Tuesday, January 29, 2019

ECONOMIC CONSEQUENCES OF GLOBALIZATION ON TELECOMMUNICATION INDUSTRY Essay

While discussing the topics of trade, development and political economy, sphericalization is often discussed. In general, world(prenominal)ization means a process in which orbit economies live on super integ treadd, leading to a international economy and highly spherical stinting policymaking, through multinational agencies such as the World sight Organization (Todaro & Smith, 2006). Since late 1980s, the increasing orbiculateisation in the manu occurrenceuring heavens and service sector has also sphericized the telecommunication exertion. A large takings of telecom companies are expanding rapidly from their home countries to new(prenominal) countries in differentiate to add-on their customer base and their sales, off course. globalisation has with it many challenges and economic emoluments too. For many economists, globalisation can cause serious troubles in the unanimous world, such as inequality is accentuated, environmental degradation, and dominance of ri ch countries etcetera But at the same time proponents of globalisation are of the trance that globalization leads to the rapid return of knowledge and revolution and improved backing standards.ECONOMIC ANALYSIS OF GLOBALIZATIONHow globalization occurred or which forces gave birth to this phenomenon? The three chief economic and financial indicators that led to globalization are The international trade of goods and services, the widening and freeing of trade has led to globalization to increase at a rapid pace. The greater flow of capital because of growth of global capital markets. globalisation of financial sector is the most important aspect of economic globalization. The greater movement of people around the worldly concern has also contributed to rapidly growing globalization, breaking down cultural barriers. Globalization means integration of different markets in the global economy.Globalization whitethorn occur in different markets such as financial markets, com modity markets and even in the service sector (Scholte, 2000). Producers and consumers and national economies as a whole benefit from the process of globalization. For example, economies may benefit from specializing themselves in finicky products in which they get hold of comparative advantage. Firms may blend in cost warlike through globalization by accessing to cheap raw materials from other countries. Similarly, benefit of economies of scale is achieved through access to large markets and higher demand for products, thus reducing average production cost of the firm. Large multinationals are the important carriers of economic globalization. They are globally aligning their production and resources according to the article of belief of profit maximization.GLOBALIZATION OF telecommunication INDUSTRY- CASE OF VODAFONE Initially telecommunication industry was owned and controlled by state-owned national telecommunication companies. But with the passage of time, innovation in t echnology and globalization has transformed the nature of telecommunication industry. Globalization has opened up markets and brought competition in this sector. National telecommunication companies were world privatized and the industry deregulated to make it competitive. All all over the world, the multinational companies have become the main vehicle for accelerating globalization. Vodafone, a British multinational telecommunication company, is the worlds leading telecommunication having significant existence in Europe, fall in States, Middle eastern hemisphere, Asia Pacific and Africa.It is one of the most rapidly flourishing global companies, which started as a holder of one of the first twain quick communications licenses in the UK and now its a dominant global brand. (Ibbott, 2007) provides a view that Vodafone created a social network that was involved in mergers and acquisitions and deployment of a global network of mobile technology that serves a symmetrical mobil e customer base of 198.6 million in 2006. Ibbott (2007) explained what really globalization means as A global company is one that permits its local anaesthetic anaesthetic operations to act in the image of the market locally and provided can act in a truly homogeneous authority with respect to the supply and provision of its core products and services Vodafone is a global company as its sourcing and supply chain activities are transferred to be only global for the major part of its investment, era services remain local (Ibbott, 2007). Globalization does not mean to open operations and branches in other countries but to make its operations global, not directed by the judgment office located in the parent country.CONSEQUENCES OF GLOBALIZATION ON TELECOMMUNICATION INDUSTRY- CASE OF VODAFONE Globalization has become a vital aspect of the global economy and strongly influences the comparative advantage of economies. (Salvatore, 2004) examined the effect of globalization on the com parative advantage of Europe for several goods and concluded that Europe has a comparative disadvantage in telecommunication with respect to Japan, United States and high-voltage Asian countries. The degree of globalization is a significant element in examining the international competitiveness of economies.Large multinational corporations are enjoying the benefits of globalization, the most. Almost 50 percent of total profits of Vodafone came from foreign sales, i.e. Asia Pacific and Middle East region. The CEO of UK-based Vodafone Group talking about global leadership tell (Yunker, 2008), Less than 5 percent of our profits comes from UK. We have had to fundamentally redesign this company as a global company. We are a highly consumer-centric company. In Germany, we feel German. In Italy, we feel Italian. In Spain, we feel Spanish. In India, we feel Indians.Vodafone has experienced fall-out in Japan in 2005. It released Converged-Handset mobile phones in December 2005 in 13 count ries concurrently, including Japan. Being, one of the worlds largest global companies, it did so without taking into account the domestic environment of each country. In this way they incurred great loss in both, number of subscribers and profits. The company woolly 200,000 subscribers in the first few months of the year and profits declined by 15.4 percent (Fackler & Belson, 2005). Customers also got many troubles like lack of functions, the expensive bills and fallacious signals. Thus it failed to introduce same technologies in different countries. In allege to regain its position in the market, they offered such services which are beingness provided by their competitors such as low prices, flat monthly bills for calls and emails. therefore market competition forced Vodafone to survive in the market by competing with the same products at same rates as its competitors are offering. due to globalization, consumer became more aware of their decisions. They take their deci sions by taking into account their estimable and environmental concerns. This new dimension poses pressure on industries to improve their backing through new public initiatives and laws. Likewise, increased global competition effectuate serious pressure on Vodafone to evaluate its CSR policy and ethical stance.When globalization reached its pace and mergers and acquisitions among firms take place, multinational companies get authority to hire and flame their workers (Carlson, 2002). This was happened in Motorola, when they fired their 3000 workers on 2000 by shutting down their go down in Scotland. Similarly, in 2009, Vodafone restructured its business model, in order to save cost and to accommodate more customers-facing roles. Around 400 workers were made jobless from its home plate or being deployed to some other places. Hence, it is being proven over the years that in large multinational organizations, large number of workers have been made jobless, thus, creating a sense o f insecurity among workers. Taking into account the fact that globalization may also have adverse impact on workers The European Globalization qualifying Fund (EGF) has been established.The EGF aimed to support redundant workers, principally in the areas where globalization has adversely affected the workers. The European Globalization Adjustment Fund has been established under Regulation (EC) No 1927/2006 of the European fan tan and of the Council of 20 December 2006. It has an annual budget of EUR 500 million to do worker for their employment.EVALUATION AND CONCLUSIONThe growing integration of the economies has been a modify debate all around the world over the last two decades. The consequences of globalization and its various dimensions have been widely debated and examined by academics, politicians, policymakers, and even the secluded sector. According to the United Nations Development Program, Human Development Report, 1999 Globalization is geological formation a new er a of interaction among economies and people. It is increasing the interaction mingled with people across national boundaries, in economy, technology, in culture and in governance. But it is also splitting production processes, labor markets, political entities and societies. So, while globalization has positive and dynamic aspects, it has also negative, disruptive, marginalizing aspects. Critics of globalization argue that globalization is detrimental to economic growth, such as it increases income inequality among nations, economic derangement may arise, workers are being exploited and governments become unable to assist taxes, on the other hand, the advocates of globalization are of the view that it brings higher rate of sustainable economic growth and improved living standards. In a study from the Centre of Economic Policy Research by European Policy Advisors, while analyzing the economic impact of globalization, it was found that the true benefits of globalization overweigh t he costs associated with it.Similarly globalization has been affecting the telecommunication sector too. collectible to increasing globalization, the telecommunication policy all around the world has widened their cross-border implications as compared to the past. According to the analysis of (Siochru, 2004), media and telecommunication sectors are the leading sectors in facilitating globalization. The globalization of financial transactions and manufacturing products is due to globalization of media and telecommunication sectors.REFERENCES1.Carlson, B. A., 2002. Job Losses, multinational and Globalization The Anatomy of Disempowerment. Santiago United Nations Publications. 2.Fackler, M. & Belson, K., 2005. A major Backfire in Japan Deflates Vodafones One-Size-Fits-All Strategy. Online Available at

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