Changes in the Balance of Trade in during 20th Century
Without a question, the world is a radically different place than what it was a century ago. The globe underwent a complete transformation in the 20th century, and the same is true of international exchange. The balance of trade refers to the net volume of exports minus the sum of the country’s imports during that year. The balance of world trade in the last century has changed considerably. In the early days of the 20th century, several countries used it to avoid trade disparities and considered it bad for the economy. The globalisation process was slow, and many markets stayed largely closed. However, as far as the CIA figures for 2010 are concerned, out of the 191 countries on their list, only 61 or 32% of the countries had trade surpluses and the rest had trade deficits. It is quite clear that this relates to the fact that, overall, the balance of foreign exchange is negative, leading to a trade gap. The highest exchange deficit with U.S. economic super-power was US$561 billion (Steger, pp. 74-78, 2010). In comparison, economic powers such as the United Kingdom, India, France, Brazil, Canada and Australia have had deficits of more than USD 35 billion (Steger, pp. 74-78, 2010). However, emerging Asian powers China, Japan, and Germany are at the top of the list with trade surpluses of 272, 166, and 162 billion US dollars (Steger, pp. 74-78, 2010).
Economies of Scale
Through globalisation and growing foreign exchange, economies of scale have arisen as an increasingly significant element in the growth and development of different sectors. Scale economies apply to ‘a process where cost per unit declines with increased demand’ (Rossi, pp. 304-305, 2007). It helps the business to lower its prices and win more market share, or it can decide to keep the same pricing standard and raise its profit margins in order to make more money. Consider the example of computer industry where with the expansion of computer giants like Dell, HP, and IBM, they have been able to decrease their prices (Rossi, pp. 304-305, 2007). The fast-food industry has benefited from economies of scale by organizing and training their employees in such a way that they can now handle orders with greater efficiency and responsibility. With the growth of the cell phone industry, it has been able to take the advantage of economies of scale by investing more of their retained income in research and development and technological advancements. This has allowed them to introduce new and innovative products more quickly thus increasing the market demand (O’Loughlin, Staeheli & Greenberg, pp. 214-218, 2004).
Globalisation and Organizations Finding Cheaper Resources
Today, the mantra of the business is to lower costs and increase the profits. This single thought is driving almost all decisions in most of the companies. In fact, most companies today are using their ability to find cheaper resources as their competitive advantage. There are various reasons for the same. First and quite understandably, due to Globalisation, lifting of trade barriers and expansion of markets, firms in every place in the world are now facing more competition than ever in the history (Mishkin, pp. 149-152, 2008). According to the guru of strategic management, Michael Porter, there are now two ways to beat your competition, either to differentiate yourself from others or offer lower prices. Due to all the technology, imitation has become easy; therefore, it all comes to lower cost, which can be achieved by using cheaper resources. Second, businesses in most of the developing countries realize that resources such as land, labor, inputs, and others are expensive in their country; however, the same remains much cheaper in other countries such as China, Bangladesh, Pakistan, India, Vietnam and others. Therefore, many of the manufacturing and even service companies have outsourced their operations to those countries to gain competitive advantage over their competitors (Wiarda, pp. 93-98, 2007).
Deploying Culture for Social and Economic Change
Companies should follow the example of Merck, which invested millions of dollars, without the support of US government and the United Nations and provided free medicine to the people of Africa and Latin America, which were affected by a deadly disease called river blindness (Robertson, pp. 265-268, 1994). Dell also is investing thousands of dollars in training children from poor and lower-class families to learn computer skills, from which they would remain isolated under normal circumstances (Rossi, pp. 304-305, 2007). In this way, these companies have benefited many people and have initiated a process of social and economic change. The point here is that companies should use their resources in such a way that they could provide some benefit to the economically and socially least advantaged in the society (Ervin & Smith, pp. 185-186, 2008).
One of the most effective ways to do so so businesses can deploy culture for social and economic change could be through the increased use of corporate social responsibility. This refers to the fact that businesses should try to achieve a balance between their goal of profit maximization and the needs and well-being of the entire society (Collier, Dollar & World Bank, pp. 41-48, 2002). Another way of the same, which is also discussed in length under the latter heading, is the process of acknowledging cultural diversity and opening the gates of the company for all people regardless of their gender, race, color, caste, creed, sexual orientation, and other demographics (Steger, pp. 74-78, 2010).
Cultural Diversity at the Workplace
Quite understandably, the world has become a global village and it is shrinking everyday. Gone are the days when segregation was possible and allowed. Today, diversity and pluralism have emerged as undeniable realities and the same is true for workplace as well. A business can promote cultural diversity through various ways. First, in order to embrace diversity it will have to train its employees for the same. Embracing and promoting diversity is not an overnight job but it takes time, effort, and energy (Mishkin, pp. 149-152, 2008). Therefore, the company will have to start a rigorous training for the same purpose. Second, the company will also have to include the same in their vision and mission statement to tell the stakeholders that the business is determined for the same (Rossi, pp. 304-305, 2007). Third, the organizational culture processes, and systems will have to flexible and such which could acknowledge the cultural diversity. They may include flexi-time, holidays, leaves, and others. Fourth, consider the example of Colgate, which has associations and affiliations with more than 35 minority organizations for African Americans, Asian Americans, Hispanic Americans, Gays, Lesbians, Women, and others. Fifth, the company will have to acknowledge cultural diversity by introducing separate products or services for different target markets (Steger, pp. 74-78, 2010).
Importance of Globalisation for Employees of Dell
Globalisation and its impact on a company are of great significance for its employees. Consider the example of Dell, which is quickly globalizing. Its employees will be concerned for various reasons. First and the most important would the due to the fact that Globalisation will allow the company to encounter with different cultures and in order to deal with them, it would be important for the company to have ample information about their cultures (Gannon, pp. 25-28, 2007). For example, in Japanese and Chinese cultures great significance is laid upon the age of the employee which means that an older employee will have to respected even if they are a lower level of hierarchy or even if they are at the wrong side (Prempeh, Mensah & Adjibolosoo, pp. 98-99, 2004). Furthermore, in Middle Eastern cultures, there is a completely different concept of time. In Western cultures, time is viewed as an asset or an important resource, which once lost, is impossible to retain back. Therefore, waiting for someone is equal to disrespect and insult (Collier, Dollar & World Bank, pp. 41-48, 2002). However, the same is not true for Middle Eastern cultures because they do not place importance on time but on relationships. If a guest has kept one waiting, it probably means that he wants to meet after being completely free from other commitments, which is a good sign (Ervin & Smith, pp. 185-186, 2008).
Globalisation, Poverty, and Hardships
Where Globalisation has transformed the world and improved the lifestyle of millions of people, it has been blamed for increasing poverty and hardships for millions in the world. Critics claim that Globalisation has only benefited the western world and despite all their claims, many countries in Africa and Asia also have a significant number of citizens live below the poverty line (Prempeh, Mensah & Adjibolosoo, pp. 98-99, 2004). It has forced any underdeveloped and developing countries to lift trade barriers and allow those small firms to compete with international business giants, which has ultimately resulted in the loss of jobs and closure of business by many local entrepreneurs and workers (Scholte, 230-240, 2000). Therefore, Globalisation has facilitated competition on an unfair ground where many small and local workers have lost their jobs. Furthermore, by allowing foreigners to exploit the resources of poor countries, it has increased the gap between rich and poor (Waters, pp. 10-12, 2001). For example, in 2000, the richest 1 percent adults of the world owned 40 percent of the world’s assets and the richest 10 percent adults were in charge of 85 percent of world assets. However, bottom 50 percent of the entire population in the world has only 1 percent of the world assets at their disposal (O’Loughlin, Staeheli & Greenberg, pp. 214-218, 2004).