Globalization: IT Perspective

Everyone has its own understanding about this concept. Their definitions and understanding about the concept of globalization differs. The most unified definition of globalization explains that it is a concept of globalization explains that it is a concept in which the different economies of the world amalgamate or unify with each other by reducing the barriers like tariffs of international trade, fee related to export and quotas on the imports [Bhagwati, 2004]. According to Levin Ins., (2012) the term globalization is “a process of interaction and integration among the people, companies, and governments of different nations, a process driven by international trade and investment and aided by information technology”.

Over the past few decades there has been a sudden increase in international integration of goods, services, capital and economic activity, it is this worldwide integration that has led us to come up with the term, globalization. Even, though this integration of worldwide markets and economies is relatively new, the evolution of globalization has had a profound effect on the global business environment. Globalization is able to have much impact on the global landscape due to information technology. It has been found to be the key catalyst for globalization. The progression towards globalization has been around for centuries, but it really became noticeable in the early 1990’s with technological advances. The early 1990’s were one of the major stepping stones in helping us to get to our current state of globalization, but during that period there was no collective worldwide integration as many of the global processes of that time were still one-dimensional.

A selected number of advances that truly define the progression of globalization in relation to business are:

Rise of the Personal Computer: The rise of the Windows-based PC, which popularized personal computing, eliminated another important barrier that was restricting globalization: the limit on the amount of information that an individual could obtain, author, modify, and distribute. The PC allowed individuals to author their own digital content and share them with places all around the world. After the PC, the invention of the dial-up modems (allowed users connect to a phone line and send e-mails through service providers), fax machines was what followed, it allowed users to combine these tools with the PC to create a new platform that started a global information revolution. This common platform gave individuals both reach and scale, as they could create and distribute information in so many different ways and send their information to so many more people around the word.
Standardization of the World Wide Web- Perhaps the greatest influence on globalization was the invention of the WWW in 1991. Before the WWW, we had the internet which connected he globe, but with the WWW individuals were now able to post their own digital content for anyone across the globe to see.
Fiber-Optic cables- The Telecommunications act of 1996 launched an enormous boost in the laying fiber-optic cables world-wide. Telecom companies saw a huge opportunity for investment in fiber-optic cables, as they felt that with the rise of the internet, people were going to be begging for increased speed and bandwidth power. As popularity grows and advances, the capacity allowed by these cables continued to grow, making it even cheaper and easier to transmit information and digital content to any part of the world.
Creation of Work Flow Software- Work flow is basically a software package that automates business procedures as well as being able to pass along “workflows” such as documents, information, tasks, etc. from one employee to another. When work flow software was first adopted, it enabled employees in different locations in the same company to collaborate, manage and design business data that had previously had to be handled manually.
Open-Sourcing- A community-driven software movement where companies and individuals make their source code available online, so that others could contribute to their work and in turn their software programs benefited because of it. One of the most successful open-source tools is ‘Apache’, a web server product owned by IBM, which powers nearly two-thirds of all the world’s web sites. What is so fascinating is that anyone around the world can download the software for free and contribute to the source code; all they have to do is redistribute it back for further use.
Supply Chaining- A method of integrating horizontally between suppliers, retailers and customers to create value for the company. Wal-Mart is a perfect example of supply-chaining; as soon as a customer picks an item of the shelf and the cashier scans it, a signal is sent to the supplier of the product, no matter their location around the globe. The signal is received by the supplier and the supplier packs the item and ships it to the Wal-Mart store that sold the item, Wal-Mart never even touches any of its products until they reach the store. Because of this supply chain, Wal-Mart can move 2.3 bullion merchandise cartons world-wide per year. Supply chaining has influenced globalization because as supply chains grow, the more global standards are needed, and as standards increase they begin to eliminate border frictions and as companies begin to feed off other companies, it creates a global collaboration for all to share. Globalization also helps companies build their supply chains as companies can find both the best producers as well as the lowest prices around the globe.
Digital, Mobile, Personal and Virtual Movement – More recently the world has been swarmed with digital cameras, mobile PDA’s and cell phones along with personal laptops and this is having a profound effect on the progression of globalization. With the growing popularity of these types of technologies individuals and companies are able to collaborate with one another more frequently and in so many more ways than ever before.

Alone, these types of advances have an effect on business and globalization; businesses can now take skills and knowledge from across the globe and widen their horizon which leads to increased collaboration and breakthrough innovations. The ability to communicate and transfer information all around the globe lets companies focus on their main core competencies which in turn leads to better collaboration and innovation.

Globalization has also led to companies being able to lower costs and increase efficiency in their business functions. The terms “outsourcing” and “off shoring” have become common terms in today’s business world and are now a part of almost every multi-national corporations business strategies. To be clear “outsourcing” means taking a specific business function that your company was doing in-house and having another company perform that exact same function for you. “Offshoring” by contrast, is when a company takes one of its factories that is has locally and moving the whole factory off shore.