Globalization’s Unintended Consequences for Americans

global-sourcing-man-strategy

Even in fun, you should see the obvious.  Last fall, my wife and I went on a cruise to the Caribbean.  During this seven day adventure, we visited several countries that catered to our whims as Americans. 

Yet, the impacts of globalization were obvious on the cruise ship.  Both the passengers and the cruise staff appeared to operate within their own cultural preferences when not having to succumb to the dominant culture.  

There were several occasions where there was multiple languages being spoken in the same area which provided a different backdrop to me as an American.  We were all interconnected but yet apart. 

Global forces continue to change business operations and society as a whole.  The results of globalization mean that countries, businesses, and people become interdependent.  Organizations typically pass through four stages to international commerce: The domestic stage, the international stage, the multi-national stage, and the global stage. In search of more profitability, companies send many of their business functions abroad in an attempt to obtain cheaper resources (i.e. labor) for products or services.  

Should globalization change our thinking as Americans too? In the 1960s, the United States was a megastar internationally, accounting for 66.3% of worldwide foreign direct investments. As globalization began to open barriers to the free flow of commerce, non-U.S. firms sought to increase production activities to establish a presence in major foreign markets.  

Given these changes, things started happening.  In 2009, non-U.S. firms accounted for 14.1% of the stock foreign investments with the majority of these firms based in Hong Kong, South Korea, Singapore, Taiwan, India, and China.  Charles Hill, author of International Business, notes:  “The world may be moving toward a more global economic system, but globalization is not inevitable. Countries may pull back from their recent commitment to liberal economic ideology if their experiences do not match their expectations.”

 

Of course, globalization is not all good. America was once the center of all important business transactions internationally.  However, now there is an emergence of other key global partners.  Brazil, Russia, India, and China are becoming dominate providers of products and services abroad. 

With the threat of outsourcings, many Americans are worried about job opportunities.   Richard Daft, author of Management, further argued about the impacts of globalization: “For today’s managers, the whole world is a source of business threats and opportunities.” Should U.S. parents worry about their children’s future given the declining role of the United States in the global environment? 

Today’s American students are not doing better than their parents as it relates to education.  According to the Organization for Economic Cooperation and Development (OECD), the U.S. ranks fourth worst among 29 developed countries for children obtaining a higher level of education than their parents.  

Only 21.6% of those 25 to 34 years old achieved a higher level of education than their parents in the United States. That compares to an OECD average of 36.8%.  Consequently, current and future U.S. workers will be vulnerable to the consequences of globalization.  Unfortunately, many politicians, executives, and media pundits do not have a long-term perspective about the opportunities and threats related to globalization.  They should! 

Discuss the opportunities and threats associated with globalizations and how emerging leaders can compete.

© 2013 by Daryl D. Green

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23 thoughts on “Globalization’s Unintended Consequences for Americans

  1. There is no possible way to change the idea that industries are globalizing, the wheels have are ready been set into motion and stopping them I believe would be impossible. However, this opens up whole new windows of opportunity for businesses to sell their products and expand profits. If emerging leaders are to compete an education must be priority. According to Calloway (2010) and Georgetown University a “study projects the creation of 46.3 million new jobs by the end of 2018, with 63 percent requiring a post-secondary degree or certificate”. People must learn to adapt to the changing needs of a growing market, the market should not adapt to the people. A major threat here in America is the lack of individuals that possess a higher education. For them finding work and competing in a global market place is going to be a challenge.

    Calloway, M. (2010). Study predicts need for higher education. Daily Collegian. Retrieved from http://dailycollegian.com/2010/09/08/study-predicts-stronger-need-for-higher-education/

    • Chris,

      Excellent and…interesting points! Does this hold for governments too?

      What about China’s effort to shrink Western civilization’s influence on its citizens?

      Professor Green

      • Chris,

        You stated: “There is no possible way to change the idea that industries are globalizing, the wheels have are ready been set into motion and stopping them I believe would be impossible.”

        My response: I agree with your statement and I think that globalization is no longer a trend but rather a normalcy. According to businessdictionary.com “Access to global customers has increased through enhanced communications, improved shipping channels, reduction of barriers, and centralized finance authorities.” The need for globalization is here now and we must take advantage of the opportunities we have internationally in order to remain competitive.

        Reference: http://www.businessdictionary.com

  2. Recently outsourcing has been the boogey man come to take our jobs. However, recent reports indicate a trend towards in-sourcing is bringing those jobs back to the US. Whether customer service, manufacturing, or IT services, businesses are finding that the value proposition of outsourcing may not be as expected. In call centers, companies are starting to recognize the costs associated with brand damage caused by mishandled customer service calls as evidenced by the return of 1000 jobs to the Dallas area by Mumbai-based outsourcing firm, Aegis (Zeitlin, M., 2012). Unexpected control costs and rising wages in developing countries are eroding the value propositions for some companies (Kavoussi, B., 2012). “Factor in shipping and all the other B.S. that you have to endure. It’s a question of, ‘How do I value my time at three in the morning when I have to talk to China?’ he[Jerry Anderson, co-founder of LightSaver Technologies] told Bloomberg Businessweek” (Kavoussi, B., 2012, para. 2)

    Kavoussi, B. (2012, June 22). After years of outsourcing, small U.S. manufacturers bring jobs back to America. The Huffington Post. Retrieved from http://www.huffingtonpost.com/2012/06/22/small-us-manufacturers-st_n_1619470.html

    Zeitlin, M. (2012, August 28). Why call center jobs are coming back. The Daily Beast. Retreived from http://www.thedailybeast.com/articles/2012/08/28/why-call-center-jobs-are-coming-back.html

      • Deciding how to distribute work and who to distribute it to are difficult decisions businesses and managers must make. Often businesses decide to send jobs outside of the country for reasons such as feeling that labor expenses can be cut down. In-sourcing, according to Businessdictionary.com (n.d.), is the choice a company makes to give a job to a designated worker within the company who they think will do a better job than outsourcing the work. Keeping jobs within a company is a good idea and can be very profitable. However, keeping jobs within the company without innovation to take your company into new directions can be an expensive option.

        Reference: http://www.businessdictionary.com

  3. According to Maidment (2003), the economic dislocation of certain skilled work forces, such as the American auto manufacturing work force, to low cost countries such as China is a trend that will only continue as technology permits global access to information. Furthermore, he suggests that it is this global access to education through technology that has allowed companies to rapidly move jobs requiring high skill levels from the developed country to the developing.

    As American business leaders, it is important we invest heavily in technology to maintain our competitive edge. Only through constant innovation can America remain the world’s foremost economic powerhouse.

    Reference

    MAIDMENT, F. (2003). GLOBALIZATION AND THE AMERICAN LABOR FORCE. Journal Of Individual Employment Rights, 11(2), 111-123.
    .

  4. With the advancement of technology, any company has the ability to become a global company. Daft (2012) explains, globalization can benefit small companies by relocating parts of the company or finding the best brainpower globally (p.91). However, with opportunities come threats. Either a small company or large companies looking to expand their operations globally have to look at the external threats. Global companies have to understand their foreign markets cultural. In addition, need to view the country’s political risk and if the country is politically stable or instable. On the contrary, if a company large or small is able to understand these threats there are advantages to globalization. There is larger market share to gain and lower cost of manufacturing. In conclusion, globalization might have various threats companies have to consider. However, thank to the advancement in technology it has allowed the little man the ability to compete globally.
    Reference
    Daft, R. L. (2012). Management (10th ed.). Mason, OH: South-Western, Cengage Learning.

  5. One thing that stood out in my opinion was franchising. Daft defines franchising as “a form of licensing in which a company provides its foreign franchises with a complete package of materials and services” (pg. 96). He also uses McDonald’s as an example, because “Mcdonalds and other U.S. fast food companies have franchises all over the world” (pg. 96). What is great about this is that when an American travels internationally there is a good chance that they will be able to have something familiar. It also enables your company to be recognized the world over. If you ask most people around the globe to identify McDonald’s golden arches, they would probably be able to. Going internationaly or globalization can cause you to somewhat compromise your brand. For example, I studied abroad in Scotland in the summer of 2010. It was a wonderful experience. Because I was a poor college student, fast food options were appealing. I remember being excited to go to a McDonald’s in a different country. My friends and I ate there and upon leaving I remember saying, “that is nothing like McDonald’s back home”. Due to certain rules and regulations McDonald’s has to alter their menu. Certain countries may require them to use a certain grade of beef or fry their french fries in a certain type of oil. It makes it taste different. So what is Mcdonald’s to me and my American friends, is not going to be the same for someone from say Great Britain or Germany. Which by the way has beer on tap in their Mcdonald’s, that just seemed hilarious.

    Daft, R. L. (2012). Management (10th ed.). Mason, OH: South-Western, Cengage Learning.

    • Rebekkah,

      You make some excellent points about McDonalds. Going into a foreign country is risky. What if McDonalds goes into a muslim country with pork products? Are beef in a sacred area like India?

      Mistakes are bound to happen.

      Professor Green

    • “The worst sin that globalization is accused of is the leveling of the specific character of the countries, whether from an economic, cultural or religious point of view” (Negrea, 2012, p. 1). Although there are seem to be very large differences in a McDonalds here in the United States compared to Rebekkah’s example of Scotland in the grand scheme of things Negrea may be right it may blur the lines quite a bit between such cultural differences. Another example that I have experienced is coca-cola, depending on the country of production different sweeteners are used producing a different taste. Even Canada’s Coke products taste different compared to the United States, they seem to be much sweeter since they use actual sugar compared to corn syrup.

      Negrea, A. (2012). Globalization and the identity dilemma. Theoretical & Applied Economics, 19(9), 93-116.

  6. There are several opportunities that globalization brings. Among them are opportunities for expansion and increase in knowledge. Knowledge is the key to success. Many companies need employees who are familiar with the cultures of other companies they do business with. According to Griffin (2010), “Understanding cultural differences is critical to the success of firms engaging in international business.” One day all jobs may require some degree of knowledge about other cultures and languages.
    For instance, Wal-Mart employees interact daily with people of other cultures. All one needs to do is step inside any nearby Wal-Mart to hear a great number of customers speaking different languages. This is no longer a rarity, but rather, the normal scenario. If Wal-Mart or other businesses decide to make it a requirement to be educated in other languages; this would leave a great deal of employees and managers at a disadvantage. The only way to compete and be prepared for the future is to stay educated, learn other languages and to be knowledgeable about other cultures.

    Reference:

    Griffin, R.W. (2010). International Business. Upper Saddle River, NJ: Prentice Hall.

    • Tammy-Understanding other cultures should be one of the top priorities for the United States to survive in a global market. However, proper communication is important also to achieve understanding of other cultures and to provide an avenue for profitable business transactions. Verbal or non-verbal communication is of utmost importance, Griffin (2010) reports, because the chances of miscommunication and cultural misunderstandings are high in an international business setting. Non-verbal communication can be the difference between whether an organization keeps or loses their best client. Small gestures can have large meanings. Some non-verbal gestures, according to Griffin (2010), include hand gestures, eye contact, and body positioning. Understanding different cultures will remain a large part global business but one small slip can have extreme consequences if misunderstood.

      Reference:

      Griffin, R.W. (2010). International Business. Upper Saddle River, NJ: Prentice Hall.

  7. Learning other languages
    As employment from global outsourcing increases, I agree with you Tammy that people need to be educated and learn other languages. However, I have learnt the basics of Spanish, French and Japanese while I was doing my undergraduate degree. And ask me now if I remember anything I have learnt. I can’t say I do because when you learn a language if you don’t use it, you will lose it. There are five suggestions by Kelly Services to bridge the language barrier, by pronouncing our words carefully, avoid the use of slangs and the use of visual aid to help relate in the work place. Unless persons who learn a foreign language live in that foreign country for a year or more or use the foreign language on a daily basis it will be difficult to become fluent or to recall the language.

    Kelly Services (2011) How to bridge language barriers in the work place. Retrieved on January 25, 2013 from http://www.smartmanager.com.au/eprise/main/cms/content/au/smartmanager/en/pages/language_barriers_in_the_workplace.html

  8. The most immediate thought that comes to mind when the word “globalization” is mentioned involves domestic job availability. The advent of offshoring and outsourcing has perpetuated an ongoing battle between employees and shareholders over whether profits or fellow nationals are the core concerns of local companies. As is the case with many difficult circumstances, innovative ideas can lead to success. However, flexibility is equally important in a globalized world. Blumentritt (2011) states that managers in the global environment must be aware of and able to adapt to the environments of any country within which they intend to do business. This global environment is here, and it is not just a fad. Emerging leaders of today must bring their organizations to terms with the fact that globalization is not going away, and it is in everyone’s best interest (including domestic employees) to create ways to work within this new model rather than continue to fight it.

    Blumentritt, T. (2011). The big picture: Decision making and globalization. Journal of Emerging Knowledge on Emerging Markets, 11. DOI: 10.7885/1946-651X.1057

  9. When looking at globalization as good or bad you have to ask yourself some questions. Is globalization good for me and bad for someone else? Is globalization bad for me and good for someone else? There are countries that have worked hard and waited a long time to achieve status as a financially developed country. The four tigers (South Korea, Taiwan, Hong Kong, and Singapore) are such countries, according to Griffin (2010), they all have been working since 1945 to bring about financial success. Therefore, respect of other countries achievements and international diplomacy is more important now than ever before. It is important to use intense business planning and strategy so that productive business partnerships can flourish. America must identify with the example the four tigers have displayed and work harder for a brighter financial future through education, technology, and innovation to promote prosperity.

    Reference: Griffin, R.W. (2010). International Business. Upper Saddle River, NJ: Prentice Hall.

  10. Through globalization, countries of the world have become increasingly connected through a single capitalistic economic system. The growth of globalization has grown vastly over the past 50 years, largely due to the accelerated growth of technology.
    Globalization has expanded trade between the U.S. and other countries. It has brought us better and cheaper goods, opened up new export markets, lifted up many poor countries, and strengthened American alliances around the world. Immigration has brought the U.S. economic benefits from increased labor and expertise of knowledge; it has created a blending of culture while allowing for a better understanding of the world.
    Though globalization has provided considerable opportunities, many top economists believe globalization is the leading cause of job stagnation in the U.S. Though inconclusive, trade’s effect on job and income seems strong (Alden, 2013, p.2).
    Companies’ emerging leaders can compete by working collaboratively with other firms and countries to facilitate increased internationalization, often affected by domestic success and entry barriers. A resolution would be to encourage management teams of companies to educate themselves by bringing managers with international experience into the management team, recruiting partners, or educating themselves about international opportunities (Arbaugh, Camp & Cox, (2008, para.3,24).

    References:
    Alder, E. Behind the new view of globalization, The New York Times. Retrieved from http://economix.blogs.nytimes.com
    Arbaugh, J., Camp, S. & Cox, L. (2008). Why don’t entrepreneurial firms internationalize more?
    Journal of Managerial Issues, 20.3: p. 366.

  11. Globalization causes many opportunities as well as threats for everyone. The opportunities include allowing businesses to expand globally which can often be more profitable. However, it also creates new competition for existing companies. One example is the auto makers in the U.S., McCubbrey (2010) states, “At the current pace, the automotive market is approaching a 50/50 split between United States and overseas-based control of the US market. As a result, Ford is challenged to constantly reevaluate and revamp its market strategy”. For the working class, we all are aware that many jobs that were once easily obtained, are now non-existent due to outsourcing. For newly graduated college students, it may be much more difficult to find a job. People must learn to embrace the changes that globalization may cause because the fact of the matter is that it is not going anywhere soon.

    McCubbrey, D.J. (2010). Globalization: opportunities and threats to developing country business. Business Fundamentals. Retrieved from:
    http://cnx.org/content/m35591/latest/?collection=col11227/latest

  12. There are endless opportunities in the global market. A mom-and-pop store can sell its products online to a customer in another country. We live in a global market – businesses are just one click away from globalization. Conversely, a key threat of globalization is the ramifications of a business not knowing or understanding their target market. More specifically, businesses must understand the culture they are competing in if they want to stay relevant. Stalk and Michael (2011) gave a perfect example, “Western companies need to understand that Chinese consumers have very different needs than consumers in their home markets. Chinese households don’t want cappuccino machines; they want water filters, air filters, and soy milk makers…” (p.27). I think Americans have been catered to in other countries, like the cruise ship example above, which can cause some Americans to have tunnel vision. It is imperative that emerging leaders understand the culture in which their business plans to compete. They need to understand the political, social, and economic landscape in order to be successful.

    Reference: Stalk, G., & Michael, D. (2011). What the west doesn’t get about China. Harvard Business Review, 89(6), 25-27.

  13. Globalization can create both opportunities and threats for most businesses. In a world that is constantly changing we must adapt to these changes that we face in order for our businesses to stay competitive. Some of the opportunities that globalization creates is expansion into new countries which in return allows us to freely trade amongst countries. This will also give companies the opportunity to become more profitable. Although, globalization creates many opportunities, it also brings about threats as well. Some of the threats that we face expanding globally would be differences in government regulations, supply chains, language barriers and cultural differences (Grewal & Levy, 2010). I think that emerging leaders must have a higher education in order to be successful in a business that is involved with countries internationally. It is important for these leaders to fully understand how globalization works and what the threats might be before entering a new country.

    Reference:
    Grewal, G., PhD, & Levy, M., PhD. (2010). Marketing. (2nd Ed.). New York, NY: McGraw – Hill Irwin.

  14. The costs and benefits of globalization vary in the country or region being discussed. However, some general aspects of globalization have affected national consumers as a whole. A large benefit of globalization for consumers is greater competition. Greater competition typically leads to lower prices and a wider variety of goods and services for consumers. Tejvan Pettinger of EconomicsHelp.org recently stated, “Domestic monopolies use to be protected by lack of competition. However, globalization means that firms face greater competition from foreign firms.”
    A large cost of globalization creating much controversy is tax competition and tax avoidance by multinational companies. Companies like Amazon and Google are setting up offices in countries with lower corporate tax rates. The companies then funnel their profits through subsidiaries in these countries. This has created unfair competition for domestic firms.

    Reference:
    Pettinger, T (2012). Costs and Benefits of Globalizaton. Retrieved from http://www.economicshelp.org/blog/81/trade/costs-and-benefits-of-globalisation

  15. Globalization can have both positive and negative connotations depending on who you ask. For some, it offers a world of possibilities as it breaks down global barriers and creates opportunities for growth and progress. For others, it is viewed as a threat to local economies, with the phrase itself being closely related to offshore outsourcing and the loss of local jobs. It can be argued that globalization does benefit the poor and the rich, but perhaps not the middle class. Geoffrey Garrett argues this opinion in his article on globalization. He points out that globalization either benefits the “knowledge economy” and its technological savvy or the “low-wage economy” and its low cost of labor. Those that are left out are the industrial middle class that do not possess either a knowledge or low-wage advantage. This is an interesting observation that is certainly an unintended consequence of globalization.

    Garrett, G. (2004). Globalization’s Missing Middle. Foreign Affairs, 83(6), 84-96.

  16. At one time it was all but certain that the United States was the worlds front runner in terms of economy and power. Now several countries threaten to take away that status in a world of globalization. Reilly (1999) writes that at the end of the Twentieth century Americans felt we were the strongest nation and were very well founded in these beliefs. Perhaps that is the reason why we struggle now. Other countries learned english as a second language and were forced to adapt while we were not. Our business practices may have become somewhat complaisant due to our arrogance. If we are to stop ourselves from sliding back into more economic recession and become enveloped by the rest of the world, we need to change our thinking to mirror those rising countries. If our mindset is changed to think we need to catch up instead of just staying ahead we can gain the elite status that the United States once had as the worlds most important nation once again.

    Rielly, John E. Americans and the World: A Survey at Centuries End. Foreign Policy, 1999.

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