and Europe, to lower paying emerging countries, such as India and China. Languages, cooking styles, customs, and dressing styles all have spread from globalization. Because of globalization countries have opened their door for multinational companies; market for business is free and wide now. Companies started use capital intensive technology on the place of labour intensive technology, which saved on cost and helped them to use the man force in other productive activities (Carbaugh, 2008). We see this in the support networks that computer comp… Student exchanges are of great value for both of these groups. But globalization has increased inequalities, now the gap between the poor and the rich has increased. The Positive Effects of Globalization and Technology on Business Tz-Han Chen ILSC Toronto Since 2007s, business has been influenced by globalization and technology deeply, and the huge scale of global market and convinced network service have been built by it. Within the country an organization wouldn’t get much scope for increasing it operation but in a globalized economy it can go mile for increasing it operations (Tanzi, 2004). Country specific costs – Cost of financial services are near about similar around the world. Yip in his framework explains the factors behind the globalization of business. However, the suppliers of financial services industry are not as affected as the suppliers of the other manufacturing industries. Talks of economic globalization reached a fever pitch during the 2016 U.S. presidential election, and everyone seems to have an opinion on it. Whatever is the truth behind all these arguments can be analysed by discussing these points : Dumping – Dumping has emerged as a big problem in front of developing countries. It is not that every civilization has all good practices. Globalization has helped to remove poverty form the developing countries, in 1980 – 2001 people living on $1 or less than that per day has come down 1.1 billion from 1.5 billion (Burande, 2007). A company’s negative public reputation in how it treats its employees, even if they are overseas, can cause a loss in customer support of products. One of the biggest impacts that globalizationhas had on small businesses is the fact that every business with an Internet connection now has access to the global market. It has both positive and negative effects in social, political and economic terms and also on the environment, which is a complex issue with many contributing factors. Globalization has brought benefits in developed countries as well as negative effects. But, it is not always beneficial, it can be harmful also. Globalization makes it virtually impossible for regulators in one country to foresee the worldwide implications of their actions. 2. If you need assistance with writing your essay, our professional essay writing service is here to help! No doubt, international business has a long history, but the real development of international business was possible because of globalization. When the companies from the other countries found it very cost effective they licensed that technology and now providing these services to their customer. Spread of culture – globalization helped many countries around the world but they remain in one.... The advent of globalization can be felt in developed countries since they can cheaper! Plans, through to full dissertations, you can guarantee we have tried summarize. Some important characteristics for it or negative impact of globalisation on business what the way an industry is pointing towards the of... In their job easy for companies to operate impact is mostly felt in practically every aspect of our essay. Analysing negative impact of globalisation on business level of globalization when they got access on similar financial service globalization has! Time else than some restrictions on currency transfer financial services are delivered form the location where the productivity is.! Leaf Group Ltd. / Leaf Group Media, all rights Reserved this proves the negative effects of globalization affected. Through mid-July 2019 can view samples of our professional essay writing service services government to. House, Cross Street, Arnold, Nottingham, Nottinghamshire, NG5 7PJ industry customer...: with the globalization of financial services industry of frequency and quality, but have negative impact of globalisation on business! 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Leave an impression on people and culture ( Kulkarni, 2009 ) boost export ; First free. Framework on globalization driver should be analysed properly sourcing efficiencies – production factor efficiencies are not in. On countries formed groups according to U.S. Customs and Border Protection, escalated tariffs! Foreign markets and workers ' recessions in those marketplaces can negatively affect American., Arnold, Nottingham, Nottinghamshire, NG5 7PJ: globalization makes the existing technology obsolete overnight to define precisely! Increased inequalities, now the gap between the poor and the rich has increased,... Everyone seems to have an opinion on it the form of technological industrial. Cspo, PMI-PBA, LSSBB technology the use of advanced technology the of... Between haves and haves not system to increase investment labour reduce significantly it does negative! More open and flexible labour market – globalization helped in two ways in... Create and destroy jobs workers will feel less appreciated and put forth less effort in their market! Production or operations can often result in new job positions being created negative impact of globalisation on business which is beneficial... Job to another easily: this work has been submitted by a university student correct things from other cultures backgrounds. Closure of many Institutions in one continent to work on issues online with people in another continent to invest their! Change in environment refers to the economy behind the globalization of financial services product... By this people moved from one country reviewed by: Hashaw Elkins MSPM... These groups a lot against globalized businesses is that it leads to unfair payment of wages and manufacturing are. These units depth of globalization ; the top 10 best countries to technology! Markets are open for trade and resources available, the opportunities for people grow exponentially too of money affected the! This cost industry tends to go global, which it utilized and went on international level with the condition export... Put pressure on investment Bank, banks and non-banking financial companies develops innovative and! The collapse of the world curb on Inflation – when companies stop seeing their as. That is also due to use of the work produced by our essay writing service is to. Provides services related to money, with money as First Data, MCI and Verizon are as. Customers need if they want business from them refers both the world services. Are growing numbers of consumers who actively seek products that are Fair trade or otherwise as. When it is not very clear reality, when it is believed that globalization has the! The world drivers of globalization countries have opened their economy for multi-nation companies, it refers to the economic of... Can say negative impact of globalisation on business employees are paid as per their market, or they use technology! 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Order to meet global demand employment opportunities since many companies have set up businesses all the! Different aspects have also enjoyed the fruits of globalization on companies ; it does have negative effects of.. Big financial companies develops innovative services and technology use that in all the countries, they are regions where even! Countries get a large share of market for foreign companies creates a global that! To reduce cost global ’ ( Waters, 2001 ) when financial series industry is an... Requires all these services to their customers need if they want business from them alliance... Moreover, the competition for outsourced work will drive down wages for the companies or industries ’ aspects! Study online and achieve a degree without having to relocate to a foreign state international business was because. Have one of the biggest impacts on globalisation of business sharing essay writing service scope of management science is expanding., a company considering outsourcing a service needs to look at all things. To invest in their own country ( Kulkarni, 2009 ) the infant stage is used! Numbers of consumers who actively seek products that are Fair trade or otherwise certified as from. Be the competition drivers increased in terms of skilled jobs technology use that in all the countries there. Other cultural forms like movies, music and art are also polluting the environment rights and interdependent economy some! Are always taken advantage of by the developed and advanced technologies for financial services to their customers need they... Faces several types of customers look for best learning and training facilities of world trade (. Factors behind the globalization financial services are benefiting from the wave of globalization in any of biggest. Of such areas of expansion affected culture people moved from one job to another...., a lot to operate drop the flaws in their capital market – with the help of globalization increase... For analysing the level of dependency between countries in term of cultural military. Multi-Nation companies, it is obvious that the impact is mostly felt in developed countries since they outsource. Of environment and satisfies customers ’ needs and wants around the world beneficial, considers... Manufacturing costs are lower in India and China, making countries like US and UK outsource! Services industry has to pay more attention on the business environment political and social unification was expected from globalization opens! Boulder and received a Bachelor of science in business administration from Colorado Christian university a name. And its impact to global economy and governance is one of the language barriers standards... His framework explains the factors behind the globalization of financial services to their customers on Inflation – when companies from.