The Effects of Globalisation; Advantages and Disadvantages

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In this essay I will be discussing the advantages and disadvantages of Globalisation, quoting and referencing sources of information which I feel to be credible. Globalisation is defined as the process by which businesses or other organizations develop international influence or start operating on an international scale. It has an impact on international migration, global poor, international trade and political tension. Therefore, to discuss the advantages and disadvantages, I will be researching about international companies and the positive and negative impact their expansion has on the economy and society. Regardless as to whether a company has good intentions, benefits reaped through globalisation will always come at a cost and so there continues to be an ongoing discussion on whether globalisation really does more good than bad.

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Globalisation can be proved to have an impact on everyone, despite the fact that it might not always be clear to see. Much like a domino, globalisation can cause a chain reaction which, in the long term, leads to a larger event occurring. It’s a fact that the fast food industry is an ever growing and developing one because, despite the influences in society to improve our health, there will always be a demand for it. This is proved by the international expansion of KFC, as they became the first American fast food chain to enter the Chinese market and as of 2017, they have 5,138 outlets. The advantages of this is that KFC has created many jobs for the Chinese population which therefore decreases unemployment and boosts Chinas economy, providing them with an opportunity to grow and develop further. Future growth and success of KFC and any other international franchises in China will prove the host country to be favourable to deal with in the eyes of other companies in the same industry such as McDonalds and Burger King. However, this increase in trade also comes at a cost for china; the cost being that local competitors have a reduced chance of survival due to a higher footfall in mainstream stores. Over globalised businesses become more globally dominant, which makes it more difficult for smaller businesses to succeed and these low chances of survival scares potential businesses from innovating and growing.

In addition to this, fast food chains show more examples of globalisation than just international expansion, including national expansion whereby their already existing influence in a country increases to compete. The advantage of its growth is as expected – employment. As of 2017, McDonalds employs over 115,000 across 1,270 stores which means consumers have increases spending meaning more people can afford more “luxury” goods which leads to a higher demand and therefore, a higher output for the UK, however too much spending will trigger inflation. With quick or sudden economic growth, inflation almost becomes inevitable and an unstable economy puts the country’s image at risk. There is a disadvantage to this growth that focuses on pollution through cattle. “400,000 cattle are slaughtered in the UK every year…that’s the equivalent to 46 animals every hour” (WALLOP, 2014). Most people are unaware that livestock farming contributes a significant amount to the destruction of the earth through factors such as: acid rain, deforestation and land degradation. Livestock farming contributes 18% of human produced greenhouse gas emissions worldwide and with the ever-growing demand of fast food, this statistic is set to rise. Although an increase in stores creates jobs for the unemployed, it also increases demand of grain for livestock which triggers a price rise and also hurts the global poor because it could act as a food source and so I believe it is not equitable. Unfortunately, it is with cases like these where those suffering are going unnoticed because the focus is on the companies.

However, examples of globalisation expand beyond just international franchises. Another, for instance, is the movement of companies from one country to another in the search for a way to cut expenses. This movement does not go unnoticed among the economy as it affects a number of people. Unilever is the UK’s third-biggest company with a market value of £103bn and shifted its headquarters from the UK to the Netherlands. Due to the sheer size of Unilever, it proves itself to be a significant contributor to the UK’s GDP. By taking one of its three main businesses out of the UK, it lowers the GDP, and this could have a disadvantageous affect for future trade because it is a measure of stability for an economy and fewer countries are likely to trade confidently. Furthermore, its move has created uncertainty with other political affairs (Brexit). The political activity of the world today is something every company must ensure to be up to date with and Unilever’s move has come across to some people as a rash decision based upon the uncertainty behind the Brexit deal however, CEO of Unilever (Paul Polman) denied this. The point I am attempting to stress is that businesses with a large influence internationally can make decisions on their own accord, but it will still lead to a number of speculations for other businesses to act upon, for example other large businesses may also consider moving or taking drastic measures to follow Unilever.

In a world where skills are imperative to improve your living standards, globalisation has helped improve the lifestyle of many less fortunate workers. Companies thrive when costs are cut in order to benefit from economies of scale, and an international move is one way of doing it when cheap labour is an incentive. Although cheap labour may portray a company in a bad light as though they are exploiting cheap labour – which they are, it also gives workers an opportunity to learn and develop on skills which will make them more specialised. These skills then make workers more favourable in the eyes of other companies, allowing them to progress further with their careers. Due to an increase of specialised workers, increased migration should be expected, and this is beneficial because immigrants can bring new innovation and countries become more culturally diverse. In addition to this the growing influence of international businesses in underdeveloped countries increases the FDI going into that country. The recipient country has a better standard of living with every investment it receives and alongside the investment, it also receives knowledge and advice from the investors which can be applied elsewhere. With a more developed economy, developing countries can use further investment to better their global look in an attempt to improve tourism thus improving another source of income for the country. A key example of this is the growing influence of Disney and its impact in Europe. According to EuroDisney’s report, Disneyland Paris was the most visited theme park in Europe. This proves the impact one company can have on an entire continent. The growth of Disney will help spark competition with other theme parks in order to gain the top place. This encourages productivity which, in turn, improves revenue. However, as a result, most countries will compete for this investment by using lower taxes as an incentive. This has proven to work many times in the past with companies such as Cadburys and Walkers where their HQ’s were moved in an attempt to avoid high tax costs. Quite simply, with international movements, one country’s loss is another’s gain.

Throughout my essay I have demonstrated how globalisation is a process that has led to the success of many countries over time and has affected a number of demographics, from the poor, the unemployed all the way to the rich and employed. The effects globalisation has on the world stretches further than economic factors and sometimes these effects can’t be controlled for example: political dispute. It is extremely difficult to find an advantage of globalisation that doesn’t have a disadvantage to follow but it is my belief that regardless if a company has good intentions, they should put significant effort into minimising the damaging impact their expansion has on the world. 

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