Impact Of Globalization On The Value Chain

Discuss about the Impact of Globalization on the Value Chain.

It is observed that the process of corporate consideration is like a sea change that has tides and at times it is quiet with some surprises in a way. There are new challenges, when companies face, it is equally a challenge for small business consideration and even for multinational companies. There are issues that emerge and are even affected with the performance and behavior of the senior level management to handle crisis management when globalization affects the company. This is an impressive development that an organization owns with the impact of globalization in this age (Wuelser et al. 2012).

The changes are faster now a days and this threatens the survival of organization with the factors that affect the value chain organization. There are new challenges such as new competitors, capital investment and mobilization, difficulties in retention process and as such a higher level change of technology that has an extreme element with which the managers has to get prepared for the challenges and the change. Managers continuously try to prove their responsibility by proving the change in an organization. As such there are many factors that impact the globalization on the value chain (Zindiye et al. 2012). This seems to be motivating the employees by handling them their work responsibility and analyzing the impacts with each of the element in the business. There are corporate considerations that include the change when globalization matters on the value chain of the business. Other factors such as competitive advantage considerations, financial considerations, technological consideration, and cultural consideration, and human resource consideration, political and economic consideration do justify the overall information regarding the impact of globalization on the value chain (Harrison et al. 2004).

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Competitive Advantage Considerations

Due to globalization, companies face a high competition in the domestic as well as international markets. Globalization promotes competition, which requires excellent services and high quality which leads to the growth of the company.  For competing in the global market, the companies need to develop and grow powerful enough to sustain for a long term in the market. The companies need to constantly develop innovative strategies and plans to remain competitive and develop a huge market share (Wuelser et al. 2012).  As per different industries, the ratio of competition and chances of survival differs. The companies may face high competition if the market is already occupied by the best service provider companies which are difficult to defeat. There are numerous advantages of getting the business globalized. Globalizing into the developing countries and countries from where the company can find cheap resources, raw materials, energy sources and liberal rules and regulations (Geoff, 2006)

The strongest example of the advantage of globalization is found within the case of US. The United States faced a decline of manufacturing industry and was on the edge to diminish due to high costs and expenditures. But due to globalization and expanding the manufacturing business into various developing countries where the resources, the labor costs and the overall expenditures were less, US were successfully able to maintain its manufacturing business. Also differences in the currencies help the countries to gain high revenues and profits in comparison to the base countries from where it developed (Zindiye et al. 2012). Along with the favorable locations for the business in terms of geographic, economic, demographic and conditions can also be explored which would enhance the quality and success of the business. Thus globalization and managing the value chain has a wide competitive advantage for companies (Acemoglu et al. 2007).

Corporate Consideration

The large corporations aim to reach the entire globe by exploring their offices and branches all around the world in different countries. The corporate considerations of globalization and value chain include the development of a company’s branches and offices into different countries and enhance the value chain for the customers of those countries (Varghese, 2011).

Also the large corporations enter the under developed countries and stimulate technology and automation in the countries. It has been identified from various surveys that 51 from the list of top economies are not countries but are businesses and corporations. The businesses generate more revenue than countries (Wuelser et al. 2012).  As an example, Walmart’s revenues are considerably higher than Indonesia’s total revenues. The companies now do not face any boundaries for developing at the global level and also succeeds in developing a sustainable and reliable value chain. The companies consider the value chain and customer value as important aspects of globalization (Prete et al. 2015).

The companies adopt the political, demographic, economical etc. values of the countries where they expand. This makes it easy for them to get smoothly established in the countries. As an example, McDonalds is a huge chain of restaurants which has 31,000 restaurants in 118 different countries of the world. The company has amazing strategies to regulate globalization while maintain the value chain. The company performs in depth analysis regarding the culture of the countries and then penetrates in the market (Varghese, 2011). Despite of its huge brand name, the company adopted various factors like the political, legal, cultural, demographic etc. factors and values and then started businesses in various countries. This made McDonalds widely accepted and welcomed in every country where it expanded and maintained its value chain (Defever and Farid, 2013).

Along with globalization, the companies require to understand and practice then social responsibilities. The social responsibility includes developing services which can benefit the entire society and provides outcomes which are beneficial to each individual entity concerned with the business (Hamilton and Webster, 2009). The companies are liable to develop ethical behavior showcasing the concern and benefits of the customers, employees, stakeholders and shareholders. The social responsibility includes several aspects like environmental, social, moral and financial factors. Globalization must practiced as two sided process where the company grows while developing into various countries fulfilling the social responsibilities and the countries gets benefited by having huge multinational companies serving the citizens and providing income and employment to the citizens (Zindiye et al. 2012).

The companies promote technological and economical transformations while emerging into various countries (Alfaro and Maggie, 2014). Not only the companies and society gets benefited but also the trade relations and the political relations of the countries are enhanced by this. The huge example of best practice of corporate social responsibility are the Open Door Policies in China which provides trade and finance liberalization (Varghese, 2011). Thus Social responsibility is a very important aspect in the globalization and value chain management.

Financial considerations

Finance is an important aspect which gets hugely affected by globalization. The developing countries have been majorly benefited due to the globalization o terms of cash flow and growth rate.  This leads to the incorporation of all the financial markets into a single global market (Hamilton and Webster, 2009). Also, uniformity and stability has to be maintained to achieve financial benefits of globalization and value chain management. The developing countries are highly benefited from the globalization in terms of fiancé as, the changes and instability of the currencies and conversions leads to more income. These aspects, however act as a barrier or hindrance to globalization for some countries (Cunningham, 2008). The banking sector has changed where the banks have negotiated the chances of financial risks by transforming the assets into tradable securities and interest rate changes. The integration of a country’s finance into the global market gives the investors a stable and powerful platform and thus the businesses planning to increase funds would have a wider option of investors to select from (Wuelser et al. 2012).

The financial system for the lenders and borrowers has got more transparent and competitive. The domestic market has, however experienced some critical conditions in contest to financial concerns due to globalization (Alfaro and Maggie, 2014). For example, Saudi Arabia prepared its yearly budget assuming that the prices of oil are 40 USD but was in actual 100 USD. Due to this the country had a huge surplus and the liquidity dried up. Thus, there are benefits and harms of globalization in terms of the financial market, but it is significantly marked that the distribution of capital is done in a very efficient and effective manner which benefits the society or investors of the country and the companies both (Alfaro and Maggie, 2014).

Technological Considerations

The technology has promoted and regulated the globalization where companies get various benefits regarding the business to business transactions (Hamilton and Webster, 2009). Several costs are reduced, which benefits the companies. The advancement of internet has led to numerous advantages of data sharing. All over the world, people are able to communicate and trade. Since the last few decades the globalization process has become more efficient and simpler due to the technology (Antr`as, 2015). This includes areas like communication technology, information technology, transportation technology etc. If we consider the information technology, the internet and the World Wide Web has dragged globalization to a new level where people are able to communicate from huge distances and share the data and information (Nigam, 2009).

The various aspects and news regarding various countries are available just within a fraction of time through which it gets so easy to analyse and trade with countries. If we consider the communicational technology, there are various mediums which have made communication very easy between countries (Hamilton and Webster, 2009). The mobile phones, the internet and mailing systems, softwares and applications are developed which makes communication a very simple and efficient matter. The significance of transport technology is also highly impactful as the sea, air and road transport has become so easy and speedier. The advancements and development in the engines, and the technology used in building the transportation vehicles has become more advanced which has increased the trading and tourism among countries. Thus the technology can be said as the most powerful reason behind the increase and ease in globalization (Antr`as, 2015).

Human resource considerations

The impact of globalization on human resource consideration has a positive impact that matters for the value chain organization. As such globalization and human resource are interlinked with the worldwide phenomenon and this gets into the shape with the corporate world which is actually predominant (Ogunsola, 2005). There is an immense relationship between globalization and strategic human resource (Nations, 2011). As such due to globalization, there are significant changes that are considered with high degree of improvement in the human resource activity in an organization. The extents to which the human resource department adopts the standards that are set globally are well recognized and accepted by the companies (Antr`as  and Davin, 2013).

The degree of globalization and the impact of globalization are widely considered in IBM, where employees are treated with high respect at the same time, they are responsible to fulfill their work with high degree of ethics with the prevalent work culture (Hamilton and Webster, 2009).

If the degree of globalization is high, the degree of correspondence seems to be an influencing factor for the human resource department (Nigam, 2009). It is important to know that globalization has various challenges that the company needs to consider when it reaches at a point where strategic human resource planning is the next step to carry forward the growth and development of an organization (Ogunsola, 2005).

Cultural considerations

The impact of globalization has an affect towards the cultural change whereas the production and sales of goods and services do impact with the development of the country and its wellbeing (Pieterse, 2009). The way globalization has come up with the value chain has some home changed the scenario with the concerned change that has to threaten with the local products? Products at the domestic level can now be exported with the change in the system and the products with higher value satisfaction. the foreign foods such as Mac D has come up in the market and people have accepted the change in their food habits due to the familiarity and fame that the company has all around the world (Powell, 2015). The globalization approach has made simple things more complex with the increase in the supply of good and the choice that people get with large number of foreign consumer products, this actually disrupts the traditional producers and so in this case it may adversely affect the demand and supply of the local products (Broda and David, 2006).

This gives a demographic level and an international level of cultural demands and supply thereby it assists to the expansion of trade in various countries with an impact of a positive and a negative impact towards the value chain (Nigam, 2009). Globalization tends to majorly realm the elite because of the reason that there are many such individuals who are merely engaging into the affluent purchase that enhances the online products in the global market (Pieterse, 2009). This criterion is very much inclusive now days and the backgrounds interact as such with the westernized milieu. International business acceptance criteria have been widely spread and western culture has influenced the behavior and the language that generates the international or else the economic rate of the country.

Economical and Political Considerations:

The economical aspects like GDP and its increment due to globalization, the foreign direct investment, the income and payments, the revenues are considered while identifying the economical benefits of globalization. The political globalization includes the number and increment in the number of foreign embassies in a given country, participation in the international organizations, number of treaties signed between countries, trade relation with countries etc (Ogunsola, 2005). Due to globalization the interdependability of countries in context to the economical and political aspects has increased. The economical globalization has led to flow of capital, cash, gods, technology, and skills among countries. Due to the economic globalization the foreign investment and employment opportunities have increased (Pieterse, 2009).

The foreign trade has developed import, export and trade relations among countries and the developing countries shave especially gained huge benefits from globalization. The political aspects showcase come advantages and disadvantages. The political aspects generally consider power which may get the situations and relations among the country tensed up. The developing countries are dependent on the powerful countries for trade and employment areas. The political relations can be damaged between countries having equal powers and can stress up the trade relations (Powell, 2015). Thus the economical and political aspects have a quite high influence on the globalization. While having proper and unbiased trade rules and regulations, the countries can have a proper advantage of globalization.


There are positive and negative impacts of globalization on value chain and these were discussed while considering various factors that affect the globalization. By evaluating each factor, the findings reveal that the extent of which globalization is accepted is very much significant due to the emerging markets and the developed countries that enhance the privatization and liberalization. The positive impacts are the number of factors that include trade, technology, investment opportunities, competition, organizational structure and education at the prioritized level. The whole effort lies in the global community that engages various countries and transactions between these countries. As such there are advancements and improvements that have developed since a decade and the availability of options that enhance the growth and development of an organization. The impact of globalization on value chain has been directly focused on some considerations that affect in the economy and in the country with a significant level (Powell, 2015).

The political considerations, human resource considerations, economic considerations, cultural considerations, competition and technological considerations are affected with the advancement and change in the economy.


Acemoglu, D., Pol A., and Elhanan, H. (2007), “Contracts and Technology Adoption,” American Economic Review 97(3): 916-943.

Alfaro, L., and Maggie, X. C. (2014), “The Global Agglomeration of Multinational Firms,” Journal of International Economics 94(2): 263-276.

Antr`as, P. (2015), “Global Production: Firms, Contracts and Trade Structure,” Princeton University Press, forthcoming.

Antr`as, P., and Davin, C. (2013), “Organizing the Global Value Chain,” Econometrica 81(6): 2127-2204

Broda, C., and David, W.(2006), “Globalization and the Gains from Variety,” Quarterly Journal of Economics 121(2): 541-585.

Cunningham, S. R. (2008). “Financing creative industries in developing countries. Creative industries and developing countries: Voice, Choice and Economic growth,” Routlegde Londonand New York, pp.65-110.

Defever, F., and Farid, T. (2013), “Productivity, Relationship-Specific Inputs and the Sourcing Modes of Multinationals,” Journal of Economic Behavior and Organization 94: 345-357.

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Ogunsola, L. A. (2005). “Information and Communication Technologies and the Effects of Globalization:” Twenty-First Century “Digital Slavery” for Developing Countries–Myth or Reality? Electronic Journal of Academic and Special Librarianship , 2, 1-2.

Pieterse, J. N. (2009). “Globalization and culture: Global mélange.” Rowman and Littlefield Publishers.

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