Globalization: Introduction

Discuss about the Managing a Value Chain.

Globalization is an ability of business to move around the globe. Globalization increases the interconnection of the world, as it helps in increasing the international trade and cultural exchange. Various facts of globalization tell us that, it helps in the development of the nation by providing a large number of techniques as well as employment. To know about domestic economies, industries, and rules of the other countries around the world, globalization is used. Globalization mainly depends upon the techniques being used by the industry, and the public policy. Technology plays an important role in the growth of globalization. With the help of information technology, the flow of information becomes easier across the boundaries. Technology has increased the communication between the various countries by decreasing cultural gap between them (Webster, 2016). Globalization helps in the development of a nation by making people to communicate with each other. Globalization has provided a large number of benefits to the Australian economy. Australia has a large number of natural resources, which is very large in comparison to the population of Australia. Therefore, Australia exports those resources to other countries according to their requirements (Red Apple Education Ltd., 2015).

The value chain is a cycle which tells us about the working of a business. It tells us that how an industry receives raw material for manufacturing of goods, and how industry adds value to the raw material to create the final product. The main motive of the value chain is to deliver the maximum value to create a competitive advantage (Jurevicius, 2013). Value chain depends upon various factors which are mentioned below:-

Inbound logistics- In this phase preparation and management of raw material is done, which is required for the production of goods.   

Operations- In this phase, various operations take place to convert raw material into the final product.

Outbound logistics- In this phase, all the operations are completed and the products are ready for the customer.

Marketing and sales- In this step, the product is ready for sell in the market. Advertising and pricing are the main parts of this step (The Economics Times, 2016).

Service- It is the last and final step of the value chain and describes various actions used to make better consumer experience related to customer service.

Globalization has a large impact on the value chain, as it helps in increasing the business throughout the world. With the help of globalization, a country can communicate easily with the other countries. It helps in the exchange of information and techniques throughout the world. Globalization reduces the cost of transportation, and communication by breaking down the boundaries, to flow the products among consumers across the world. Globalization provides us the freedom to do business beyond the national borders. Australia was always more open to the globalization as compared to other countries (Gereffi & Fernandez-Stark, 2011). Globalization plays an important role in the Australian economy. Australia’s exporting business mainly consists of raw materials like Uranium, Coal, Iron ore and many other minerals. Australia also exports secondary goods like machinery and eatable products, such as wheat, rice etc. It also provides tertiary products like education, services and tourism.  Evaluation of the impact of globalization on the value chain includes various factors which are:-

Value Chain

Globalization has created a system, which has various advantages over the competitors across the world. The competition is becoming stronger day by day, and can be located anywhere in the world. Competitive advantage is very good for the customers, because it helps to fulfil the needs of customers in an efficient way. Providing the consumers with greater value than the other companies or industries can gain competitive advantage to the firm. Competitive advantage can be attained by offering lower prices to the customers, by providing good quality of products, by providing good customer services etc. The best method to make competitive advantage strong is to follow a particular task or method, which is totally different from other industries (Powell, 2001). There are main three strategies which are used in competitive advantages, which are cost, differentiation, and service.

Cost- The main purpose of this step is to measure the efficiency of an industry. Efficiency is measured by considering the ratio of inputs used for production to the outputs produced as a final product. A firm may have good profit margins only if it can produce the highest efficiency. A firm can increase its efficiency, by decreasing input for a constant output, or by increasing output for a constant input. Input can be decreased by reducing labor inputs, by decreasing waste etc. By increasing the number of units produced by a machine in a particular instance of time, output can be increased. Downtime also decreases the output of a firm, so eliminating the downtime by the use of different strategies can increase the output.

Differentiation – In this step, the comparison is being done between the various products produced by a manufacturer with the products produced by some other manufacturer. Mainly this comparison is done on the basis of the physical structure of the product. The customer also compares the quality and services provided to them for that product. If a company hires better people as compare to other companies, will help in competitive advantage for the company. If the performance of the employers is being monitored by the employers of the company, it will lead to competitive advantage. A trained staff can produce good quality of products, and if the quality of the staff is good than no other company can compete with them. When a customer starts dealing directly with the employees than people differentiation becomes an important part of the differentiation process. Image differentiation is also a part of this. In this task a same image is designed on the product, so that customers can easily differentiate between the similar products of different manufacturer. Quality differentiation describes the quality of products, because the manufacturer which gives best quality products in the minimum cost will automatically gain a profit.   

Impact of Globalization on Value Chain

Service – In this step a company mainly thinks about the types of services it can provide to its customer. Service is also a major part which can increase the profit of a company, because many companies can provide similar types of products,  and then the customer moves towards those companies, which can provide them best service. Therefore, these are some of the factors affecting competitive advantages of a company. If a company keeps on changing its techniques from time to time as per according to the market depending upon factors like cost, differentiation, and services no other company can compete them easily.

In this phase, a firm has to understand its current financial condition. A firm should know about its incomings and outgoings, i.e. how much money it is investing for the production of goods, and how much profit they are getting from it. Australia has a very less effect of the crisis, and has better growth as compared to many other developing countries across the globe. Many other countries are facing recessions and unemployment, but Australia is far away from them. Australian banks are in continuous profit, and they didn’t want any type of capital help from the government. In between the Australian Dollar started decreasing rapidly due to an effect of the crisis (Australia, 2015). Reserve Bank of Australia enhances liquidity in the market. Due to the economic strength of Australia, the Australian Dollar has largely recovered after a bad impact of crisis. Market of Australia is more resilient as compared to many other countries. Australian banks had almost no borrowings that can affect global banks. Strength of Australian banks facilitates the public by allowing an ease in monetary policy related to business loans etc.

Technology plays an important role in globalization, as it has connected the public of different countries with each other. Mainly there are three types of technology, i.e. information technology, communication technology, and transport technology.

Information Technology – Internet helps in connecting the computers with each other across the world, as a result of it people are getting connected to each other. With the help of the internet anybody can access anything, sitting in any part of the world. At present almost all of the businesses are being done with the help of internet. Information technology provides us the facility to communicate with anybody at the speed of light (Johnson, 2016). Companies having branches all over the world exchange their information with each other through this technology. With the help of this technology a large amount of data can be transmitted to any part of the world.

Competitive Advantage Considerations

Communication Technology – Communication technology allows people to communicate with each other throughout the world. This technology has provided us a large number of applications, such as Email, chat applications, video calling etc. to communicate with each other without considering the artificial boundaries. With the help of various satellites we are getting each and every type of information required by us.

Transport Technology – Transport technology provides faster, safer and comfortable transportation of raw materials from one place to another. With the help of transport technology a firm can transport its products to the consumers in a very short time period. At present, various means of transportation are available. Means of transport used by the industries at present are very fast, and their fuel consumption is very low. Companies should use those means of transport which has very less maintaining cost, so that it helps in decreasing the input of an industry for a constant output. Transport has changed all the ways to do business. Companies are using large tankers etc. for the transportation of their raw materials in a bulk quantity from one place to another (Ostasiewski, 2008).

Globalization affects the functioning of human resource management, as it implies a great pressure on the working of human resource management. Globalization forces the human resource management to apply the various changes to their work, so as to complete the needs of an organization. It is the management duty to change their managing techniques time by time as required by an organization. For a global business, there must be a free flow of human and financial resources. These developments help in doing a business in a new way which was never done earlier. Human resource management design various policies, according to which the staff has to perform and helps a firm to achieve its main objective. Human resource management is responsible for the various tasks being performed by the company. Management divides the staff into various groups, and departments. Tasks are assigned to these groups by the human resource management which they have to accomplish in the given time limits (Rabbanee & Haque, 2010). Management prepares a plan, according to which whole process takes place. To place the appropriate people for a particular task comes under the functioning of human resource management. In this task the requirement of raw material, labor etc. is fulfilled according to the requirement of an organization. HRM identifies that what is required by the company in future, and what is available at present. It has to maintain human capital available for the further tasks of the company (CBS Interactive, 2007).

Financial Considerations

In this competitive world no company wants to make mistakes, so for avoiding these mistakes one should know about the culture of the country in which it wants to do business. If the company knows about the culture of the target company, then it can save money and avoid mistakes too. For selling the products a company needs to do advertising of that product. For advertisement it is necessary to know about their culture, because without knowing it is difficult to do so. The company needs to know about the language of that country, which help the company in promoting the product (Katarya, 2016). The company should understand the importance of the language of that country, and needs to respect their culture. Some important facts for cultural considerations are:-

• The company should have employees related to both the cultures.
• The company needs to take feedbacks of employees from different cultures.
• Training must be given to employees to decrease the cultural differences.

This phase describes about the impact of globalization in different policies of different countries. Local and regional government of the company plays a vital role in the globalization. The government of the countries performs in controlling the economic forces. It tells us about the various political disputes. There are different political movements, which have different goals, and objectives. Economically Australia has a large number of natural resources (Hellwig, 2015). The population of Australia is very less as compared to the quantity of these natural resources therefore; they sell these natural resources to the other countries according to the requirement of that country. Australia’s main export business depends upon raw materials, minerals etc. Half of the Australian export is consisted of uranium, coal, and iron ore. Australia also exports secondary goods like machines, food products etc. It also exports services like education which comes under the category of tertiary goods. Australia also imports a large number of primary goods, secondary goods, and tertiary goods. In primary goods Australia imports crude petrol, in secondary goods Australia import cars, and accessories of computer, and in tertiary goods Australia import insurance and transportation. Import has a negative effect on local industries working in Australia. Mainly the secondary industries have a negative impact, because secondary industries are related to manufacturing of products, but due to high standard of living labor is very costly in Australia. At present Australia is trading with other countries at a very large scale. Australia has decreased the export of raw materials to the UK, and Japan is the single biggest export market of Australia. Depending on the current status, we can say that soon China will replace Japan (The Whitney and Betty MacMillan Center, 2016).

According to social considerations, we can say Australia is one of the countries those who are getting a lot of advantages from globalization. Communication technology is being used maximum in Australia for communicating with each other. The internet is a part of communication technology, and it is being used at a very large scale (Lee & Vivarelli, 2006). With the help of this technology Australian’s are getting connected to the people of other countries. All these technologies are helping Australian’s to do business with the other countries, and all these factors enrich the people of Australia. The people of Australia have knowledge about the cultures of other countries, which enriches the society of Australia. Cultural knowledge helps them to deal easily with others, which help them to develop their business. Australia has less social exchange with the countries that do not have any technology to exchange with them. Therefore, due to good understanding of various cultures, Australian’s have a good understanding of diversity (World Commission, 2004).

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