Understanding the Role of Globalization

  • Globalization has had a significant impact on businesses and organizations around the world. With the advent of low-cost transport and enhanced communications, it’s possible to build a product from components manufactured around the world. The following guide discusses how the Internet and container ships have allowed market globalization to thrive.

    It can be challenging to communicate with people in different parts of the world. Less than 200 years ago, it could take weeks for a message to travel across the Atlantic ocean from London to New York. With the invention of the telegraph, it was possible to communicate in real-time. While early transatlantic telegraphs were expensive to send, they were a valuable way for companies to communicate. However, their expense limited their use to only a few businesses.

    The Internet has allowed companies of all sizes to work internationally. Since there is no charge for accessing a server in a foreign location, it’s possible to send blueprints, videos, emails and other forms of communication around the world for no cost.

    For example, some fast food restaurants in the United States hire support representatives to manage drive-through orders. As a customer enters a drive-through, he or she is connected to an employee in a low-wage country like India or Pakistan. As the customer places the order, a foreign employee enters this information into a specialized menu. This order is automatically transported back to the fast food restaurant’s kitchen. Since these employees are paid less than minimum wage, it’s possible for fast food companies to reduce their payroll costs.

    In addition, container ships have revolutionized the shipment of products across the world’s oceans. It’s possible to send a ton of freight across that Atlantic ocean for less than $100. While delivery can be slow, this can be an effective way to save money. As container ships continue to grow in size, this cost is expected to decrease.

    Globalization has enabled the production of low-cost goods for a variety of countries. By connecting potential markets with labor pools, it’s possible to produce goods at a very low cost to consumers.