Advantages and Disadvantages of Globalization

Advant get on withs and Dis emoluments of GlobalizationThe term orbiculateisation has many understanding from different people. Hill, (2005) as cited in Stuart, et al (2010), mentioned it refers most countries would shift toward a more than integrated and interdependent sphere economy by the merging of historically and separated national marts into one colossal orbiculate mart place. Gavin C(2009)stated that it had replace those economic expressions such asinternationalization and transnationalism. Sadegh B.,et al,(2006) citied as Cheng (2000), mentioned that nowadays of people have great opportunity to learn from new(prenominal) countries. The globalisation could be superior grow that main driver key is there exiting many of preferences and the hold of consumers from the worldwide (Pierre,D., 2006).Catherine ,D(2005) agreed that it could be reach an unexpected phenomena with high engineering science , advance communication and free wad market. 124The impact of globalization has bring achiever of business to new level, where many countries have been go through it( prudenceWatch.,nd). In research based on thrift Watch team that found the globalization has bring forward on each industry and meanwhile it has annul some(prenominal) of industry where its cannot survival though the impact of globalization. Their research have shown the pecuniary industry could gain more benefit after the emergence of monetary markets on global rather than topical anesthetic market, and be more efficient entrance the finance facility at other countries. With the free trade dominion exercises on worldwide, it has result in boost up the finance flow. Economy of democracy will also increase whereas gain more business trade and robement from unconnected investments, which has mentioned by Adam Smith, as cited in Ferraro (1998). 132What are advantage and disadvantage of globalization?In generally , globalization has give advantage to play along such as opportunity of develop new market for consumers have more variance choose the best quality mathematical product. It also provides educate understanding between different nationalities(bangkoklogistics,n.d.). Besides, companies can outsourcing their part of project that reduce time, uncertain genes and fail product. They can find more profit base on manufacturing rather than charge high price on consumer. Thus, they offer reasonably price for attach different type of consumer with frank quality. Government has encouraging MNE invest directly on country that reduces unemployment by new investment and industrial menaces.(bangkoklogistics,n.d.)Disadvantage of globalisationGenerally, for domestic supplies have to compete with international suppliers that lose the belligerent advantage yet fight with price. Thus, there would a lot of stress and threat of new type of colonization comes with much(prenominal) author and money from unlike player. Meanwhile, with the outsourcing concept, there woul d be increase jobless that is working middle class in developed country such as U.S(bangkoklogistics,n.d.).Among many companies have success in financial industrial though globalization, one of troupe can be more precise explain how reaction on impact of globalization and create new solution at nowadays which is Hong Kong and Shangai Banking Corporate holding plc(HSBC holding plc)The case studyJustify why HSBC is MNE before history.Hong Kong and Shangai Bank join is one of examples success go though globalisations effect in financial industry. Thomas Sutherland was founder the HSBC while he was working in the Peninsular and oriental Steam Navigation Companyhistory. He found that financial service care has huge demand in Hong Kong and China so that he and his group exposed bank and established the HSBC in March 1865 at Hong Kong and Shangai. Chuan Li (n.d) stated that the World Bank operates the finance on worldwide but their goods, serve were not satisfied, and inefficiency to local market withdraw. Whereas, the World Bank unable afforded heavy debt and lead to a harsh economic imbalances. 111By this lesson, Thomas had adopted the joint venture concept to operate business at different localization(annual report). Thus, HSBC can reduce the uncertain from internal and bring a good relationship at local citizen and brass. 35Management of HSBCHSBC used the ethnocentric approach that easy communication between parent and subsidiary company at aboriginal stage. After subsidiary company has stability, then management structured can applied the polycentric method that efficiently and at short term to fit in the cultural and political of that country. With these approaches, HSBC has good start the step in their vision, which is the world local bank. It reminds people who want due to finance related with international and local that HSBC will be their original optional. Besides, HSBC also purchased those companies who specify area on financial field that can reduce costing, and decrease the uncertain risks.Nowadays of HSBC is one of the biggest banking and Service Company in worldwide and headquarter allocated at London. To reflect their vision, it has not ignored power of international communicate which has 8,000 properties in 88 countries and territories have include Europe Hong Kong Rest of Asia-Pacific the tenderness East North America and Latin America.(annual report 2009)116 With listings on the London, Hong Kong, New York, Paris and Bermuda stock ex commutes, destinys in HSBC Holdings plc are held by over 220,000 shareholders in 121 countries and territories. agree to annual report 2009, HSBC has good maintained performance and well management convinced to shareholders during downturn periods. Because all shares are trading on the New York entrepot Exchange in the form of American Depositary Shares(annual report2009).142ProductionTo fulfill consumers common need and differential preference, HSBC offer a wide figure of produ ction and divers(prenominal) into four categories such as Personal Financial run (including consumer finance), mercenary Banking, Global Banking and Markets, and Private Banking.Need shown how effect to world.CategoriesPersonal financial servicesCommercial bankingGlobal banking and marketsPrivate banking*I will focus these three ,suit title need clear easily gopal.Impact of globalisation to HSBC summaryLead Emerging market ,HSBC has gain excellent of results through rising markets on past few years. HSBC has good aim on those potential countries, which would boost up the economic, after change the political and other direct factors. The brand of HSBC was not being easily for entered at foreign market because education of consumers was so weak at early century. HSBC have to send a respective for understanding on real situation and reaction on it. Thus, HSBC provided training at local citizen to build up local teams that enable reduce conflicts and create more jobs which is will a ccepted by their government. With a good relationship of government, HSBC has confidence gained good result and do further plan in future.Internet age,Arrive on Internet Age, HSBC has adopted IT concept, which applied on their branches. Consumers were not impulsive accepted the changed at begin period because the network services have not mature yet and unconvinced to consumers. For generation X, they were no confidence with unphysical of documentations and lower of education. However, generation Y has willing be learns new things and can adopt this new phenomenon. HSBC required all stuff be patetion and polite clench this type of consumers.Financial crises,HSBC has well management and be aware of worse on US shares before financial crises. Subsiders of HSBC companies have not kernelly full influence from financial crises especially Malaysia, and other Asian countries. Top management of HSBC believed that not all eggs should put in one basket. They have enough resource to support those other countries, which has be damaged during downturn. They also willing lend their hand to help on those companies had worst impact with limited resource.Reason why did they success on these issues? firmness those arise from Lead emerging market issuesProblems time scales, burden cost, risk on purchased company, failure response from consumers, will production enable suit to consumer need ,WTO issues,Globalization and market ?the forces of globalization would establish global market for standardised product purchased in huge volumes by consumers worldwide ot .while global market do indeed exist for some standardized product but where little product differentiation is feasible or wanted by users, with other product and services varying international tastes and preference mean that product differentiations vital to appeal to local markets.HSBC research team found that success in emerging market has need good timing and more information collection to make precise decision. With new tools of communication, HSBC can easily communicate to other location in efficiency that reduced costing on research, failure response based on customers. To avoid conflicts and risk, they had designed production in wide range that from common characters for general need of consumers until local differential preference. Free trade, less regulation international ,Solution those from Internet AgeProblem instability network services, afraid on new technology (ATM), perception of consumer ,Globalisation and production ? however it may not only be the cost based advantages of utility(a) production location which might lead to such outsourcing but possibly less tangible factor ,HSBC believed the internet banking will became world trend by following improved the stability network services and evolution of technological. They has outsourcing the machine of auto transfer money where can launch on public in early that it will be competitive advantages. This new pattern of business tran saction will increase perception of consumers toward HSBC in developed countries, but it seems need more time for developing countries citizen to adopted the change.Solution those from financial crisesProblem confidence consumer toward HSBC , dropped expenditure suddenly, cash inefficient,Globalization and the role of the nation state? waiver of competenceThe impacts of financial crises have serious damaged on economic, government policy taken action for decrease influence on people. Thus, finance industrial suddenly shortage of capital, cash inefficient and withdrawn out huge amount of cash by customers. Fortunately, HSBC has well prepaid enough resource to handle this situation and still borrow out money as usual that it can proofing HSBC has capability go through this recession .There many of factor influence success HSBC on globalistion , it will used PEST analysis for details.Analysis application of theory to evidenceApply part 2 to the company in part 1Pest analysis why did hsbc success? others factors influence it Different used IFRS and GAAPPest analysisPolitical need more two points tax policy,Risk of Political Instability, 2010 artlessRating1Australia9.24Singapore8.78New Zealand8.76Germany8.49France8.46United States8.16Hong Kong SAR7.49United kingdom7.41China7.12India7.08Malaysia6.90Taiwan6.42Korea5.72Japan5.40Indonesia4.94Philippines3.50Thailand1.75Footnotes1 0 = very high, 10 = very lowSource The IMD World Competitiveness Yearbook, 2010, Switzerland, www.imd.ch/wcy.According to Business in Sydeny and NSW (2010), third ranked fallen on Australia that shown has a lower risk and uncertain on political. Thus, mostly investors invest on Australia where safe and stable political framework is.United KingdomUnited Kingdom has very little on political risk because of the efficiency on the Westminster system whereby adopted by Australia government (Business in Sydeny and NSW, 2010). During recession, the government of UK has applied some incentive soluti on even though changed loosening fiscal policy to tightening fiscal policy that grape those attention of public finances (AMB Country Risk Report, 2010c).MalaysiaMalaysia ranked on 13th that has give of political risk (Business in Sydeny and NSW, 2010). Malaysia has three major groups of people likes Malay, Chinese and India who are living in peaceful and understanding on each culture(Malaysia truly Asia,2009) .They also working together handle problems that avoid happen serious conflict against on whitethorn 1969.The national front consists of UMNO is the Malaysia government which included others races parties as MCA (Malaysian Chinese Association) and MIC (Malaysian Indian Congress) are col drudgeating for peaceful civilization(Malaysia truly Asia,2009). However, according to AMB research (2010b), found that the government is lento applying inventiveness which citizen enable accept public contract in more transparency, less subsidies and involvement from government. Besides, gov ernment also has encouraging foreign invest in economic sectors (Malaysia truly Asia, 2009). Thus, Malaysian can be achieving the dream of being develop country on 2020.Tax policy company has paid 28% of tax per yearlyWell structure protection employees under Employment Act 1995( stable and good frame structure and can complain labor office http//www.pesaraonline.net/eatutorial.htm)Industrial Relations Act 1967 (major manufacturing law) http//www.pesaraonline.net/ir-guides.htmTrade unions act 1959 (major shareholder and director law) http//www.pesaraonline.net/tua-guide.htmChinaChina has a high risk of political even ranked after United Kingdom, because it has strongly stability of government and social based on summary A.M.Best Company(2010a).In report mentioned that government look for balance toward commie central with the capitalist- style economic center where can cooperate East industrial. China is a large and huge of population, but considers as developing country with mone tary value of GDP (gross domestic product), infrastructure, and others (A.M.Best Company, 2010a). If advance of industrial keep on expand, it will increase unemployment rate that become useless toward GDP. The government has majority power to control it that avoid happen.Legal United KingdomMalaysiaChinaEconomics(GDP) GDP, exchange rate , inflation, FDIUnited KingdomEconomy2000200520072008GDP (current US$) (billions)1,477.582,280.112,799.042,662.65GDP ripening (annual %)3.92.22.60.5Inflation, GDP deflator (annual %)1.22.02.93.0Agriculture, value added (% of GDP)1111Industry, value added (% of GDP)27232324Services, etc., value added (% of GDP)72767676Exports of goods and services (% of GDP)28262629Imports of goods and services (% of GDP)29303032Gross capital formation (% of GDP)18171817Revenue, excluding grants (% of GDP)37.136.937.438.3 exchange surplus/deficit (% of GDP)1.7-2.9-2.6-4.7According table 1.a GDP, GDP growth, inflation the growth of GDP has stable increase because con sumer expending more actively on these few years . Then, list of inflation is moderate. The GDP has boost up over than 200 billion which means average of business were doing well. The government has increased inflation rates during high peak of GDP, but it has decrease rate during turn down that increased consumer spending.Industrial sectors, agriculture, industry, services Industrial sector has growth up after but it seems slow down before year 2008.the emerging market has bring benefit to industrial such as lower labour cost ,but them faced many competitors form worldwide.Exprorts and important of good and serives the exporting portion has lower than import percentage that business loss some absolute advantages,Gross capital ,revenue , cash surplus or deficit the gross capital allocated average 17% and 18%. The revenue percentage of GDP has reach more than 35%Economic Risk Very Low The United Kingdom (UK) has the second largest economy in Europe behind Germany. Service indus tries represent three quarters of economic production, particularly financial servicesand real estate activities. London is a global financial center and businesses there account for nearly half of the countrys financial services industry. While positive economic growth has resumed in 2010, the Bank of England is improbable to raise interest rates until late 2011 at the earliest.United Kingdom has very low in economic risk by report ABM. genius of biggest industrial that service can diverse into production, finance services and real seFinancial System Risk Very Low The Financial Services Authority (FSA) regulates the UK financial services industries, including insurance. The UK is widely seen as a major center for international insurance and reinsurance and is home to the London Market, a wholesale market that writes risk around the world. Lloyds of London accounts for over half of the business on the London Market.Global linksMerchandise trade (% of GDP)42.939.437.941.0 lucre bar ter terms of trade index (2000 = 100)100105104105External debt stocks, summation (DOD, current US$) (millions)........Total debt service (% of exports of goods, services and income)........Net migration (thousands)494948....Workers remittances and compensation of employees, true (current US$) (millions)3,6146,3027,8777,861Foreign direct investment, net inflows (BoP, current US$) (millions)122,157177,405202,07193,506Net official development assistance and official aid received (current US$) (millions)........MalaysiaEconomy2005200620072008GDP (current US$) (billions)93.79137.85185.98221.16GDP growth (annual %)8.95.36.24.6Inflation, GDP deflator (annual %)8.94.64.910.3Agriculture, value added (% of GDP)1810..Industry, value added (% of GDP)485048..Services, etc., value added (% of GDP)514242..Exports of goods and services (% of GDP)120117111..Imports of goods and services (% of GDP)1019590..Gross capital formation (% of GDP)272022..Revenue, excluding grants (% of GDP)18.5......Cash surplus/deficit (% of GDP)-3.0......According to the data of the World Bank, shown that the GDP (Gross Domestic Product) is $ 191601,000,000Financial System Risk Low The insurance industry in Malaysia is adjust by the central bank, Bank Negara Malaysia. The Malaysian government continues to support the takaful and retakaful sectors as part of its strategy to make the country a global hub for Islamic financial servicesSource IMF and A.M. BestGlobal linksMerchandise trade (% of GDP)192.1185.4173.8161.2Net barter terms of trade index (2000 = 100)100102102104External debt stocks, total (DOD, current US$) (millions)41,87451,98161,56766,182Total debt service (% of exports of goods, services and income)5.65.64.8..Net migration (thousands)498150....Workers remittances and compensation of employees, received (current US$) (millions)3421,1171,5701,329Foreign direct investment, net inflows (BoP, current US$) (millions)3,7883,9668,4547,376Net official development assistance and official aid re ceived (current US$) (millions)4526200158Economic Risk Moderate At independence, in the 1960s, the Malaysian economy depended upon rubber and tin. Since then, the economy has transformed to become a sphereal manufacturing center, services provider and offshore financial center. The government encourages foreign investment but maintains approval rights for individual investments, often opting to restrict foreign equity or encouraging the transfer of technology from foreign firms.ChinaEconomy2005200620062008GDP (current US$) (billions)1,198.482,257.073,505.534,532.79GDP growth (annual %)8.411.314.29.6Inflation, GDP deflator (annual %)2.13.97.67.8Agriculture, value added (% of GDP)15121111Industry, value added (% of GDP)46474747Services, etc., value added (% of GDP)39414242Exports of goods and services (% of GDP)23373835Imports of goods and services (% of GDP)21323027Gross capital formation (% of GDP)35444243Revenue, excluding grants (% of GDP)..9.717.0..Cash surplus/deficit (% of GDP )..-1.4....Economic Risk Low China, the worlds most inhabited country, is home to the worlds third largest economy. Rapid growth rates are driven by a strong export sector, state expenditures, construction and infrastructure development. The government was able to respond to global economic downturn by launching stimulus programs, which brought a strong recovery in 2010. Expansionary policies have resulted in commodious increases in bank lending, stimulating the economy but bringing rise to fears of increases in non-performing loans.Financial System Risk Moderate The insurance industry is correct by the Chinese Insurance Regulatory Commission (CIRC). China is partially liberalizing its financial sector, which is a long and drawn out process but inbred for the long-term sustainability of the economy. The Insurance Law was amended in 2009 to enhance regulation in core areas such as the strength of the supervisory authority and solvency and investment guidelines.Global linksMerchan dise trade (% of GDP)39.663.062.156.5Net barter terms of trade index (2000 = 100)100868074External debt stocks, total (DOD, current US$) (millions)145,711283,986373,773378,245Total debt service (% of exports of goods, services and income)9.33.12.22.0Net migration (thousands)-786-2,058....Workers remittances and compensation of employees, received (current US$) (millions)5,23724,10238,79148,524Foreign direct investment, net inflows (BoP, current US$) (millions)38,39979,127138,413147,791Net official development assistance and official aid received (current US$) (millions)1,7121,8141,4871,489Social or culturesone more pointsReligionsUnited KingdomRegional Summary western Europe Western Europe is a highly developed and affluent region. The European Union (EU) is an economic and political union of 27 countries that accounts for 30% of world gross domestic product (GDP). The EU is facilitating a single European market with standardized regulatory systems and free movement of people, good s, services and capital. The euro-zone is made up of the 16 EU members that have adopted the euro as their currency. Most, if not all, of Western Europe has been experiencing a severe economic slowdown and several countries remain in recession. While the European Central Bank has cut interest rates tospur demand, economic growth in the region has been generally modest.PeopleIncome share held by utmost 20%........Life expectancy at birth, total (years)78798080Fertility rate, total (births per woman)1.61.81.91.9Adolescent foulness rate (births per 1,000 women ages 15-19)28262424Contraceptive prevalence (% of women ages 15-49)........Births attended by accomplished health staff (% of total)........Mortality rate, under-5 (per 1,000)7666Malnutrition prevalence, weight for age (% of children under 5)........Immunization, measles (% of children ages 12-23 months)88828686Primary completion rate, total (% of relevant age group)........Ratio of girls to boys in primary and secondary educa tion (%)100101102101Prevalence of HIV, total (% of population ages 15-49)0.10.20.2..MalaysiaRegional Summary southeastward Asia Southeast Asia is a critical part of the world trading system and while the regions economies remain somewhat dependent on agriculture, manufacturing and services have been the engine for growth. The region has been remarkably resilient to the global economic slowdown.While regionally growth slowed as the economies of their large trading partners (notably the U.S. and Europe) went through recession, the slowdown was in most cases moderate and the recovery in 2010 has been very strong.PeopleIncome share held by lowest 20%........Life expectancy at birth, total (years)73747474Fertility rate, total (births per woman)3.02.72.62.6Adolescent fertility rate (births per 1,000 women ages 15-19)15141313Contraceptive prevalence (% of women ages 15-49)........Births attended by skilled health staff (% of total)..98....Mortality rate, under-5 (per 1,000)10876Malnutriti on prevalence, weight for age (% of children under 5)........Immunization, measles (% of children ages 12-23 months)88909595Primary completion rate, total (% of relevant age group)..9896..Ratio of girls to boys in primary and secondary education (%)103104103..Prevalence of HIV, total (% of population ages 15-49)0.30.50.5..ChinaRegional Summary Eastern Asia Eastern Asia is home to some of the worlds largest and most advanced economies. China and Japan are both in the worlds top five countries measured by gross domestic product (GDP). In the aftermath of the Southeast Asian financial crisis in the late 1990s, much of the region underwent a restructuring of traditional economic and financial practices to match international best practices in regulation. The region as a whole weathered the global financial crisis well, with local demand powered by government stimulus helping to maintain positive economic growth.PeopleIncome share held by lowest 20%..