Global business

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In terms of interconnectedness and international relations, the twenty-first century is a time when it appears that the world is flat.

The forces of globalization are dispersed throughout numerous nations, allowing for cross-border engagement in significant commercial operations and other global engagements. The ability of the globe to connect billions of individuals who can now improve their lives by having access to necessities that were before difficult to obtain is now possible. This essay explores globalization trends that are said to have flattened the world and the fragility of global trade, which is particularly apparent in the case studies of the economies of Iran and the United States.

Globalization Categories

Globalization focuses on the spread of people, technology and consumer goods throughout the world in a simplified manner. Globalization is further classified into three distinct categories; social, political and economic globalization. Social globalization refers to the manner in which popular fashion trends and business strategies such as the opening up of chain stores are spread from one country to the other. Political globalization means the interconnection of countries under a unified governance body such as the United Nations that is responsible for fostering co-operation among most countries in the world. Economic globalization on the other hand refers to the growth of international businesses spanning through different countries.

Economic Globalization Case Studies: United States and Iran

The research conducted towards the compilation of this paper is interested in the economic globalization that has made it possible for people to engage in international business. Specific examples will be drawn from the United States and the Iran case studies that are selected for the discussion of economic globalization in the world. The globalization index proposed by Kearny will also be helpful in examining the global indicators in emerging markets.

Global Recession and Globalization

The global economy suffered a period of recession in the decade starting from the year 2000 that had significant repercussions for both developed and developing countries. In response to the macroeconomic trends during the period, globalization created a platform that would resolve the financial crisis of different countries by linking them to solutions in other countries (Laudicina, 2015). The initiative of forming international treaties that boost local economies has been in existence since the 1900s after the age of industrial revolution but it has never been this easy to transact trade before the creation of globalization.

Economic Globalization in Iran

The Global Economic Outlook 2015-2020 has developed a framework that assesses the potential of emerging markets in the world that are posed to expand in the near future. Iran is one of the countries with such growth potentials identified by the developed framework to outperform existing markets in the Middle East. A strategic assessment of the business opportunities available in Iran indicates that the high growth potential is faced with globalization challenges especially due to international sanctions placed on the country.

Economic Globalization in the United States

The United States has one of the most developed economies in the world which was adversely affected by the global recession of the twenty first century. The utilization of globalization trends has enabled the U.S. to diversify production to specific countries with specialized technology in China and Japan that helps to boost the economy (Silberglitt et al., 2006). Access to raw materials, advanced technology and a wider market in the twenty first century has been crucial to the revival of the U.S. economy from the recession period. The national economy of the U.S. is gradually making low strides towards growth through a link up with emerging markets enabled by the globalization trends.

Globalization Indicators: United States

Among the top globalization trend indicators are international travel policies, foreign direct investment, internet connectivity, and multinational organizations. These indicators suggest how much a country is connected in the flattened earth through direct representations in foreign regions (Amburn, 2009). The United States as a global leader has a large economy that is interconnected with numerous regions of the world that trade using the national currency (dollar) in the foreign exchange market. Apart from using the U.S. national currency globally, the globalization index suggests that economic integration, technological innovations and political interactions are some of the strengths of the U.S. economy.

Globalization Challenges: Iran

The economy of Iran in comparison to that of the U.S. is faced with international suppressions by the United Nations in a peacekeeping initiative. Terrorism is a major threat to the global economy that challenges globalization and international trade with Iran. The nuclear activities of Iran have particularly invited sanctions from developed countries in Europe and the U.S. that consider the activities a threat to international business. The inevitable push to tap into the economic potential of Iran has led to the drafting of the Iran Nuclear Treaty.

Emerging Markets and Globalization

The emergence of globalization is responsible for the recent initiatives by countries to open themselves up for international connections. The participation of all potential emerging markets such as the one in Iran has been responsible for the attempts by the United Nations to eliminate trade sanctions in order to exploit the vast opportunities availed by globalization (Cole, 2016). Iran plans to expand its economic activities in the global platform upon withdrawal of the trade sanctions that will, hereby, enable globalization trends to be accessible to the people of Iran. This could mean plenty for the global economy that depends on the collaboration of countries through international engagement to improve their financial position.

Benefits of Globalization for Developed Countries

It may appear as if developed countries such as the United States do not require international collaborations and that their governments are self-sufficient and trade is mostly internal. Globalization from this school of thought seems to be mostly beneficial to developing nations that require financial aid and personnel among other factors that can strengthen their economy. This is an inaccurate ideology since in the current age of natural disasters and terrorism fears, even the most stable governments in the world need international collaboration to overcome these challenges.

Importance of Globalization for Developing Countries

Additionally, developing countries such as Iran, India, Brazil and other potential markets within the world are rich in natural resources that the Western countries require. Iran as a country has been locked out of the international community for several years and recently the Joint Comprehensive Plan of Action has excited European countries such as France and Germany. These European countries are willing to push through the Iran Nuclear Treaty in order to reap the economic resources found within the foreign country. Global exports from these European regions such as technology and manufactured goods are bound to gain a wider market in Iran thanks to globalization.

Economic Potential of Iran

The Iran economy is particularly fragile due to the past nuclear activities that led to the initial sanctions by the international community. Iran has a population of about 78 million civilians and a nominal gross domestic product of 394 billion dollars as at 2015 (Cole, 2016). The manufacturing potential of Iran is displayed by the automobile deals with France that previously existed before the trade sanctions. The market potential is also high for technological products as suggested by the annual market of automobiles with approximately 800,000 consumers. Upon removal of the sanctions, these consumers are expected to increase to about 1.5 million in the near future.

Current Challenges for Iran

Iran has been able to comply with the Nuclear Treaty deal amidst criticism from other countries such as Israel and Saudi Arabia that consider the reintegration of Iran as an economic threat to them. According to the Global Economic Outlook 2020, emerging markets with the potential displayed by Iran are bound to challenge neighboring countries in the region. The United States in the year 2015 permitted the sale of 114 aircraft to Iran in a symbolic trade initiated under the Obama administration valued at 10 billion dollars. The compliance by Iran is aimed to reactivate the Iran economy that had been deteriorating over the sanction period.

Globalization Challenges for Iran in the Trump Era

Despite these attempts by Iran to get back into the international platform, recent political changes in the United States suggest that the struggle to get back into globalization is far from over. Donald Trump, the current U.S. president is critical about withdrawing the trade sanctions on Iran and negotiating for better deals for the U.S. in the nuclear treaty (Sanger, 2016). These remarks by the Trump administration spark concerns by the international community especially from European countries that were looking forward to exploit the opportunities in Iran. The U.S. is categorical about remaining in the deal but the fresh negotiations could lead to its collapse.

Globalization Trends in the United States

Globalization in the United States has enabled the spread of the American influence throughout the world. Indicators of globalization in the world suggest that the U.S. is among top fifty global performers in terms of economic activities and personal contact despite recently dropping in the world globalization rankings (Florida, 2011). Multinational organizations founded in the U.S. are distributed over several countries in the world. These organizations include; Wal-Mart, KFC, Burger King, that have expanded globally as a result of globalization (Dunning & Lundan, 2008). Consumers all over the world can, therefore, enjoy commodities manufactured in the U.S. within their local markets.

Economic Expansion through Globalization: United States

The economy of the United States is very large with the country having a gross domestic product of about 18.57 trillion dollars and a population of 323 million citizens as at 2016. The business entities in the country have expanded to most of the fifty two states in the very competitive domestic market. Research suggests that the domestic market in the U.S. is almost saturated and global expansion is the best initiative for organizations that intend to keep growing. Globalization to the foreign markets has enabled these domestic organizations to become multimillion dollar entities with a significant amount of their revenue coming from the international market.

Globalization Success: Wal-Mart

The evidence of multinational organizations generating numerous revenues from the foreign markets is displayed by Wal-Mart. The Wal-Mart Stores Inc. is ranked top in the retail industry for hiring a large number of employees globally and generating the highest revenue from the global platform. Economic trends originating from the U.S. as a result of globalization are spread by such multinational organizations that manage to blend excellently in foreign countries (Dunning & Lundan, 2008). The chain store system is one economic trend along with the fast-food policy that have been spread from the United States through globalization.

Globalization Challenges for Developed Countries

As globalization interlinks these wide markets in the international platform for the United States, it is essential to understand that opening up the global market means increased competition. Foreign policies of engaging in the global market dictate that the United States should also open up its domestic market to other nations. Apparently, the global supply chain is set up in a way that holds together different stakeholders from different nationalities. The U.S. for instance, is well known for manufactured industrial commodities and most countries in the east such as China and Japan are popular in the global market for technology devices and software.

Overall Globalization Trends

The overall globalization trend in the world has been taking a slow progress as social and political aspects of globalization continue to proportionately spread through various countries. Most globalization indicators focus on the economic aspect that examines size of the business activities in the international and local platforms. The post-industrial age has been marked with technological advancements that increase the efficiency of natural resource exploitation. The looming exhaustion of natural resources in developed countries seem to be responsible for the slow economic globalization in the world since most developing countries appear to be leading in the globalization index chart.

Emerging Markets and Globalization Policy

The economic crisis that was experienced in the world during the early 2000s has gradually been resolved in most countries according to reports from the World Bank. Kearny proposes the use of the Global Business Policy Council (GBPC) to identify countries that are expected to leap forward in the macroeconomic world through dynamic policies and strategies of managing globalization (Laudicina, 2015). Several countries specifically identified by the initiative include China, Peru, and Philippines. These countries are identified to have a strong potential economic growth heading towards the year 2020 due to globalization and a culture of exploiting the surrounding business opportunities.

Seven Emerging Markets

The 2020 seven-markets are forecasted to outperform other globalization leaders such as Switzerland and Singapore that came ahead in terms of growth due to the foundational strength of their well-placed economies. The economic positions of these seven-markets are also flexible such that they can react swiftly to crisis and remain in balance. While China has the largest economy among the seven as Peru has the smallest economy, friendly social policies enable them to exploit the benefits of globalization.

Case of China and Globalization

China for instance, became the largest economy in the world in 2014 through growth of its gross domestic product by increasing their purchasing power on low-value goods that end up being converted into high-value. The international relations of China indicate a friendly economic policy with foreign nations that allow them to move into the free market and consume a large portion of their commodities. It is, hereby, notable through the China case that the global indicators used to select the seven emerging markets revolves around; size of the economy, economic performance and resilience, local labor force, infrastructure, policy governance regulations and structural reform agendas.

Benefits and Challenges of Globalization: United States and Iran

A direct comparison of the globalization indicators using Iran and the United States suggest that these two countries have a very different approach in facing the flattened earth. Research suggests that cultural factors have a significant influence on the benefits of globalization in both of these countries that places them in different paths towards economic growth. The United States has high fears of terrorism that make them to take a conservative approach towards migration policies at border entries in the ports. From this believe, the country has challenges in the governing policy discussed in the seven economic indicators since the U.S. experiences openness issues to foreigners.

Criticism of Globalization and the Need for Fair Trade

It is necessary to acknowledge that through these restrictive openness policies regional trade does not benefit every nation involved in globalization (Ghemawat, 2007). The world is, thereby, not entirely flattened by the introduction of globalization since some of these benefits of going global end up heading in one direction. The inevitable push and pull of globalization is the reason for the formulation of fair trade in most parts of the world that aim to cancel out the existing imbalance (Raynolds, Murray & Wilkinson, 2007).

Globalization Potential: Iran and Global Oil Prices

The Iranian economy is likely to be taking an explosive forward shift in their national growth that is bound to reflect in the global economy of the world after their international accounts are unfrozen. The foreign governance policies in Iran are less restrictive in comparison to the United States and international commodities are likely to be shipped to the vast local market. Aside from the market potential for international commodities, the lucrative petroleum business in Iran is essential for the international business heading towards the near future. Petroleum is an essential fuel for numerous machineries in the world and being the major export commodity from the country, opening up globalization channels to the Iranian economy is an essential move for the world at large.

Globalization Challenges for the Middle East

Globalization in Iran has a direct influence on global oil prices, as the petroleum mines in the country increase the quantity supplied to the international market. When supply is high, the prices of oil are expected to be lowered and this is bad for alternative sources of fuel. This is a direct threat to the Organization of Petroleum Exporting Countries such as Saudi Arabia and the entire region in the Middle East that are against the globalization of Iran. On the other hand, a direct challenge on the electric projects by the United States is placed by this move to lower oil global prices.

Expanding Natural Resources Business: Iran

Based on the economic potential of Iran in the production of natural gas, advanced packaging technologies by Shell and Total SA would enable them to export liquefied natural gas necessary for diverse fuel functions. However, the trade sanctions set in place by the UN and the US ensure these packaging technologies are kept away from Iran. It is easy to see why Iran is so keen on having the sanctions lifted, specifically in this period of numerous globalization trends. The only concern lies on whether the global world is ready to participate in business with Iran given the diverse direction that lifting the trade sanctions could have on their economies.

References

Amburn, B. (2009). The Globalization Index 2007. Foreign Policy. Retrieved 25 November 2017, from http://foreignpolicy.com/2009/10/12/the-globalization-index-2007/

Cole, J. (2016). Iran Is Open For Business. What Does This Mean for the Global Economy?. The Nation. Retrieved 25 November 2017, from https://www.thenation.com/article/iran-is-open-for-business-what-does-this-mean-for-the-global-economy/

Dunning, J. H., & Lundan, S. M. (2008). Multinational enterprises and the global economy. Edward Elgar Publishing.

Florida, R. (2011). U.S. No Longer a Top-25 Globalized Nation. The Atlantic. Retrieved 25 November 2017, from https://www.theatlantic.com/business/archive/2011/03/us-no-longer-a-top-25-globalized-nation/72692/

Ghemawat, P. (2007). Why the world isn't flat. Foreign policy, 54-60.

Iran and the Global Economy. (2012). Federation Of American Scientists. Retrieved 25 November 2017, from https://fas.org/pub-reports/iran-global-economy/

Laudicina, P. (2015). “2020–Seven” Growth Economies - - Article - The Purchasing Chessboard - A.T. Kearney. Atkearney.com. Retrieved 25 November 2017, from https://www.atkearney.com/web/the-purchasing-chessboard/article/-/asset_publisher/9AutfSQfJm6Y/content/-2020-seven-growth-economies/236833

Raynolds, L. T., Murray, D., & Wilkinson, J. (Eds.). (2007). Fair trade: The challenges of transforming globalization. Routledge.

Sanger, D. (2016). From Iran to Syria, Trump’s ‘America First’ Approach Faces Its First Tests. Nytimes.com. Retrieved 25 November 2017, from https://www.nytimes.com/2016/11/18/us/politics/from-iran-to-syria-trumps-america-first-approach-faces-its-first-tests.html

Silberglitt, R., Antón, P. S., Howell, D. R., & Wong, A. (2006). The Global Technology Revolution 2020, Executive Summary: Bio/Nano/Materials/Information Trends, Drivers, Barriers, and Social Implications. Rand Corporation.

February 09, 2023
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