Globalization and Competition Trends;
Globalization refers to the tendency of firms to extend their sales, ownership, and/or manufacturing to new markets abroad. Examples surround us. Toyota produces the Camry in Kentucky, while Dell produces PCs in China. Free trade areas agreements that reduce tariffs and barriers among trading partners further encourage international trade. NAFTA (the North American Free Trade Agreement) and the EU (European Union) are examples.
Companies expand abroad for several reasons. Sales expansion is one. Walmart is opening stores in South America. Dell, knowing that China will soon be the world's biggest market for PCs, is aggressively selling there.
Firms go abroad for other reasons. Some manufacturers seek new foreign prod-ucts and services to sell, and to cut labor costs. Thus, some apparel manufacturers design and cut fabrics in Miami, and then assemble the actual products in Central America, where labor costs are relatively low. Sometimes, it s the prospect of forming partnerships that drives firms to do business abroad. When IBM sold its PC division to the Chinese firm Lenovo, it did so partly to cement firmer ties with the booming China market.
For businesspeople, globalization means more competition, and more competition means more pressure to be world-class to lower costs, to make employees more productive, and to do things better and less expensively. As one expert puts it, The bottom line is that the growing integration of the world economy into a single, huge marketplace is increasing the intensity of competition in a wide range of manufacturing and service industries. Both workers and companies have to work harder and smarter than they did without globalization.
Globalization therefore brings both benefits and threats. For consumers it means lower prices and higher quality on products from computers to cars, but for workers it means the prospect of working harder, and perhaps less secure jobs. Job offshoring having employees abroad do jobs that Americans formerly did illustrates this threat. For example, in the next few years, many employers plan to offshore even highly skilled jobs such as sales managers, general managers and HR managers.
Indebtedness ( Leverage ) and Deregulation;
Other trends contributed to this economic growth. Deregulation was one. In many countries, governments stripped away regulations. In the United States and Europe, for instance, the rules that prevented commercial banks from expanding into stock brokering were relaxed. Giant, multinational financial supermarkets such as Citibank quickly emerged. As economies boomed, more businesses and consumers went deeply into debt. Homebuyers bought homes, often with little money down. Banks freely lent money to developers to build more homes. For almost 20 years, U.S. consumers actually spent more than they earned. On a grander scale, the United States itself increasingly became a debtor nation. Its balance of payments (exports minus imports) went from a healthy positive $3.5 billion in 1960, to a not-so-healthy minus $19.4 billion in 1980 (imports exceeded exports), to a huge $497 billion deficit in 2010.
The only way the country could keep buying more from abroad than it sold was by borrowing money. So, much of the boom was built on debt. By 2011, Standard & Poor s said it would lower the ratings of U.S. sovereign (treasury) bonds, fearing Washington policymakers could not get a handle on the huge indebtedness. Rating agencies had already lowered their ratings on the bonds of countries such as Japan and Greece.
Technological Trends;
Everyone knows that technology changed almost everything we do. We use smartphones and iPads to communicate with the office, and to plan trips, manage money, and look for local eateries. We also increasingly use technology for many human resource management type applications, such as looking for jobs.
Facebookrecruiting is one example. According to Facebook's Facebook recruiting site, employers start the process by installing the Careers Tab on their Facebook page. Once installed, companies have a seamless way to recruit and promote job listings from directly within Facebook. Then, after creating a job listing, the employer can adver-tise its job link using Facebook Advertisements.
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