Globalization

Globalization

For every organization, its goal is to maximize profits. Over the years, the increase in competition causes organization to either disintegrate or rise on top of other competitors. Therefore, the best tactic for any organization is to construct innovative ways in conducting a business. To be more specific, globalization provides a key to an organizational success. Globalization is the “shift toward a more integrated and interdependent world economy” (Hill, 2004, P6). In simpler terms, globalization is a business expansion in the different countries (Department of Commerce, 2007). Wal-Mart is an example of a business’s global expansion. Wal-Mart has successfully expanded its businesses in 4 different areas such as Europe, Canada, South America, and Asia.

International trade theories play a major role in globalization. Free trade is an example of the international trade theory. Free trade is “where a government does not attempt to influence through quotas or duties what its citizens can buy from another country or what they can produce and sell to another country” (Hill, 2004, P144). Two major factors for greater globalization are “the decline in barriers to the free flows of goods, services, and capital that has occurred since the end of World War II” and “technological change particularly the dramatic developments in recent years in communication, information processing, and transportation technologies” (Hill, 2004, P12).

The barriers to international trade and foreign direct investment occurred in the early 1900. By lowering national barriers to foreign trade, countries all around the world have been able to enjoy tariff free products which help to open the markets for more innovative products General Agreement on Tariffs and Trade (GATT) was established in 1947 and the World Trade Organization (WTO) was established in 1993 (Hill, 2004, P12)..

The development of the microprocessor chipset; new telecommunication system such as phone systems, security systems and internet access based systems; and changes in transportation such as jet aircrafts, cars, trucks, and trains are some examples of the technological advancements.

Globalization affects an individual, organization or country’s culture and custom. Moreover, globalization affects the environment, individual’s labor, and the monetary trading system. When Wal-Mart first introduces its business in Mexico, the people in Mexico did not have the money to buy and were not accustomed to U.S products. As a result, Wal-Mart had to adapt Mexico’s custom, revaluated its prices and adopted its policy of partnership with the Mexican trucking company for better services (Hill, 2004, P. 4).The expansion