Research Articles Base: Singapore Airlines

Airline Company

OBJECTIVES As a person with knowledge of strategic management, the author has always brought up to his superiors the viability of strategy formation regarding the analysis of this topic and at times fails to understand the reasons or logic behind certain strategic implementations imposed on it. By delving into this project paper, the author intends to have better insights into how strategic management is thought up, formulated and then imparted down into the subsidiaries of a company or organization. The author hopes to have an in-depth understanding as to how the process of strategic management enables companies and organizations to compete effectively and profitably in this era of internationalization where competition is extremely intense. In order to reinforce the learning objectives, two key focal issues were focused upon, i.e. innovation and diversity. Innovation was discussed with regard to strategic management where it was renowned for its developmental capabilities to constantly innovate. Diversity came under strategic thinking and formation as the author considered the diverse culture, political climate, economic surroundings, social environment, technological settings, government policies and legal systems in order to better understand the issues being discussed.   EXECUTIVE BRIEF This essay utilized Singapore Airlines as the model organization to review its present strategies and management and how they dealt with critical situations. From the analysis, key trends in the strategies and management of Singapore Airlines were then identified, how they worked and their effectiveness in dealing with critical situations were ascertained. The paper then moved on to assess these strategies and management with regard to their suitability to critical situations, during which the internal capabilities of these public relations strategies in relation to the company mission and vision being followed by Singapore Airlines was determined also. An overall analysis of the public relations strategies and management of Singapore Airlines was also conducted to assess and compare the capabilities of these strategies with those of others. Gaps in the strategies and management capabilities of Singapore Airlines were then identified. Finally, several choices of strategies to improve the strategies and management capabilities of Singapore Airlines as effective means in critical situations were recommended and evaluated in terms of appropriateness to the issues reviewed, feasibility in carrying out the options and acceptability within the key stakeholders and decision makers. Several key implementation issues related to managing strategic change were also addressed as well.         OVERVIEW OF SINGAPORE AIRLINES Singapore Airlines aims for sustainable growth as a broad market leader in the airline industry as well as for segment leadership. In both cases, the services of Singapore Airlines will play a crucial part. The company is able to establish its broad leadership usually by acquiring other strong airline companies and their services, which are then combined into a new, larger company.  Offering training to its employees, improving the company operations, and the introduction of new technologies then reinforces the positions of the various services of Singapore Airlines. This practically results in economies of scale that is able to create a distribution network for both the local and international terminals of the company. If a market is already in the control of other airline companies, Singapore Airlines devotes its attention towards the development of a premium segment with its various airline services.        Singapore Airlines has four main objectives: A)   Remain one of the top companies in the airline industry. Being on top of its industry enables Singapore Airlines to command the respect and confidence of its clients. Thus, the company is able to expand its operations through the acquisition of other airline companies. B)   Gain more profit than other international airline companies. The raw materials that are being laid down in the airline services used by Singapore Airlines are able to meet high quality standards. As a result, the company is able to earn more profit as against other airline companies. C)   Build the best airline portfolio, with Singapore Airlines as the international brand of flagship; and D)   Maintaining its independence. Being an independent company allows to Singapore Airlines to continue its tradition of excellence in both its products and services by setting new trends and standards. QUESTION 1: What are the prevailing strategies chosen and implemented by Singapore Airlines?   A. Resources-based Strategic Management of Singapore Airlines The mission of Singapore Airlines is to secure the growth of the business in a sustainable manner, while at the same time constantly improving the company’s profitability. The strategy to achieve this involves four elements: <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Striving in order to reach a leading position in attractive markets </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Focusing on securing a competitive share of the airline market segments. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Working in order to improve the company’s efficiency and cut costs in operations. </li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> Continuous growth through selective acquisitions for as long as they are able to create shareholder value. </li> In order to achieve these objectives, Singapore Airlines implements a strategy of promoting a combination of local and international airline services, but maintaining Singapore Airlines as the flagship brand. The company also aims for broader positions as well as either the top or secondary positions in any airline market. Any of these positions would be enough for Singapore Airlines to deliver a high level in terms of production, marketing and distribution. Moreover, these positions create a platform from which the company can promote their premium airline services and other specialties. And with a continued focus on the structures of the costs, the above mentioned objectives should undoubtedly be reached. B. Position-based Strategic Management of Singapore Airlines Positioning is a key factor especially in markets where a broad leadership position has yet to be fully developed (Kotler, 1999). In these markets Singapore Airlines strive for strong positions. Therefore, this type of strategic management takes into consideration the important environmental and economic factors that can either hinder or enhance the entry of a company or organization in a particular territory. Position-based strategic management of Singapore Airlines typically takes into consideration the following components: A. Analysis of the Macro Environment This component normally identifies the political, economic, social and technological trends that emanates within the macro-environment. The results of this analysis will simply verify whether the people or the consumers in the macro-environment are aware of the possible benefits and hazards that will be pushed in by a particular company or organization. The overall economic outlook of the macro-environment will also suggest whether the people or the consumers in the macro-environment are ready to embrace the new technologies that could be possibly brought about by companies and organizations. For example, the large number or tourists in the ASEAN Region can suggest that people in these countries have adequate knowledge on various airline companies that will give them excellent traveling experiences. B. Analysis of the Airline Industry The assessment of the airline industry attractiveness is based on Porter’s 5 forces model. In summary, the results of the Five Forces Analysis will determine whether the entry of a particular company or organization in a macro-environment will be favorable or not. For example, the threat of new entrants could be considered as serious because the lack of distribution channels of major competitors will damage the good reputation of companies and organizations as well as their products and services (1999). The analysis can also determine whether existing products and services within the macro-environment can be easily substituted by other products and services. Information regarding the bargaining power of suppliers and buyers, whether high or low, as well as the competitive rivalry between a company and its major competitors can also be determined.           Good examples here include Singapore Airlines’ leading position in the airline industry in Singapore as well as the recently established markets in various Asian capitals.  In these examples, Singapore Airlines shows its desire to establish autonomous growth through the establishment of more and more airline services and expansion through the distribution networks as well as growth through acquisitions. Singapore Airlines has been showing steady signs of growth and progress for a couple of years now. This consistent progress can be attributed to the change in strategic directions that was implemented several years ago and is still being further structured up to now. Basically, the critical element of the strategy was that Singapore Airlines started looking at things from the perspectives of the consumers and the customers. C. Positioning Strategy of Singapore Airlines In order to sustain its growth on the international level, Singapore Airlines builds its business on four (4) main positioning strategies. <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: black; text-align: justify; line-height: 200%"> The first is building a strong local operating platform, and then testing it over time to determine if profitable growth would be possible through the selection of the right airline services and creation of the structures for implementation to supply a local national market. </li> <li class="MsoNormal" style="color: black; text-align: justify; line-height: 200%"> The second is broadening the portfolio in order to make way for international airline services to give access to those not supported by the local airline services. Global perspectives are also gathered to help optimize both the local and global airline services. By broadening the portfolio, Singapore Airlines is able to meet the consumer’s needs and minimize the costs of local infrastructures.</li> <li class="MsoNormal" style="color: black; text-align: justify; line-height: 200%"> The third positioning strategy involves a balanced portfolio of countries among established and developing markets. In this instance, the established markets such as those in Europe will provide the funds to invest in developing markets like those in Asia that have lower GDPs but possess a tremendous potential for growth and development.</li> <li class="MsoNormal" style="color: black; text-align: justify; line-height: 200%"> The last positioning strategy involves market consolidation which would help in the securing of positions and the creation of shareholder values. Singapore Airlines strives to be in the top position on each market</li> </ul> QUESTION 2: Advantages of Strategies of Singapore Airlines   The strategies of Singapore Airlines focus more on the management and access of information rather the creation of irrelevant airline services. For this reason, Singapore Airlines has developed a unique set of guiding principles – simplicity, cost-efficiency and effectiveness. Total commitment to these principles makes the airline services of Singapore Airlines very user-friendly to its customers. Singapore Airlines was able to achieve a broad market leadership through various acquisition deals over the years. The company also exerts efforts to communicate with their customers in every local culture about their airline services and their impressions. And this is no easy thing because their regular clients and customers have different tastes in terms of airline service preferences. This critical information gathered by Singapore Airlines paves the way for them to make the right decision regarding the appropriate innovations to pursue. The strategies of Singapore Airlines are focused mainly on driving the growth of its airline services and improving the company’s financial performance. These innovations have also helped secure significant acquisitions and partnerships. And more importantly, these innovations have led to the release of the potentials of the company’s employees, thus building a quality performance- based culture. The strategies of Singapore Airlines are practically reinforced by the local employees themselves. These moves certainly allow the company to improve even more without the costs of introducing new technologies. These efforts have resulted in increased financial gains for the company and have allowed the establishment of distribution networks for its airline services. On the other hand, Singapore Airlines’ strategies in the airline industry changed for the better at the start of the new millennium and began pursuing airline service differentiation. True enough, the differentiated airline services of Singapore Airlines were able to satisfy the needs of customers through a sustainable competitive advantage. This allowed Singapore Airlines to desensitize the prices of their airline services and instead focused on the values that generated not only a comparatively higher price but also a better margin. Profits / Competitive Advantages Because of Singapore Airlines’ successful implementation of its strategies, the following profits and benefits were achieved over the years: ·         Financial Stability Financial stability is crucial especially in the pursuit of research and development activities. In the airline industry, it is important to remain updated with the latest technological developments to be able to stay competitive in the market. ·         Excellent Service Performance and Price The designing of the best airline services comes as a result of well-funded research and development activities. The strong performance of airline services in the market could also be linked to their cost-effectiveness. However, Singapore Airlines has to be aware of the positioning in terms of process so as to maintain satisfactory profits margin and remain competitive in the market. ·         Effective Distribution of Airline Services High airline service awareness among the buyers has created the need for aggressive marketing, and access to strong distribution channels is critical for the introduction of new airline services. ·         Economies of Scale and Scope in manufacturing and research and development arising from its numerous facilities situated in Singapore and other countries worldwide. ·         Unique Quality Airline Technology Singapore Airlines’ commitment to research & development activities has always been one of its top strategies to remain competitive in the market.          ·         Differentiated Airline Services Through the production and marketing of differentiated airline services originating from their research and development activities, Singapore Airlines is able to create its own firm-specific advantages. The continuous pursuit of research and development processes enables Singapore Airlines to produce a steady stream of originally differentiated products which makes it difficult for competitors to find substitutes. Because of this differentiated approach, Singapore Airlines is able to market their airline services worldwide, which enables them in turn to maximize the returns on research and development expenditures. QUESTION 3: Superiorities and Inferiorities of Singapore Airlines   Strengths: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines has services that boast of a very powerful retail. This includes a reputation for value of money, convenience and a wide variety of products </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines has grown significantly over the years, and has experienced global expansion.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines’ main competence lies on the use of information technology (IT) to fully support its international logistics system. Therefore, Singapore Airlines can see how their individual products perform within Singapore, or even at other countries at a glance. IT also supports Singapore Airlines’ efficient procurement. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines is able to deliver good customer care, as the limited amount of work would mean plenty of time to devote to customers.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines’ lead consultants have established a strong reputation within the market.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines can afford to change direction quickly if its management finds that the company’s marketing strategy is not effective.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines has little deficits and overheads. Therefore the company can offer good value to customers on a consistent basis.</li> </ul>     Weaknesses: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines is one of Singapore’s largest airline companies but has a weak control of its empire, despite its IT advantages. This could lead to a decrease in productivity in some areas where they have the least control of.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Since Singapore Airlines’ airline services push through across many sectors, the company may lack the flexibility that some of its more focused competitors possess.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines operates globally, but its presence is located in only relatively few countries worldwide.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Some of the company’s weaker branches lack market presence or reputation </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Some of the company’s personnel still lack the essential skills base in many areas.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The company is still vulnerable to the temporary losses of its vital staff (e.g. being sick, leaving).</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The company’s cash flow is unreliable especially in the early stages of a new product development.</li> </ul> Opportunities: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Taking over, merging, or forming strategic alliances with other airline companies while focusing on strong markets like Europe or the Greater China Region. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The branches of Singapore Airlines operate only on in a relatively small number of countries all over the world. Thus, this would open the opportunities for future businesses in expanding various consumer markets, such as those in China and India. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The opening of new locations and branches offer Singapore Airlines the opportunities to exploit market development. This could lead to the diversification of the company’s branches from large super centers to local-based sites. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Opportunities exist for Singapore Airlines to continue with its current strategy of establishing large branches worldwide.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Singapore Airlines is continuously expanding, with plenty of future opportunities to exploit for success.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The local councils of Palm, Inc. are in the process of encouraging local businesses with work whenever possible.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The competitors of Palm, Inc. may be slow to adapt to new technologies especially the ones that Palm, Inc. releases.</li> </ul> Threats: <ul type="disc" style="margin-bottom: 0in"> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Being number one means that Singapore Airlines is the target of competition, the company to beat, both locally and globally. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> Being a global airline company means that Singapore Airlines might be exposed to political problems in the countries where the company has operations.</li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The production costs of most airline services have the tendency to fall because of lower manufacturing costs. Manufacturing costs fall because of outsourcing to low-cost regions around the globe. This phenomenon could lead to competition in prices, which in turn would result in the deflation of prices in various ranges. Intense price competition must definitely be considered a threat. </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> The latest developments in information technology which could possibly change the markets might challenge the company’s ability to adapt to these changes </li> <li class="MsoNormal" style="color: #333333; text-align: justify; line-height: 200%"> A slight shift in focus of a large competitor might wipe out any market position that Singapore Airlines has achieved over the years. This could force the company to specialize in rapid response but good value services to local businesses. This would put so much pressure on the company’s consultancy staff to keep informed with the latest changes in technology where possible.</li> </ul> RECOMMENDATIONS A tie-up or merger with various local airline companies offers tremendous benefits in terms of access to their strategic management policies, infrastructure and even their resources. However, Singapore Airlines must not lose sight of its core competencies while pursuing these tie-ups. Otherwise, the image of this company might be put in jeopardy. Meanwhile, the collaboration of Singapore Airlines with its major competitors can be seen as a ridiculous move at first.  However, upon close examination, this move could pave the way for this company to improve even more its strategic management. The bottom line is both sides would be able significantly gain in such an alliance. The company’s strengths in airline service development combined with the strategic management capabilities of their competitors can transform them suddenly into an unbeatable force to reckon with. One possible setback, however, is the differences in the cultures of the airline companies involved. Another possible setback could be whether any of Singapore Airlines’ competitors has the need to form alliances. The third option also focuses on alliances, but this time with either one of the suppliers in airline products and technologies. The benefits of these alliances should outweigh the costs in the long run. In terms of appropriateness, all three options are able to directly address the current issues mentioned. However, the question remains whether Singapore Airlines could be able to implement any of these options, and whether these options can be acceptable to the key stakeholders. Any merger or alliances may also involve the sharing of expertise. This company has traditionally relied on the inside-out approach. It is important to note that any merger transactions would have many implications on the company’s values and culture as well as the resources. The key stakeholders definitely would be concerned with such options and need to be convinced of the positive aspects. Somehow, Singapore Airlines will be able to overcome this barrier in managing strategic changes in the process of implementing any of the above mentioned strategic options. CONCLUSION The results of the analysis carried out on the strategies of Singapore Airlines indicated very significant effects, even amidst the threats of unrest. Therefore, we could conclude that the strategies of the company could still be expected to improve faster than average. The review of the company’s strategic management capabilities and resources revealed very little inconsistencies regarding its strategies. This is coherent with its traditional inside-out approach. However, the need to reconcile both the inside-out and outside-in approaches becomes imperative now for the company. The analysis among the environment as well as the strategic management and capabilities of Singapore Airlines revealed certain gaps, most of which are biased towards the environment. However, these gaps paved the way towards determining a number of recommended strategic options to secure the company’s competitiveness. Also, the company has to find a balance between adherence to internal forces within the management and to the changing forces of the environment in order to implement such strategic options.   Credit:ivythesis.typepad.com

Airline Company

OBJECTIVES As a person with knowledge of strategic management, the author has always brought up to his superiors the viability of strate...

GLOBAL TREND

The Characteristics and Impacts of Globalization Trends A. The Trend of Globalization B. The Characteristics of Globalization C. The Impacts of Globalization   History of Globalization Species once spread across the earth very slowly, blocked by deep oceans and varying climates on land. Human beings took more than one million years to move from Africa to all the other continents. Human trade and communication over great distance dates back more than 2,000 years, when products first began to travel between China and Europe along the Silk Road. Within a few centuries, the Silk Road carried Buddhism from India to China. It was the desire to trade that drove European nations to develop great sailing ships at the end of the fifteenth century, breaking the Venetian monopoly on trade with Asia and causing the European discovery of the Americas in 1492. These ships became the technology that allowed large numbers of plants, animals, people, and viruses to be transported from one continent to another. During the European colonial period, traders, invaders, settlers, and slaves were transported via ocean-going ships from one continent to another. These colonists brought new diseases and exotic species with them that ravaged human populations and ecosystems in Asia, Africa, the Americas, and Australia. The modes of transportation, and the speed at which items have been transported, have increased exponentially over time. As these capabilities have developed, new communications technologies were introduced that have enabled corporations, governments, and militaries to significantly increase the transportation of goods, services, and information from continent to continent. Increases in the frequency of these intercontinental contacts are known as the process of globalization. American political scientists  and ., define globalism as “a state of the world involving networks of interdependence at multi-continental distances” ( and  2000).Globalism has generally been increasing throughout modern history and the process of increasing globalism is called globalization. Various dimensions or aspects of globalization have been identified. The most important of which are economic, political, and cultural. Economic globalization generally refers to expansion and intensification of international trade and investment; political globalization to the organization of transnational governmental and regulatory institutions and the diffusion of liberal political ideology and institutional forms; and cultural globalization, often but not always, to the spread of Western ideas and cultural practices, as the environment knows no political borders. Global governance structures would be a crucial aspect of the globalization process. In the modern era, globalization saw an earlier flowering towards the end of the 19th century, mainly among this generation’s developed countries. For many of these countries, trade and capital market flows relative to GDP were close to or higher than in recent years. That earlier peak of globalization was reversed in the first half of the 20th century, a time of growing protectionism, in a context of bitter national and great-power strife, world wars, revolutions, rising authoritarian ideologies, and massive economic and political instability. In the last 50 years, the tide has flown towards greater globalization once more. International relations have been more tranquil (at least compared to the previous half century), supported by the creation and consolidation of the United Nations system as a means of peacefully resolving political differences between states, and of institutions like the GATT (today the WTO), which provide a framework of rules for countries to manage their commercial policies. The end of colonialism brought scores of independent new actors onto the world scene, while also removing a shameful stain associated with the earlier 19th century episode of globalization. The 1994 Uruguay Round of the GATT saw developing countries become engaged on a wide range of multilateral international trade issues for the first time. International Trade A growing share of spending on goods and services is devoted to imports from other countries. This growing share produce from different countries is sold to foreigners as exports. The share of international trade among developed countries rose from 27 to 39 percent between 1987 and 1997 in total output (exports plus imports of goods relative to GDP). On the other hand, the total output of developing countries rose from 10 to 17 percent ( 2000). Foreign Direct Investment (FDI) Firms based in a particular country increasingly make investments to establish and run business operations in other countries. US firms invested US3 billion abroad in 1998, while foreign firms invested US3 billion in the US. Overall world FDI flows more than tripled between 1988 and 1998, from US2 billion to US0 billion, with the share of FDI to GDP generally rising in both developed and developing countries. Developing countries received about a quarter of world FDI inflows in 1988-98 on average, though the share fluctuated quite a bit from year to year. Thus, this flow of investment is now the largest form of private capital inflow to developing countries. Capital Market Flows In many developed countries, savers increasingly diversify their portfolios to include foreign financial assets, such as foreign bonds, equities, and loans, while borrowers increasingly turn to foreign sources of funds, along with domestic ones. Similar flows to developing countries also rose sharply in the 1990s, as they have been much more volatile, compared to either trade or FDI flows. In addition, they have also been restricted to a narrower range of ‘emerging market’ countries.   A. The Trend of Globalization There are many aspects in globalization trend such as economy, culture, education and information technology. The globalization of culture has a long history, and this includes the formation and expansion of the great world religions, which are profound examples of the capacity of ideas and beliefs to cross great distances with decisive social impacts ( 2005). With this long history, the concepts of globalization and culture has become intertwined. It has been reported that globalization maintains the huge transformative processes of our time, and cannot be entirely described and properly understood until it is grasped through the conceptual vocabulary of culture ( 1999). In terms of economy, globalization is now regarded as new economic, as well as political and cultural order, where countries and peoples live in a borderless world. This means that nation states are no longer significant actors or meaningful economic unites, and consumer tastes and cultures are now homogenized and satisfied through the provision of standardized global products generated by global corporations with no allegiance to place or community ( 2003). This emphasizes the importance of world economy, where all other countries, both developed and developing rely on. Following such changes in culture, economy, and politics are the changes in education, which play an essential role in the improvement of society. In this regard, this era of globalization brings urgency to the need for a new world order in which nation states can develop policies and regulations that will contribute to and sustain forms of international governance, including education policies ( 2004). The update and changes in culture, economy, politics and technology of different societies also alter and improve education. Lastly, changes in technology can also be observed with the changes in the society, as brought about by globalization. Technology can be transferred from one country to another through patents, licenses and contracts, and flows from developed countries to developing ones. It has been reported that the dynamics of technology flows, comparative advantage, and prosperity will then largely depend on the rate at which an undeveloped country can absorb new technologies ( and  1988). As such, transfer of technologies provide faster globalization.   World Population The future population growth of developing countries will continue to rise despite control measure. Thus, by the middle of this century, more than 80% of the world’s population will be concentrated in the developing world. In addition, if the current demographic trends continue, the world’s population will almost double to about 11 billion in the latter part of the twenty-first century, shifting the geographic distribution of the world’s population and decreasing the share of people living in developed countries (cited in  2005). Technology Technological change will be the hallmark of this century as rapid developments continue in the field of electronics, microelectronics, lasers, computers, and many other gadgets.. The use of these technologies around the world will facilitate better and more effective communication and business worldwide, and its integration into all aspects of communication and business will mark the development of telecommunications. Companies that create technological breakthroughs in the field of agriculture will be the major gainers in the future world with increased population pressures, along with countries and firms, which who would be spending more on R& D and technology in general. Free Market Economies The process of development of free market economies will be accelerated and will determine the future of the world’s economic systems. Large economic blocs such as India and China are likely to develop more rapidly with free market economies. It has been reported that a free market economy, by its nature, enable countries to become open to foreign institutions, require a completely different structure, bear in mind international specialization, and have much more significant share of imports. Thus, restructuring of its industry requires rapid growth of investment outlays destined for advanced technology ( 2006). Free market economies then plays significant roles in the changing of trends brought about by globalization. Global Alliances and Global Tie-ups Global alliances are more common among multi-nation enterprises. Global tie-ups are motivated by the fact that firms need to gain easy access to new markets, to share costs of expansion, and to increase skills without having to develop them in-house. All of which can take place through a relationship with collaborating partners. In making global alliances, the lead time for setting up one’s own operations can be considerable, the expenses that can be incurred in the process, the level of risks taken, and the various forms of partnerships that provide a viable and frequently exercised option, particularly when one is seeking to establish a new business or develop an already existing business within a new territory. In relation to this is the need for global tie-ups, which are accelerated by rapid changes taking place in global markets where consumer tastes and preferences are becoming universal on account of ever-increasing exposure to global media. Some examples of global alliances are equally relevant in service as in manufacturing sectors. Thus, airlines around the world are seeking closer ties with each other to gain economies of scale. For instance, Lufthansa has made moves to form a new entity incorporating the erstwhile East Germany’s Influg Airline and has also made moves in developing closer ties with Air France. Similarly, Singapore Airlines is forming a joint venture with Sabena of Belgium, and Alitalia is establishing commercial arrangements with Iberia of Spain and US Air. These are all signs of increasing global alliances to improve efficiency and better preparation for competition. Global Man-Management and Cultures One of the greatest challenges facing global firms is the need to develop human resources capable of handling global operations. This is a major challenge as global forms operate in multiple cultural environments whereas individuals tend to be brought up in single environments. The policy of employing nationals from home countries and sending them out to run foreign operations has been the standard practice of traditional global forms. Attractive hardship allowances and improved prospects in return are among the incentives provided. Some factors that expatriates consider in overseas postings are whether they will be able to afford the same lifestyle in terms of modern living, and if they will be able to establish a social circle, whether good schooling is available for children, chances of advancement when they return to their own country, language difficulties, concern about safety and medical care. The common Western practice is an extension of the same approach. However, with world that is rapidly shrinking and with comfort and security levels improving in many parts of the world, expatriates in some countries of Asia and Africa, having tasted the benefits and having tasted the benefits and having adapted to a new country, are often reluctant to return home. If opportunities for growth are lacking within one area, expatriates often switch jobs and continue to live in thee societies for decades, sometimes even marrying locally. This results to social issues, such as the concept of “brain drain” in some countries, where professionals immigrate to more developed countries due to increase in compensation, monetary gratification, and work satisfaction, rather than staying in their home country, which would only provide them less in terms of compensation and benefits. In this regard, the trend in this generation is increasingly towards finding global managers in the mould of the American Apple Corporation and Compaq’s chief operating officers, who are both German nationals. This type of manager can skip easily across frontiers, from function to function and industry to industry, though they are most often wanted for special, rather than general talents. Another example is when the UK-based advertising giant Saatchi & Saatchi was looking for the global answer, its CEO selected a Frenchman, with no advertising background and who had made his mark running a medical market-research firm in the US. This resulted to effective management, as the language skills of such managers are most often impeccable and their knowledge of management and management practice outstanding. Their flexibility probably is greatest displayed by managers at any time in business history, and with some having more than a couple of important international jobs before the age of 40, an age where their ambitions, like their experiences, know no frontiers.   B. The Characteristics of Globalization Most nations encourages global trade and have cooperated in constructing an international framework that helps transfer goods and services across borders while still allowing for the imposition of restrictions and controls by their respective governments. While various common agreements exists, the development of a globally uniform regulatory framework has been a slow process due to differences in levels of development, ideologies and perceptions of priority of different issues by different nations. Further, there is generally a long delay between the time when the need for an agreement is identical and when the agreement is finally negotiated globally. World Trade Organization (WTO) The World Trade Organization has to take into account such issues as social policies, workers’ rights, minimum wages, and even competition policies. This must be so, as there remains a scope for more liberalization and tariffs in newly covered sectors, which are still too high. Because trade policies are regarded as major tools for pushing globalization, groups in societies and countries that oppose globalization are also resisting further liberalization of world trade. Instead, such groups are demanding a democtratization of trade policies as well as a democratic WTO, being the major agent of free trade ( and  2001). In this regard, the role of the WTO must be given significance, through the different existing treaties and agreements that would benefit all countries involved. Finally, major new economics, such as those of Russia and China will come into the WTO fold, and talks more than before. International Air Transport Association (IATA) IATA came into being in 1919 at The Hague between one Dutch, one German and three Scandinavian airlines. It was only in 1938 that Pan American and non-European became involved. Regular conferences based on geographic zones are now held and rates and frequencies between global ports modulated. Rates are recommended by the conferences and the stability of air costs is largely due to conception of IATA. The United Nations Conference on Trade and Development (UNCTAD) There are several other conventions and conferences held to simplify and standardize trade globally. These include the United Nations Conference on Trade and Development (UNCTAD), held in 1964, during which the developing countries pressurized industrialized nations for preference in exports. Several industrial countries have complied and several special agreements have been developed to allocate production and to raise the export earnings of markets in the developing world. Regional Economic and Trade Forums Nations in various regions have come together to form their own economic communities or groups for improved economic and trade integration within their regions. These include the European Economic Community (EEC), the European Free Trade Association (EFTA), the Latin American Free Trade Association (LAFTA), the Council for Mutual Economic Assistance (COMECON), the Arab Common Market (ACM), the Asian Free Trade Area (AFTA), the West Asian Nations (ASEAN) and Asia-Pacific Economic Cooperation (APEC). This economic integration hopes to achieve regional competitive advantage in global markets, by aiming at the following: -         Free trade areas, where tariffs are abolished between members; -         Common external tariff to non-members; -         Access to common markets; -         Common or harmonious national economic policies; and -         Complete economic integration   C. The Impacts of Globalization Contemporary globalization represents a real revolution in human affairs. It is a massive change in the way that civilization is organized. One of problems and issues associated with rapid globalization is an increase in the risks of spreading economic maladies. Economic insecurity Contagion. With all key economies closely connected in a globalization process, countries now have become mutually vulnerable. This means that various forms of economic diseases can spread rapidly from one country to another. Vulnerability. Vulnerability refers to the rapid capital movements and the associated destabilizations of currencies. Predators can make a lot of money speculating on currencies, but risking heavy costs at the expense of the countries being attacked. Dislocation. Globalization is accompanied by a related human tragedy in displaced workforces. This includes the wandering heavy industries that move frequently from one country to another. The tennis shoe industry in Asia moved every few years from one country to the next, leaving behind displaced workers while jobs are created in other countries. Exploitation. Exploitation of labor and natural resources has been taking place since the beginning of the Industrial Revolution. However, the exploitation of cheap labor has increased greatly, as did the devastation of natural resources in poorer countries. This can be described as “an old wine in new bottles”. The Economics of Globalization: A Labor View Globalization is a process that has profound impacts in the lives of workers everywhere, as it brings problems as well as benefits. It is changing the very structure of our economy, thus, establishing patterns of incentives that can have long-term negative societal effects in the future. Globalization is not a natural process over which we have no control. Instead, it is being driven by the choices of business, governments, and international policymakers. The creation of a unified national economy in the second half of the 19th century, through the fusing together of the different regional economies, involved the same processes. Just as national economic integration produced benefits, so too can global economic integration. However, national economic integration also brought problems, and such problems have been addressed through the creation of modern governments. Addressing the problems raised by global economic integration is more difficult because of the deeper political problems, and because of the lack of proper structures of international economic governance. At the beginning of the 19th century, production took place on the factory floor while management sat above in overlooking offices. Today, companies can be headquartered in New York while production takes place thousands of miles away in China. Globalization is also being driven by economic policies, which have sought to remove barriers to the flow of goods and capitals between countries. As such, it has increased the international integration of national economies. Globalization brings significant economic benefits. These benefits include increased goods market competition that has contributed to lower prices and improvements in quality. It has also contributed to improvements in production efficiency with domestic firms, which are forced to go head-to-head with their foreign rivals. There have also been improvements in the provision of financing which has helped developing countries acquire the capital necessary for their own development. But side-by-side, there have been serious negative effects with globalization, creating new forms of wage and workplace competition that have twisted the distribution of income in favor of the most well to do. It has also twisted the economic structure, leading policy-makers to face a pattern of incentives that increasingly compelled them to run economic policies for the benefit of those corporate interests which have been empowered by the globalized economy. There is also a tendency to demand leak outs in the national economy, owing to an increased propensity to import goods. This increase in macroeconomic leakiness is true for almost all industrialized countries, with trade (i.e. imports and exports) as a share of GDP having increased by more than 50 percent over the last 30 years. In addition, there is also a tendency for jobs to leak out of an economy if labor markets are not sufficiently flexible, or if profit taxes are relatively unfavorable compared to conditions elsewhere. Microeconomic leakiness has been promoted very much by technological developments that have lowered costs of transportation and costs of coordinating production. Economic policy has also contributed to increased microeconomic leakiness by bringing down trade barriers and making it cheaper and more economically feasible to shift production between countries. Another form of leakiness is “financial leakiness” whereby money flows between countries. Today, more than .5 trillion is traded in foreign exchange markets every day, whereas the actual value of international trade is less than three percent of this amount. The existing structure is unstable, and gives financial interests too much sway over domestic and international economic policy. In this regard, the globalization of capital markets has brought a new kind of competition among currencies, since international investors will pull their funds out of any currency in which they lose confidence to. This has produced a sustained bias toward tighter fiscal and monetary policies around the world to reassure international investors. Once again, this change has been driven by technological innovations in the form of lowered costs of electronic communication and transacting. It has also been driven by policies, which have removed controls on the international movement of money. Moreover, macroeconomic leakiness has tended to promote an increased reliance on exports, which means that countries are more exposed to shocks originating overseas. Macroeconomic leakiness means that countries rely more heavily on imports so that demand leaks out of the economy when policy makers try to expand economic activity. On the other hand, microeconomic leakiness poses a different set of problems. In particular, it has increased the bargaining power of business vis-à-vis both labor and government. Thus, a recent study found that after NAFTA was implemented there was a 33 percent increase in business use of threats to relocate production during wage bargaining rounds. Government has also been put under pressure using threats to move and to win tax concessions. If tax conditions are deemed relatively less favorable than elsewhere, business now threatens to invest only in those places where conditions are more favorable. Furthermore, export-led growth also fosters wage competition, deteriorated work place conditions, degraded environments, and weakened systems of governmental social support. This is because countries and businesses have an incentive to try to gain international competitive advantage by any means possible. Huge imbalance of power between business and labor. The global enforcement of core International Labor Organization (ILO) labor standards that give workers the rights of free association and collective bargaining is a key. In a similar vein, there is a need for new rules to prevent international tax competition.   Conclusion The current state of Globalization and regionalization suggests that the international system is unevenly structured. Institutional financial structures both at public and private levels – WTO, World Bank, IMF, and Private Financial Institutions (PFIs) – need to be restructured to ensure human security, sustainable development and non-discriminatory trade regimes. Theories on international trade and finance have not yet produced long-term strategies for a just, fair and balanced global competition in the face of proliferating multinational enterprises. Given this, state-based political decisions and actions in the developing world will continue to play a major role in the social sector despite the fact that developing nations are under severe pressure from the WTO, and developed countries are urging them to introduce faster economic reforms for foreign investment, free trade regimes and capital flow. The developing countries need to convince the rich North that fetterless capitalism and borderless globalization must adjust to the hard boiled realities of poor developing nations. The shift in power structure will continue to inform the international system. A mix of geo-strategic, geo-economics and geo-cultural factors are likely to propel public decision makers to fashion their countries’ foreign policies and reinvent new diplomatic strategies accordingly to fit in the potential currents of globalization and regionalization. The issues of global governance and environment, global culture and democracy will continue to lure international theorists and policy practitioners into working out new formulations, paradigms and conceptual underpinnings.     Biography Credit:ivythesis.typepad.com

GLOBAL TREND

The Characteristics and Impacts of Globalization Trends A. The Trend of Globalization B. The Characteristics of Globalization C. The Imp...

ASSIGNMENT 1 ON GLOBAL TREND

The Character and Impact of Globalization trends. l          What is the globalization trend? l          What is their character? l          What is their impact?   History of Globalization Species once spread across the earth very slowly, blocked by deep oceans and varying climates on land. Human beings took more than one million years to move from Africa to all the other continents. Human trade and communication over great distance dates back more than 2,000 years, when products first began to travel between China and Europe along the Silk Road. Within a few centuries the Silk Road carried Buddhism from India to China. It was the desire to trade that drove European nations to develop great sailing ships at the end of the fifteenth century, breaking the Venetian monopoly on trade with Asia and causing the European discovery of the Americas in 1492. These ships became the technology that allowed large numbers of plants, animals, people, and viruses to be transported from one continent to another. During the European colonial period, traders, invaders, settlers, and slaves were transported via ocean-going ships from one continent to another. These colonists brought new diseases and exotic species with them that ravaged human populations and ecosystems in Asia, Africa, the Americas, and Australia. The modes of transportation, and the speed at which items have been transported, have increased exponentially over time. As these capabilities have developed, new communications technologies were introduced that have enabled corporations, governments, and militaries to significantly increase the transportation of goods, services, and information from continent to continent. Increases in the frequency of these intercontinental contacts are known as the process of globalization. American political scientists  and ., define globalism as “a state of the world involving networks of interdependence at multi-continental distances.” [1]Globalism has generally been increasing throughout modern history and it is this process of increasing globalism that is called globalization. Various dimensions or aspects of globalization have been identified, the most important of which are economic, political, and cultural. Economic globalization generally refers to expansion and intensification of international trade and investment; political globalization to the organization of transnational governmental and regulatory institutions and the diffusion of liberal political ideology and institutional forms; and cultural globalization, often but not always, to the spread of Western ideas and cultural practices (Environment knows no political borders). Global governance structures would be a crucial aspect of the globalization process. In the modern era, globalization saw an earlier flowering towards the end of the 19th century, mainly among the countries that are today developed or rich. For many of these countries trade and capital market flows relative to GDP were close to or higher than in recent years. That earlier peak of globalization was reversed in the first half of the 20th century, a time of growing protectionism, in a context of bitter national and great-power strife, world wars, revolutions, rising authoritarian ideologies, and massive economic and political instability. In the last 50 years the tide has flown towards greater globalization once more. International relations have been more tranquil (at least compared to the previous half century), supported by the creation and consolidation of the United Nations system as a means of peacefully resolving political differences between states, and of institutions like the GATT (today the WTO), which provide a framework of rules for countries to manage their commercial policies. The end of colonialism brought scores of independent new actors onto the world scene, while also removing a shameful stain associated with the earlier 19th century episode of globalization. The 1994 Uruguay Round of the GATT saw developing countries become engaged on a wide range of multilateral international trade issues for the first time. International Trade A growing share of spending on goods and services is devoted to imports from other countries. And a growing share of what countries produce is sold to foreigners as exports. Among rich or developed countries the share of international trade in total output (exports plus imports of goods relative to GDP) rose from 27 to 39 percent between 1987 and 1997. For developing countries it rose from 10 to 17 percent. (The source for many of these data is the  2000.) Foreign Direct Investment (FDI) Firms based in one country increasingly make investments to establish and run business operations in other countries. US firms invested US3 billion abroad in 1998, while foreign firms invested US3 billion in the US. Overall world FDI flows more than tripled between 1988 and 1998, from US2 billion to US0 billion, and the share of FDI to GDP is generally rising in both developed and developing countries. Developing countries received about a quarter of world FDI inflows in 1988-98 on average, though the share fluctuated quite a bit from year to year. This is now the largest form of private capital inflow to developing countries. Capital Market Flows In many countries (especially in the developed world) savers increasingly diversify their portfolios to include foreign financial assets (foreign bonds, equities, loans), while borrowers increasingly turn to foreign sources of funds, along with domestic ones. While flows of this kind to developing countries also rose sharply in the 1990s, they have been much more volatile than either trade or FDI flows, and have also been restricted to a narrower range of ‘emerging market’ countries. Globalization trend There are many aspects in globalization trend such as economy, culture, academics and information technology. World Population The future population growth of developing countries will continue to rise despite control measure. Thus, by the middle of this century, more than 80% of the world’s population will be concentrated in the developing world. Technology Technological change will be the hallmark of this century as rapid developments continue in the field of electronics, micro electronics, lasers, computers, etc. the use of these technologies around the world will facilitate communication and business worldwide. Integration will also mark the development of telecommunications coming together, for example, into one multi-entertainment and communication. Companies that create technological breakthrough in the field of agriculture will be the major gainers in the future world with increased population pressures, as will be countries and firms spending more on R& D and technology in general. Free Market Economies The process of development of free market economies will be accelerated and it will be this approach to economic development which will determine the future of the world’s economic systems. Large economic bloc such as India and China are likely to develop more rapidly with free market economies. Global Alliance Global alliance becomes more and more common among multi-nation enterprises. Global tie-ups are motivated by the fact that firms need to gain easy access to new markets, to share costs of expansion, and to increase skills without having to develop them in-house, all of which can take place through a relationship with collaborating partners. Given that the lead time for setting up one’s own operations can be considerable, and much expense can be incurred in the process, to say nothing of the level of risk taken, various forms of partnership provide a viable and frequently exercised option, particularly when one is seeking to establish a new business or develop an already existing business within a new territory. The need for global tie-up is accelerated by rapid changes taking place in global markets where consumer tastes and preferences are becoming universal on account of ever-increasing exposure to global media. Global Tie-up: Some Examples Global alliances are equally relevant in service as in manufacturing sectors. Thus, airlines around the world are seeking closer ties with each other to gain economies of scale. For instance, Lufthansa has made moves to form a new entity incorporating the erstwhile East Germany’s Influg Airline and is developing closer ties with Air France. Similarly, Singapore Airlines is forming a joint venture with Sabena of Belgium. Alitalia is establishing commercial arrangements with Iberia of Spain and US Air. These are all signs of increasing global alliances to improve efficiency and be better prepared for competition Global Man-Management and Cultures One of the greatest challenges facing global firms is the need to develop human resources capable of handling global operations. This is a major challenge as global forms operate in multiple cultural environments whereas individuals tend to be brought up in single environments. The policy of employing nationals from home countries and sending them out run foreign operations has been the standard practice of traditional global forms. Attractive hardship allowances and improved prospects in return are among the incentives provided. Some factors that expatriates consider in overseas postings are whether they will be able to afford the same lifestyle in terms of modern living, if they will be able to establish a social circle, whether good schooling is available for children, chances of advancement when they return to their own country, language difficulties, concern about safety and medical care. The common western practice is an extension of the same approach. However, with world that is rapidly shrinking and with comfort and security levels improving in many parts of the world, expatriates in some countries of Asia and Africa, having tasted the benefits and having tasted the benefits and having adapted to a new country, are often reluctant to return home. If opportunities for growth are lacking within one area, expatriates often switch jobs and continue to live in thee societies for decades, sometimes even marrying locally. Today, the trend is increasingly towards finding global managers in the mould of the American Apple Corporation and Compaq’s chief operating officers, both Germans. This type of manager can skip easily across frontiers, from function to function (though they are most often wanted for special, rather than general talents) and industry to industry. When the UK-based advertising giant Saatchi & Saatchi was looking for the global answer, for example, the CEO selected was a Frenchman, with no advertising background, who had made his mark running a medical market-research firm in the US. The language skills of these managers are most often impeccable, their knowledge of management and management practice outstanding, their flexibility probably the greatest displayed by managers at any time business history – and with some having more than a couple of important international jobs before the age of 40 – their ambition, like their experience, knows no fronties. Their Characters Since global trade is encouraged by most nations, they have cooperated in constructing an international framework that helps transfer goods and services across borders while still allowing for the imposition of restrictions and controls by their respective governments. While various common agreements exists, the development of a globally uniform regulatory framework has been a slow process own to differences in levels of development, ideologies and perceptions of the priority of different issues by different nations. Further, there is generally a long delay between the time when the need for an agreement is identical and when the agreement is finally negotiated globally. World Trade Organization (WTO) World Trade Organization has to take into account such issues as social policies, workers’ rights and minimum wages, even competition policy. There is also the fact that there remains scope for more liberalization, tariffs in newly covered sectors are still too high. Finally, major new economics, such as those of Russia and China will come into the WTO fold, and talks more than before. International Air Transport Association (IATA) IATA came into being in 1919 at the Hague between one Dutch, one German and three Scandinavian airlines. It was only in 1938 that Pan American and non-European became involved. Regular conferences based on geographic zones are now held and rates and frequencies between global ports modulated. Rates are recommended by the conferences and the stability of air costs is largely due to conception of IATA. The United Nations Conference on Trade and Development (UNCTAD) There are several other conventions and conferences held to simplify and standardize trade globally. These include the United Nations Conference on Trade and Development (UNCTAD), held in 1964, during which the developing countries pressurized industrialized nations for preference in exports. Several industrial countries have complied and several special agreements have also been developed to allocate production and markets to raise the export earnings of the developing world. Regional Economic and Trade Forums Nations in various regions have come together to form their own economic communities or groups for improved economic and trade integration within their regions. These include the European Economic Community (EEC), the European Free Trade Association (EFTA), the Latin American Free Trade Association (LAFTA), the Council for Mutual Economic Assistance (COMECON), the Arab Common Market (ACM), the Asian Free Trade Area (AFTA), the West Asian Nations (ASEAN) and Asia-Pacific Economic Cooperation (APEC). This economic integration hopes to achieve regional competitive advantage in global markets, by aiming at the following: -         Free trade areas – where tariffs are abolished between members. -         Common external tariff to non-members. -         Access to common markets. -         Common or harmonious national economic policies. -         Complete economic integration. Their Impact There are obviously many aspects of globalization. Contemporary globalization represents a real revolution in human affairs. It is a massive change in the way that civilization is organized. One of problems and issues associated with rapid globalization is an increase in the risks of spreading economic maladies. Economic insecurity Contagion With all key economies closely connected in a globalization process, they now have become mutually vulnerable. This means that various forms of economic diseases can spread rapidly from one country to another. Vulnerability Vulnerability refers to rapid capital movements and the associated destabilizations of currencies. Predators can make a lot of money speculating on currencies, but at a heavy cost to the countries being attacked.   Dislocation Globalization is accompanied by a related human tragedy in displaced workforces. Regard the wandering heavy industries that move frequently from one country to another. The tennis shoe industry in Asia moved every few years from one country to the next, leaving behind displaced workers while jobs are created in other countries.   Exploitation This, in many ways, could be considered old wine in new bottles. Exploitation of labor and natural resources has been taking place since the beginning of the Industrial Revolution. But the exploitation of cheap labor has increased greatly as has the devastation of natural resources in poorer countries. The Economics of Globalization: A Labor View Globalization is a process that is impacting profoundly the lives of workers everywhere. It brings problems as well as benefits, and these problems run deeper than just the fact that there are winners and losers. It is changing the very structure of our economy, and in doing so it is establishing patterns of incentives that can have negative societal effects long into the future. Globalization is not a natural process over which we have no control. Instead, it is being driven by the choices of business, governments, and international policymakers. The creation of a unified national economy in the second half of the 19th century, through the fusing together of the different regional economies, involved the same processes. Just as national economic integration produced benefits, so too can global economic integration. But national economic integration also brought problems, and we addressed those problems through the creation of modern government. Addressing the problems raised by global economic integration is more difficult because of the deeper political problems, and because of the lack of proper structures of international economic governance. At the beginning of the 19th century, production took place on the factory floor while management sat above in overlooking offices. Today, companies can be headquartered in New York while production takes place thousands of miles away in China. Globalization is also being driven by economic policies which have sought to remove barriers to the flow of goods and capitals between countries and in doing so have increased the international integration of national economies. Globalization brings significant economic benefits. These benefits include increased goods market competition that has contributed to lower prices and improvements in quality. It has also contributed to improvements in production efficiency with domestic firms forced to go head-to-head with their foreign rivals. There have also been improvements in the provision of financing which has helped developing countries acquire the capital necessary for their own development. But side-by-side, there have been serious negative effects with globalization creating new forms of wage and workplace competition that have twisted the distribution of income in favor of the most well to do. It has also twisted the economic structure such that policy makers now face a pattern of incentives that has them increasingly compelled to run economic policy for the benefit of those corporate interests which have been empowered by the globalized economy. There is a tendency for demand to leak out of the national economy owing to an increased propensity to import goods. This increase in macroeconomic leakiness is true for almost all industrialized countries, with trade (i.e. imports and exports) as a share of GDP having increased by more than 50 percent over the last 30 years. There is a tendency for jobs to leak out of an economy if labor markets are not sufficiently flexible, or if profit taxes are relatively unfavorable compared to conditions elsewhere. Microeconomic leakiness has been promoted very much by technological developments that have lowered costs of transportation and costs of coordinating production. Economic policy has also contributed to increased microeconomic leakiness by bringing down trade barriers and making it cheaper and more economically feasible to shift production between countries. Another form of leakiness is “financial leakiness” whereby money flows between countries. Today, more than .5 trillion is traded in foreign exchange markets every day, whereas the actual value of international trade is less than three percent of this amount. The existing structure is unstable, and it also gives financial interests too much sway over domestic and international economic policy. (The globalization of capital markets has brought a new kind of competition among currencies, since international investors will pull their funds out of any currency in which they lose confidence. This has produced a sustained bias toward tighter fiscal and monetary policies around the world to reassure international investors) Once again, this change has been driven by technological innovation in the form of lowered costs of electronic communication and transacting, and once again it has also been driven by policy which has removed controls on the international movement of money. Macroeconomic leakiness has tended to promote an increased reliance on exports, which means that countries are more exposed to shocks originating abroad. Macroeconomic leakiness also means that countries rely more heavily on imports so that demand leaks out of the economy when policy makers try to expand economic activity. Microeconomic leakiness poses a different set of problems. In particular, it has increased the bargaining power of business vis-à-vis both labor and government. Thus, a recent study found that after NAFTA was implemented there was a 33 percent increase in business use of threats to relocate production during wage bargaining rounds. Government has also been put under pressure through the use of threats to move to win tax concessions. If tax conditions are deemed relatively less favorable than elsewhere, business now threatens to invest only in those places where conditions are more favorable. Moreover, export-led growth also fosters wage competition, deteriorated work place conditions, degraded environments, and weakened systems of governmental social support. This is because countries and business have an incentive to try and gain international competitive advantage by any means possible. Huge imbalance of power between business and labor. The global enforcement of core International Labor Organization (ILO) labor standards that give workers the rights of free association and collective bargaining is a key. In a similar vein, there is a need for new rules to prevent international tax competition. Conclusion The current state of Globalization and regionalization suggests that the international system is unevenly structured. Institutional financial structures both at public and private levels – WTO, World Bank, IMF, and Private Financial Institutions (PFIs) – need to be restructured to ensure human security, sustainable development and non-discriminatory trade regimes. Theories on international trade and finance have not yet produced long term strategies for a just, fair and balanced global competition in the face of proliferating multinational enterprises. Given this, state-based political decisions and actions in developing world will continue to play a major role in the social sector despite the fact that developing nations under severe pressure from the WTO and developed world, are urging them to introduce faster economic reforms for foreign investment, free trade regimes and capital flow. The developing world needs to convince the rich North that fetterless capitalism and borderless globalization must adjust to the hard boiled realities of poor developing nations. The shift in power structure will continue to inform the international system. A mix of geo-strategic, geo-economics and geo-cultural factors are likely to propel public decision makers to fashion their countries’ foreign policies and reinvent new diplomatic strategies accordingly to fit in the potential currents of globalization and regionalization. The issues of global governance and environment, global culture and democracy will continue to lure international theorists and policy practitioners into working out new formulations, paradigms and conceptual underpinnings.         Biography Credit:ivythesis.typepad.com

ASSIGNMENT 1 ON GLOBAL TREND

The Character and Impact of Globalization trends. l What is the globalization trend? l What...