Editor’s note: “International Business Corner” is a new weekly column written by Joan Keston that will be providing information for people involved in or considering international operations. Keston is an international business consultant. Over the next several months she will be writing about important issues that international businesses face as they compete in the 21st century global business environment.
Keston has experience with mature as well as entrepreneurial companies, domestically and internationally, and with an executive managerial and legal background. She has a deep understanding of the business culture and issues involved in doing business in developing countries as well as Europe. She is the Senior Managing Principal at Keston & Associates, Ltd., a partner at Paladin and Associates, Inc. and a faculty advisor at the Kenan-Flagler Business School of The University of North Carolina at Chapel Hill.
CHAPEL HILL – The emergence in the past decade or two of the use of the term “global” represents deeper economic changes and consequences than a mere change in terminology.
Although international business has always been an important factor in world economics and politics, the current use of the term global is an indicator of world dynamics in not only traditionally international or worldly arenas, but in most domestic aspects of our lives.
Most issues, problems, trends, etc., have become global. Environmental problems traverse boundaries and hemispheres; terrorism targets societies and nations well beyond the geographical location giving birth to terrorists; quality control standards in countries at the far reaches of the globe affect our domestic health and well-being. The examples are not difficult to list. The extent to which business has international components and the widespread nature or depth of that exposure has intensified.
The great majority of businesses and commerce today rely to some extent on several international components, often beyond the control and even knowledge of the parties in a business transaction. To be successful in the 21st century global business environment, you must understand the international as well as foreign business environments and know how to deal within them.
Developing Countries in Global Business
Globalization has emerged as the result of a number of factors, progressions and developments, one such core factor being the advancements in communications, the enabler of such advancements being technology. Furthermore, the emergence of many countries from totalitarian regimes, contributed in part at least to the inability of those regimes to control the communications and their effect on the awareness and empowerment of the individuals receiving the information communicated, has greatly contributed to the geometric progression or explosion of globalization.
We have seen enormous changes in the industrialized world as a result of technology, yet we have seen even more tremendous changes in developing countries as societies have “leap-frogged” over years of development into a technological environment.
We cannot discuss the theme of globalization without including the progress of developing nations and the potential of their becoming economic powerhouses. While globalization has affected our domestic businesses and economy, we must not under estimate its affect on developing nations, which by their nature have a much more vulnerable and fragile economic environment.
The result of the rapid advancement in recent years of emerging economies, fueled by rapid industrialization, foreign investment and many factors impossible to list in this context has been drastic changes at all levels of society, government and business. This leads to the increasing complexity involved in understanding those business cultures and markets. It also increases the volume and intensity of business, legal and social issues to which developing countries must dedicate resources, already limited and stretched to capacity.
There Is No Turning Back
The effects of globalization will only expand in size and importance as communications continue to span and shorten distances, and as developing countries and populations enter the global market place on a scale not previously witnessed. We can no longer neatly compartmentalize international relationships from a position of economic power.
Globalization and the contribution to that force by developing nations have taken on a momentum that cannot be arrested by our government or by domestic policies alone. A deep understanding of other countries and foreign business cultures is essential, as is a government that supports our businesses and is their strong advocate from an informed and enlightened leadership position.