Have you ever considered where your phone or computer came from? Each individual piece of the device takes work in production and assembly. There are many products that are made domestically, but the vast number of companies transferring their products to be produced in other countries is growing every day due to the expected profit increases. This is an example of globalization. Specifically, companies like Apple can produce their phones, computers and tablets in foreign countries for significantly less money than it takes to produce them domestically in the United States. New technology in companies such as Apple has allowed globalization to result in a negative effect on global business through factors such as location, consumers and competing organizations. Yes, international factories can produce parts inexpensively, but at what cost to global business?
The consumer is the main reason that businesses become successful. Without the consumer, companies would be wasting precious resources and capital to produce products or services that are not purchased. People around the world have become so mesmerized with Apple products that they spend outrageous amounts of money on them. The cost of these products does not change despite the country it is being sold in. However, if the consumer cannot afford the product, they cannot buy the product. This is especially true for those living in the United States if businesses like Apple, among many others, are moving their jobs overseas. Similarly, in foreign countries, those businesses producing the technology are being paid pennies on the dollar. This results in poor wages for the workers and the inability to buy products, in turn. Thus, expanding the technology internationally through globalization has a negative effect on the company through the volume of purchases by consumers.
Many companies initially manufactured their products domestically. The desire for greater return on investment has lured more companies to consider or commit to expanding these tasks internationally through globalization. Potential new businesses in America are not looking into manufacturing or creating new products domestically because they fear they will not be able to compete with international rivals or companies utilizing outsourcing. In result, this may be too much expansion occurring too quickly for a new business, and it could backfire greatly on their profits. Lack of opportunity to produce domestically has also lowered the amount of jobs and taken funds away from the economy in many ways. By not creating the physical product, but still consuming it in the United States, the economy is still essentially receiving the taxes from the creation or sale of the good. However, the economy is missing out on income taxes collected from factory employees, as well as money that those same workers would be spending to stimulate our economy if their job was not outsourced. This means that there will be less money spent by consumers on products that companies like Apple produce.
On the other hand, globalization in technology has negative effects internationally, too. This proceeds into affecting business on a global scale. As stated earlier, companies receive pennies on the dollar for the products they produce, which results in poor working conditions and wages for people employed in these jobs. Poor wages for workers is directly correlated to the inability to buy non-essential items such as iPads, MacBooks or iPhones. So, by utilizing globalization, Apple is technically limiting the number of products that they will sell. Continuing this thought, it is well-known that an alarming number of factory workers for Apple have committed suicide due to exhaustion in their situations. A negative stigma and reputation could be associated with Apple for the reasons behind this, causing additional units to not be purchased. This would be all thanks to the initial effects of globalization, and illustrates how complicated the issues caused by globalization can be.
Competing companies are also affected by globalization of technology. For example, when Company One sends the manufacturing of their products abroad, there are many negative impacts on similar businesses. There are missed sales opportunities for other companies because Company One is able to sell their product for significantly less due to domination in the market in consumer interest. The consumer seeks cheaper items with available supply. The supply tends to be greater because larger manufacturers can supply more product for less, driving the demand up even more. Company One is unable to be competed with because their cost to bring the product to market is significantly less.
The effects of globalization on business are so severe that more emphasis needs to be placed on the discussion of pros and cons when making a decision of outsourcing a company. Although it may bring a company more profit, they should consider what lengths they are willing to go to achieve this goal. They should deliberate the effects of globalization on their home country as well as international countries. While outsourcing may be positive for themselves, low wages, poor work conditions and deteriorating mental health are terrible repercussions for workers abroad. Likewise, the negative effects one one’s own economy and competitors should be considered. Money that should be stimulating and circulating through one’s own economy is now in another country. Additionally, competitors in the same industry will have trouble keeping up, and could be forced to cease business. Neither of these factors are positive for one’s country. Finally, the most important point about globalization would be the long-term effects on global business. Higher profits may be seen initially, but overall, globalization affects the consumer and all countries involved so much that sales volume will likely decrease as time passes. This blatantly cancels out the main goal of globalization for a company in the first place.