American Companies and Globalization Essay Example | Topics and Well Written Essays - 750 words

American Companies and Globalization - Essay Example There is a raging debate on the impact of globalization. While one school of thought terms globalization as a sine-qua-non for economic prosperity, the other school of thought terms the concept as catastrophic. There may be reasons for fearing globalization and its impacts, for e.g. the developed world fears that free movement of labor between national boundaries may result in job losses in the home country, while the developing nations run the risk of losing political sovereignty and control over domestic markets. Venkitaramanan (2004) opines that unsound government policies, and not globalization, are to be blamed for rising inequalities in developing countries. Osland (2003) avers that empirical evidence reveals that globalization has accorded numerous benefits that far outweigh the negatives. In a globalized world, a company considers the entire world as a single market and chalks out its corporate business strategy keeping in mind the global business environment. Such companies give up the distinction between domestic and foreign market and also go in for global sourcing of factors of production like raw materials, components, labor and machinery. The phenomenon of globalization has not only resulted in availability of a variety of goods in many countries, but has also led to reduction in prices for many goods. The erstwhile local monopolies have been challenged in their backyard and thus have had to provide superior quality goods and that too at lower prices. Schneider (2010) avers that the U.S. market is huge and attracts large amounts of foreign direct investment (FDI). In order to restrict their susceptibility to trade disputes, foreign companies prefer to set up manufacturing units in the United States, thus providing the jobs to the citizens of the country. On their part, U.S. multinationals contribute significantly to the nation’s economy through capital investment and continued focus on research and development (R&D).