FE5054 International Business Assignment Sample

INTRODUCTION

Globalisation means the integration of the world economies, markets, culture, and industries as well as policies around the world free from the control related to social and political and declining distance within countries via a global network of trade, transportation, and communication. In today`s era, the manager needs to understand the effect of Globalisation on business so that able to expand business in international boundaries. The report will outline the recent trends of Globalisation in the developed country UK and the developing country India and its positive and negative impacts. In addition, the report will also highlight the impact of Globalisation in favor and against on economic growth and poverty in the developed country UK while using appropriate economic theory.

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PART A

Recent trends in Globalisation

1. Overview of Recent Trends

United Kingdom

Globalisation is used to explain how trade as well as technology made the world a more engaged as well as independent place. Globalisation increases financial integration as a result aids in increasing countries' production base leading to an increase in specialization of the production (Walter, 2021). Increasing Globalisation effectively increases trade, Foreign Direct Investment as well as use of the technology in different countries. 

• FDI: Foreign direct investment refers to an investment in a company operating in a foreign economy. It can be of two kinds inward FDI as well as outward FDI. Investment made in a domestic country by another country is known as inward while investment done by a domestic company in a foreign economy is known as outward FDI. During the financial year 2021, the inward FDI into the UK amounted - to £51.7 billion which was a decline from £34.8 billion in 2020. During 2023-24 1,555 projects come in the UK with a worth of £ 5.757 million (DBT inward investment results 2023 to 2024, 2024).
• Technology: In addition due to Globalisation, the United Kingdom can make technological advancements. Due to Globalisation UK can introduce and enhance its digital infrastructure. Regarding this, above 33% of the businesses in developed countries use technology such as artificial intelligence, automation and so more including health, hospitality, and all. Globalisation will lead to an increase AI market in the UK above 4.5 billion pounds in 2024. Also, Globalisation leads to rapid digital transformation leads to increased adoption of remote work, and provides flexibility to employees.
• Trade: In addition, currently, the trends of UK trade include a decrease in imports by £1.5 billion in July 2024 in regards to both EU as well as non-EU countries. Also, goods of exports decline by £3.4 billion in July 2024 (UK trade: July 2024, 2024). On the other hand, Globalisation leads to increased digital trade and e-commerce growth. During 2023, e-commerce sales in the UK had a growth of 4.8% which is higher than the negative 7.8% from the previous year (E-commerce sales growth, 2024.). 

India

Recent trnds in India regarding Globalisation is as under:

• FDI: In a developing country like India, the recent trends in Foreign Direct Investment include an increase in FDI in 2024 to $36.1 billion from $27.4 billion (Net FDI in India, 2024). This leads to increased employment opportunities and the manufacturing and service sectors receive a boost, resulting in high economic growth, and contribute to the country's forwards towards developing to develop one.
• Technology: In the current time with the pace of Globalisation, there is high advancement in technology. In large numbers of businesses within India, the use of technology increases to bring specialisation, lower costs as well as maintain efficient working. Presently, in 2024, IT expenditure in India is projected to record a double-digit growth of 11.1%. Globalisation makes the transfer of technology easier and leads to increased domestic productivity levels as well as innovation within the business.
• Trade: Apart from this, in India trend of the trade includes total exports amounting to $60.40 billion in 2023 and, an increase in foreign currency within the country.

2. Advantages and disadvantages of globalisation

Advantages

There are various advantages of globalisation in the UK it is as under:

• Promotes economic growth: Increasing Globalisation improves economic growth as it aids in distributing resources more efficiently as countries become specialized in activities with comparative advantages. It leads to promoting growth indirectly via changes in terms of capital as well as financial development (Ze et al, 2023). For example, Globalisation leads to enhancing the economy of the UK effectively by increasing higher export value of manufactured goods.
• Spread of knowledge and technology: Globalisation increases access to business in the international market by spreading knowledge as well as technology (Saurav, Liu, and Sinha, 2020). For instance, UK`s retail business Tesco due to Globalisation and technological advancement able to sell its products worldwide via the online platform. In addition, new website Globalisation technology assists healthcare products to reach rapidly to the multilingual target market.
• Lower cost production: Globalisation leads to increased technological advancements within the UK, resulting in significant use of technology within the business. It allows the manager of the company to reduce their cost of operations and enables them to offer goods at a lower price to grab the attention of a wide range of customers (Ikumapayi et al, 2020). It leads to increase company revenue, profitability as well as competitive power to effectively compete with the MNC.

Disadvantage

Some of the negative impacts of Globalisation are as under:

• Increase Competition: Globalisation in the UK increases competition for local businesses due to the entrance of multinational companies into domestic boundaries. Local businesses are required to compete with multinational companies that manufacture goods at lower costs, putting local businesses at a loss. High-quality goods at lower prices attract customers towards MNCs, resulting in financial loss to local businesses.

Globalisation has several positive as well as negative impacts in India:

Advantages

• Increase in employment opportunity: Globalisation leads to increased foreign direct investment in India, resulting in increasing employment opportunities within the businesses. This results in increasing income and standard of living of people. Moreover, it brings greater competitive business environment (Mazumdar and Sarkar, 2020).
• Increase efficiency: Globalisation aids the businesses of India to adopt and implement global technology within the business. It aids the Indian business to get a competitive advantage as technological advancement aids the business to improve its efficiency. The adoption of technological advancement enables Indian businesses to do online business in an effective manner, increasing profitability (Nasreen et al, 2020).

Disadvantage

The negative impact of Globalisation on Indian business includes:

• Loss of local business: Globalisation in India negatively impacts local business. For example, the handicraft, art, and craft businesses in India are destroyed in a significant manner.
• The decline in Job rate: Globalisation brings technology to India, which leads to a decline in the number of labor required correspondingly various people are removed from their jobs. In addition, the loss of local businesses also makes people unemployed as well as declines in job rates directly impact income levels.

3. Winners and losers of gloablisation

It is identified that Nestle is one of the winners that benefit from Globalisation. Due to this company is able to cater its products worldwide, able to increase its customer base and market share as well as profitability. On the other hand, Ted Baker is one of the losers that not able to compete in a highly competitive environment due to Globalisation, which leads to taking the company on end.

PART B:

Arguments for and against Globalisation impacts

1. Impact on Economic Growth

Argument For

Globalisation has a significant impact on economic growth, income inequality, poverty as well as environment. In the United Kingdom, Globalisation positively influences economic growth with the help of increasing foreign direct investment, trade with other countries as well as technological advancements. In the UK, due to increasing Globalisation, the business of the UK can expand their market share as well as consumers. It helps them to attain economies of scale as large production of goods and services allows the organization to produce at low cost. According to the new trade theory, trade can increase the number of available goods and decline the average cost of production, resulting in economies of scale. This leads to assisting the business in offering goods at a lower price to customers leading to an increase in the revenue of the business correspondingly increasing the income of the people, resulting in overall economic growth of the country in an effective as well as efficient manner (Ferry, 2022). Due to Globalisation, each year UK economy grows by 1 to 2%. The main reason for this includes an increase in trade with other countries all over the world. The main trading countries of the UK include Germany, Netherlands, France, China and so more. In addition, Globalisation results in technological advancements lead to facilitated better transportation and communication. The development of the railway, digital infrastructure, and air travel significantly declines time and cost for the business of the UK for long-distance trade (Nu'man et al, 2020). In addition the digital technologies and internet faster the global connectivity and communication. These advancements lead to accelerating the exchange of information, goods, and services of the UK with other countries, improving foreign trade, economic integration, and development. Greater trade with other countries aids in increasing employment opportunities, and earning foreign currencies, resulting in high economic growth within the UK.

Argument Against

On the other hand, it is also identified that Globalisation adversely impacts economic growth as it significantly impacts the equality level in the company. It is analyzed that usually, FDI is done in the developed cities of the country as a result people of the city can increase their income level but due to lack of investment within the lack developed cities, people are not able to enhance their income level. This leads to increased inequality within the income, resulting in poorer become poorer on the other hand richer become richer. This inequality within the society effectively impacts the economic growth of the country. Thus, Globalisation also works against the benefits of the company (Ayinde and Kirkwood, 2020). In addition, the lack of foreign direct investment within the less developed cities of the country results in less infrastructure development as a result the area does not have better business opportunities resulting in a lack of economic growth. Also, Globalisation Thus, Globalisation is beneficial for economic growth but sometimes adversely impacts it.

 In addition, increasing Globalisation assists the business of the UK to import goods that have less availability within domestic boundaries and export goods that have excess quantity. According to the comparative advantage theory, the country needs to produce goods that have the highest relative advantages. This comparative advantage aids the country in producing goods that are beneficial for economic growth and development.

2. Impact on Poverty

Argument For

Apart from this, increasing Globalisation in the UK effectively declines poverty. Globalisation increases economic integration via trade and investments, resulting in progress against global inequality as well as poverty. Increasing Globalisation increases demand for the company`s products and services, to meet the demand there are requirements of labor within the industry including retail, fashion, manufacturing and so more. The increasing demand effectively generates employment opportunities for the people of the countries. This enables the people to get employment according to their demands and requirements leading to an effective increase income level of the people within the country and significantly aids in the decline of poverty within the UK. In UK, due to the Globalisation foreign trade increase results in increase in 6.5 million jobs supported by exports leads to decline poverty (New report shows 6.5 million jobs supported by exports, 2024).

Argument Against

On the other hand, Globalisation is also one of the factors that is responsible for increasing the poverty in UK. Globalisation leads to an increase in the entrance of multinational corporations into the local market which leads to increased competition in domestic boundaries, resulting in shut down of several businesses within the economy (Ahmad, 2019). This leads to leave large number of people being unemployed, resulting in increasing poverty levels in the United Kingdom. In addition, Globalisation results in technological advancements which lead to the introduction of technologies such as artificial intelligence, automation, and robotics within the UK. This emergence of the new technology led to the layoff of several numbers of employees from the job. For instance, Sainsbury plans to lay off its 1500 employees from the job to save its costs by using the AI technology which is crucial for working in the warehouses. Thus, this leads to increased unemployment rates within the UK which become one of the results of poverty within the country. In 2021/2022 1 in 5 people were in poverty in the UK which amounted to 14.4 million people. Presently, in the UK there are 1.49 million people are unemployed one of the major reasons for the increasing poverty rate within the country (UK Poverty 2024, 2024).

Thus with the help of effective evaluation, it is identified that Globalisation has positive as well as negative impacts on both economic growth and poverty within the country.

CONCLUSION

To sum up, it is concluded that Globalisation plays an essential role in increasing the competitive advantage of the business. In the present study by evaluating the recent trends in trade, FDI, and technology within the UK and India identified that Globalisation advantages UK economic growth and lowers cost of the production. On the other hand, in India, Globalisation leads to increased employment opportunities but negatively impacts local businesses. Moreover, it identified that Globalisation leads to increased economic growth as increasing business opportunities increase growth by 1-2% each year within the country as well as at a particular level declines poverty level.

REFERENCES

Books and Journals

• Ahmad, M., 2019. ‘Globalisation, economic growth, and spillovers: A spatial analysis’, Margin: The Journal of Applied Economic Research, 13(3), pp. 255–276. doi:10.1177/2347631119841257.
• Ayinde, L. and Kirkwood, H., 2020. Rethinking the roles and skills of information professionals in the 4th Industrial Revolution. Business Information Review, 37(4), pp.142-153.
• Ferry, J., 2022. Free Trade Theory and Reality: How Economists Have Ignored Their Evidence for 100 Years. Real-world economics review, p.83.
• Ikumapayi, O.M., Oyinbo, S.T., Akinlabi, E.T. and Madushele, N., 2020. Overview of recent advancements in Globalisation and outsourcing initiatives in manufacturing systems. Materials Today: Proceedings, 26, pp.1532-1539.
• Mazumdar, D. and Sarkar, S., 2020. Globalisation, labor markets, and inequality in India. Routledge.
• Nasreen, S., Mahalik, M.K., Shahbaz, M. and Abbas, Q., 2020. How do financial Globalisation, institutions, and economic growth impact financial sector development in European countries? Research in International Business and Finance, 54, p.101247.
• Nu'man, A.H., Nurwandi, L., Bachtiar, I., Aspiranti, T. and Pratama, I., 2020. Social Networking, and firm performance: Mediating role of comparative advantage and sustainable supply chain. International Journal of Supply Chain Management.
• Saurav, A., Liu, Y. and Sinha, A. (2020). Foreign Direct Investment and Employment Outcomes in Developing Countries, IN FOCUS A Literature Review of the Effects of FDI on Job Creation and Wages. World Bank, 2020
• Walter, S., 2021. The backlash against Globalisation. Annual Review of Political Science, 24(1), pp.421-442.
• Ze, F., Yu, W., Ali, A., Hishan, S.S., Muda, I. and Khudoykulov, K., 2023. Influence of natural resources, ICT, and financial Globalisation on economic growth: Evidence from G10 countries. Resources Policy, 81, p.103254.
• Online
• DBT inward investment results in 2023 to 2024. 2024. Online. Available through: <https://www.gov.uk/government/statistics/dbt-inward-investment-results-2023-to-2024/dbt-inward-investment-results-2023-to-2024-html-version>
• Net FDI in India. 2024. Online. Available through: < https://www.business-standard.com/economy/news/net-fdi-in-india-more-than-doubles-in-apr-aug-2024-shows-rbi-data-124102101239_1.html>
• UK Poverty 2024. 2024. Online. Available through: ,https://www.jrf.org.uk/uk-poverty-2024-the-essential-guide-to-understanding-poverty-in-the-uk#:~:text=Poverty%202024%20report.-,Poverty%20has%20increased%2C%20close%20to%20pre%2Dpandemic%20levels,nearly%203%20in%2010)%20children>
• UK trade: July 2024. 2024. Online. Available through: < https://www.ons.gov.uk/economy/nationalaccounts/balanceofpayments/bulletins/uktrade/july2024#:~:text=1.-,Main%20points,large%20rise%20the%20previous%20month.>
• E-commerce sales growth. 2024.Online. Available through: https://www.statista.com/statistics/1401033/e-commerce-retail-salesgrowth-in-the-united-kingdom-uk/#:~:text=E%2Dcommerce%20sales%20growth%20percentage,Kingdom%20(UK)%202022%2D2028&text=In%202023%2C%20e%2Dcommerce%20sales,to%20grow%20by%203.8%20percent.
• New report shows 6.5 million jobs supported by exports. 2024.Online. Available through: < https://www.gov.uk/government/news/new-report-shows-65-million-jobs-supported-by-exports#:~:text=Department%20for%20International%20Trade%20and,10%20March%202021&text=New%20research%20released%20today%20(March,UK%20are%20supported%20by%20exports.>