Have you ever considered where your phone or computer came from? Each individual part 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 move their products to be produced in other countries is growing every 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 much less money than it takes to produce them domestically in the United States. New technology at 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 companies?
The consumer is the main reason why companies are successful. Without the consumer, companies would be wasting valuable resources and capital to produce products or services that are not purchased. People all over the world have become so fascinated with Apple products that they spend outrageous 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, he cannot buy it. This is especially true for those who live in the United States if companies like Apple, among many others, move their jobs abroad. Similarly, in foreign countries, the companies that produce the technology are paid pennies on the dollar. This results in low wages for workers and, in turn, the inability to purchase products. Thus, the expansion of 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 aren’t considering 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 may be too much expansion happening too fast for a new business, and could be detrimental to your bottom line. The lack of opportunities to produce in the country has also reduced the number of jobs and has drained funds from the economy in many ways. By not creating the physical product, but continuing to consume it in the United States, the economy is still essentially taxed from the creation or sale of the good. Yet the economy is missing out on the income taxes collected from factory employees, as well as the money those same workers would be spending to stimulate our economy if their work wasn’t 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 continues to affect business on a global scale. As stated above, companies are paid pennies on the dollar for the products they produce, which translates into poor working conditions and wages for the people employed in these jobs. Low wages for workers are directly related to the inability to buy non-essential items like iPads, MacBooks, or iPhones. So by using globalization, Apple is technically limiting the number of products it will sell. Continuing 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 additional units not to be purchased. This would all 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 sends the manufacturing of its products abroad, there are many negative impacts on similar businesses. There are lost sales opportunities for other companies because Company One can sell its product for much less due to market dominance in the consumer’s interest. The consumer looks for cheaper items with available supply. Supply tends to be higher because larger manufacturers are able to offer more products for less, further increasing demand. You can’t compete with Company One because your cost to bring 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 company. Although it may bring more profit to a company, they need to consider how far they are willing to go to achieve this goal. They must deliberate on the effects of globalization in their home country as well as in international countries. While outsourcing may be good for them, low wages, poor working conditions and deteriorating mental health have dire repercussions for overseas workers. Likewise, the negative effects on the economy itself and on competitors must be considered. The money that should be stimulating and circulating through the economy itself is now in another country. Also, competitors in the same industry will have trouble keeping up and could be forced out of business. Neither of these factors is positive for one’s country. Finally, the most important point about globalization would be the long-term effects on global business. Initially higher profits may be seen, but in general, globalization affects the consumer and all the countries involved so much that the volume of sales is likely to decrease as time goes on. This blatantly defeats the primary purpose of globalization for a business in the first place.
