Technology Globalization: How Is International Business Affected?
Have you ever considered where your phone or computer came from? Each individual piece of the device requires work in production and assembly. There are many products that are manufactured in the country, but the large number of companies that transfer their products to be produced in other countries grows day by day due to the expected increases in profits. This is an example of globalization. Specifically, companies like Apple can produce their phones, computers, and tablets in foreign countries for far less money than it takes to produce them domestically in the United States. New technology in companies like Apple has allowed globalization to have a negative effect on global business through factors such as location, consumers, and competing organizations. Yes, international factories can produce parts cheaply, but at what cost to global businesses?
The consumer is the main reason companies succeed. Without the consumer, companies would be wasting valuable resources and capital to produce products or services that are not bought. People all over the world have been so mesmerized by Apple products that they spend huge amounts of money on them. The cost of these products does not change regardless of the country in which they are sold. However, if the consumer cannot afford the product, they cannot buy it. This is especially true for those who live in the United States if companies like Apple, among many others, are moving their jobs abroad. Similarly, in foreign countries, companies that produce the technology are paid pennies on the dollar. This translates into low wages for workers and, in turn, the inability to buy products. Thus, expanding technology internationally through globalization has a negative effect on the company through the volume of purchases by consumers.
Many companies initially manufactured their products in the country. The desire for a higher return on investment has attracted more companies to consider or commit to expanding these tasks internationally through globalization. Potential startups in the United States are not looking at manufacturing or creating new products domestically because they fear they won’t be able to compete with international rivals or companies that use outsourcing. As a result, this can be over-expansion that occurs too quickly for a new business and could be largely counterproductive to your profits. The lack of opportunities to produce domestically has also reduced the number of jobs and de-funded the economy in many ways. By not creating the physical product, but still consuming it in the United States, the economy essentially continues to receive taxes for the creation or sale of the good. However, the economy is losing income taxes collected from factory employees, as well as the money those same workers would spend to stimulate our economy if their work were not outsourced. This means that consumers will spend less money on products produced by companies like Apple.
On the other hand, the globalization of technology also has negative effects at the international level. This proceeds to affect the business on a global scale. As mentioned above, companies receive pennies on the dollar for the products they produce, resulting in poor working conditions and wages for the people employed in these jobs. The low wages of workers are directly related to the inability to buy non-essential items such as iPads, MacBooks or iPhones. So by using globalization, Apple is technically limiting the number of products it will sell. Continuing with this thought, it is well known that an alarming number of Apple factory workers have committed suicide from exhaustion in their situations. A negative stigma and reputation could be associated with Apple for the reasons behind this, causing no additional units to be purchased. All of this would be thanks to the initial effects of globalization, and illustrates how complicated the problems caused by globalization can be.
Competing companies are also affected by the globalization of technology. For example, when Company One ships its manufacturing overseas, there are many negative impacts on similar businesses. There are lost sales opportunities for other companies because Company One is able to sell its product for much less due to market dominance in the interest of the consumer. The consumer looks for cheaper items with available supply. Supply tends to be higher because larger manufacturers can offer more products for less, further increasing demand. You cannot compete with Company One because its cost of bringing the product to market is significantly lower.
The effects of globalization on business are so severe that more emphasis should be placed on discussing the pros and cons when making the decision to outsource a business. Although it can bring more profit to a company, they must consider what extremes they are willing to go to in order to achieve this goal. They must deliberate on the effects of globalization in their home country, as well as in international countries. While outsourcing can be good for them, low wages, poor working conditions and deteriorating mental health have dire repercussions for workers abroad. Likewise, the negative effects of the economy itself and competition must be considered. Money that should be stimulating and circulate through one’s own economy is now in another country. Additionally, competitors in the same industry will have trouble keeping up and may be forced to go out of business. Neither of these factors is positive for one’s country. Finally, the most important point of globalization would be the long-term effects on global business. Initially you can see higher profits, but in general, globalization affects both the consumer and all the countries involved that the volume of sales will probably decrease with the passage of time. This blatantly defeats the primary goal of globalization for a business in the first place.