The integration of economies and societies through cross country flow of information, ideas, technology, goods, services, capital, finance and people has been termed as globalization. During the past two decades, businesses and financial markets around the world have become increasingly interconnected.
This overall globalization of economies has brought significant impacts to investors and savers. Besides this, it also has changed the structure of markets creating new risks and challenges for everyone. The effects or changes vary a lot from one part of the world to another and from one area of business to another.
There is no disputing that business and its financial strategy gets benefit from globalisation.
Impacts on Business:
- Globalisation makes it possible for business owners or companies to find economies with cheaper costs. Moreover, they also get essential component parts at reduced prices.
- Global learning is one of the most important aspects for businesses to develop. Globalisation has made exchange of ideas possible easily and effectively.
- Due to globalization the world has seen rapid industrialization and a sustainable development overall.
- Globalisation has helped in the generation of employment, thereby helping in reducing poverty also.
- Lastly, globalization is helping to improve the quality of the human life and helps in their overall development as well.
Furthermore, advances in the technology, globalization of the economies and liberation of national finance and capital markets coupled with the competition among the investors have brought in substantial financial changes globally.
Impacts on Finance:
- The growing diversity of funding sources has reduced the risks of ‘credit crunch’.
- With so many choices available to them, borrowers and investors can obtain better terms on their financing.
- Banks and other firms, that lend capital to the businesses, have reduced their borrowing costs, hence the borrowers are able to tap a broader pool of capital from a more diverse and competitive array of providers.
The above mentioned positive impacts of globalization on business and finance invigorates the following benefits that are noteworthy worldwide.
- Goods now have been produces with the resources of different countries. Hence, companies are able to deliver those goods more efficiently.
- Consumers have now got wide array of products to choose from and most importantly at a competitive price.
- Companies are getting access to much wider markets.
- Globalization is promoting goodwill and understanding among different countries.
- Mutual sharing of products is helping in a sustainable development of the whole world.
Internationally, businesses have thrive and so have thrived the capital markets. Globalisation has been a driving force in stabilizing the financial fluctuations, thereby giving a sound platform to upgrade the economies of world.