Globalization- good or bad???

After attending the lecture, I learnt more about globalization. I had some basic concepts of this topic since I have done the outline of a 1500 words essay that is talking about globalization as well. This lecture allows me to understand “globalization” this term more thoroughly. We learnt how do firms go internationally, the advantages as well as the disadvantages of globalization, the reasons to trade internationally. Moreover, I know more about the issues relating globalization, for instance, the loss of cultural diversity, the wealth gap between the rich and poor…

Why do firms decide to trade internationally?

Some questions pooped up in my mind suddenly when I attended the lecture. Why do firms decide to trade internationally? With the advanced technology and telecommunication, countries are able to communicate and cooperate with each other more easily. Many firms would like to take this opportunity to expand their shares and earn more profits. More firms aimed to expand overseas because the local market is saturated. More firms would like to have more exchange with other countries and as a result, different countries can specialize in particular products with comparative advantages. Firms would be able to have more resources such as natural resources and human resources with exchange as well. This can lower their cost and maximize their profit. More importantly, job opportunities increased in developing countries as those multinational corporations would like to lower their cost to employ labors. 

What are the pros and cons of globalization? 

We were asked to have a debate in class talking about the advantages and disadvantages of globalization. We have divided ourselves into two teams, the affirmative side and the negative side.

For the POSITIVE side, with the advanced technology nowadays, countries are able to cooperate easily. Countries can trade without any boundaries and barriers. With more exchange between countries, specialization takes place and countries are able to specialize in products with comparative advantages. This lower the cost in producing products. This can as a result increase capital and money flow. Moreover, with the rise multinational corporations, such as McDonalds, KFC Burger King, Nike, Adidas, it increase the diversity of products all over the world. People are able to have more choice of restaurants and brand name products.


For the NEGATIVE side, globalization widens the disparity between the rich and poor. Many multinational corporations aim to maximize profit and they tend to lower their cost by employing labors from developing countries with low cost. For example, Foxconn would like to minimise their cost by employing cheap labors and exploit them. Workers are required to work under poor condition. Many workers chose to end their live as they couldn't stand this poor working environment. Worse still, this may also leads to over extraction of resources.
Those rich countries chose to buy valuable raw materials from developing countries with low cost. This as a result leads to the widened wealth gap. Besides, countries' own culture may soon disappear as everything become standardize now. Restaurants and brand name products are the same all over the world. Countries will soon lose their uniqueness.

Here's a video I would like to share! Its really interesting as the man in the video talks about the pros and cons of globalization in a really fun way. Its both entertaining and meaningful! WORTH WATCHING VIDEO!

The SWOT analysis

During the week,we were taught to use SWOT analysis that is used by the managers to have planning and business strategy. SWOT stands for strengths, weaknesses, opportunities and threat.

I am going to use apply this tool into real life example, McDonalds. Here is the table illustrating the SWOT analysis of McDonalds. 

Strengths -       Having a large market share throughout the world -       Having good brand recognition -       Distribution all over the world -       Customer loyalty	Weaknesses -       Unhealthy food menu -       Negative publicity -       Few differentiation -
Opportunities -       Changing people’s eating habits by selling more healthy food apart from fast food -       Increase differentiation of food choice to attract larger customer groups	Threat -       Increasing competitor in the market -       People’s emphasize more on healthy eating habits -       Lawsuits against McDonalds -       Negative reports against McDonalds

For the STRENGTHS, McDonalds occupied a large market share throughout the world since there are branches all over the globe. It has a good brand recognition and higher level of customer loyalty as everyone in the world must have heard of or have tried food in McDonalds before.

For the WEAKNESSES, McDonalds has poor reputation as it sells unhealthy fast food such as hamburgers, french fries, ice-cream... These food are oily and deep fried food which can adversely affect people's health. People may suffer from obesity, high blood cholesterol, diabetes, heart diseases... Moreover, it is said that there are few differentiation of food choices.

For the OPPORTUNITIES, McDonalds has initiated some healthy food choices such as salad. McDonalds can also sell more healthy food in order to change people's eating habits and promote the importance of health. Apart from increasing healthy food choices, McDonalds can increase it's differentiation of food choices by increasing ingredients or flavours in order not to let customers feeling bored. These enables a wider range of customers to buy food from McDonalds.

For the THREAT,  McDonalds has increasing competitor in the market. More and more fast food restaurants were set up these years, such as KFC, Burger King, Subway... It's competitors are selling similar foods and this may reduces people choosing to buy food from McDonalds. What's more is that people are getting more concerned about their health now and there were reports demonstrating that eating food from McDonalds is harmful to our health. Example, theres a documentary called Supersize me and this talks about how may a person's health be affected when they eat McDonlads continuously. This arouses people's attention towards health and people would tend to choose other restaurants instead of McDonalds.

I found this documentary quite interesting as there's a man trying to eat food from McDonalds for 30 days. He would like to examine the effects of McDonalds. This documentary shows the negative impacts of eating fast food and this can be one of the threat for McDonalds as well since people are having more concern towards their health now.

I learnt different definitions regarding strategies and how to identify different levels of strategies used in organizations. We were required to read a journal written by Mintzberg. The journal clearly elaborates his definition regarding strategy, explores the complexity of variety strategy formation processes by refining and elaborating the concepts of deliberate and emergent strategies. Deliberate and emergent strategies are conceived as two ends of a continuum along which real- world strategies. Different forms of strategies included planned, entrepreneurial, ideological, umbrella, process, unconnected, consensus and imposed strategies.

The PESTEL!

After getting familiar with the theory of the Porter’s five forces, we started how to analyze the macro environment by the PESTEL. The PESTEL is a technique for identifying and listing the political, economic, social, technological, environmental and legal factors in the environment most relevant to an organization. These are all factors that would affect all industries. At first, I found them a little bit vague as I was not quite sure about the political and legal factors for most of the industries. 

After looking through the powerpoint slides flipping through the book, I started to have more understanding towards PESTEL. For POLITICAL, it can be affected by the taxation policy, privatisation/ deregulation policies, environmental legislation, health and safety regulations, public expenditure controls. For ECONOMIC, it can be affected by interest and inflation rates, consumer confidence, unemployment rates, disposable incomes, labour costs. For SOCIO-CULTURAL, it can be affected by the demographics, changing lifestyles or changing consumer preferences. For TECHNOLOGY, it can be affected by the changing communications technology, new production technology, scientific discoveries...  For ENVIRONMENTAL, it can be affected by climate change, energy consumption. 

During the Friday’s study group lesson, we were asked to apply this into real-life examples. We are asked to analyze the mobile phone industry with PESTEL and write them on the whiteboard. This is what we have drawn after discussing.

That's what we have written on the whiteboard at the end!!!! This diagram shows our understanding towards the mobile phone industry. At first, we found it difficult to classify our points into different aspects as some of the points can legally or politically affected. Moreover, it was quite challenging for us to figure out factors in terms of political, economic, social-cultural, technology, environment and legal as some of the factors may not be the strong arguments that would cause an impact on mobile phone industry, for instance, I don't think the reasons in terms of environments as well as political would be the major reasons causing an impact to the industry. For environment, we think that the mobile phone industry may be affected due to the reason of increasing concerns towards green issues. People may think using smartphones would waste energy consumption and as a result not choosing smartphones. For political, we think that the mobile phone industry may be caused by the new rules or regulations such as minimum wages or changing working hours. These two are reasons that are not strong enough. 

At the end, we came up to the conclusion that the major factors that would cause effect on mobile phone industry is the advanced technology and people's changing of lifestyle. Thanks to the invention of smartphones, people are now able to enjoy the new features such as different kinds of apps and application. It brings people convenience and it is really entertaining as well. This attracts more and more people to purchase smartphones. Besides, the changing lifestyle is also a reason that contributes to the rising profit of mobile phone industry. People start to rely so much on their smartphones to surf the internet. It is not only the young ones' habit to spend so much time on social networking websites, but also the older ones. Almost everyone is now owning a smartphone. Whenever people around us start to purchase a new model, we will follow suit. These two reasons would be the main factors affecting the mobile phone industry. After drawing this PESTEL diagram with my group mates, I have more knowledge about the mobile phone industry and also acknowledging how to analyse an industry with PESTEL.

At last, I would like to share this video since it is really educational and meaningful that it explains the ways of analysing PESTEL clearly.