Globalization and the Digital Divide
This chapter reviews the role that information technologies have had in the globalization of our world. As you read, pay attention to the many positive and negative changes that globalization has brought.
The Global Firm
The new era of globalization allows virtually any business to become international. By accessing this new platform of technologies, Castells's vision of working as a unit in real time on a planetary scale can be a reality. Some of the advantages include:
- Ability to locate expertise and labor around the world. Instead of drawing employees from their local area, organizations can now hire people from the global labor pool. This also allows organizations to pay a lower labor cost for the same work based on the prevailing wage in different countries.
- Ability to operate 24 hours a day. With employees in different time zones all around the world, an organization can literally operate around the clock, handing off work on projects from one part of the world to another as the normal business day ends in one region and begins in another. A few years ago three people decided to open a web hosting company. They strategically relocated to three places in the world which were eight hours apart, giving their business 24 hour coverage while allowing each to work during the normal business day. Operating expenses were minimized and the business provided 24/7 support to customers world wide.
- Larger market for their products. Once a product is being sold online, it is available for purchase from a worldwide customer base. Even if a company's products do not appeal beyond its own country's borders, being online has made the product more visible to consumers within that country.
In order to fully take advantage of these new capabilities, companies need to understand that there are also challenges in dealing with employees and customers from different cultures. Some of these challenges include:
- Infrastructure differences. Each country has its own infrastructure with varying levels of quality and bandwidth. A business cannot expect every country it deals with to have the same Internet speeds. See the sidebar titled "How Does My Internet Speed Compare?"
- Labor laws and regulations. Different countries (even different states in the United States) have different laws and regulations. A company that wants to hire employees from other countries must understand the different regulations and concerns.
- Legal restrictions. Many countries have restrictions on what can be sold or how a product can be advertised. It is important for a business to understand what is allowed. For example, in Germany, it is illegal to sell anything Nazi related.
- Language, customs, and preferences. Every country has its own unique culture which a business must consider when trying to market a product there. Additionally, different countries have different preferences. For example, in many parts of Europe people prefer to eat their french fries with mayonnaise instead of ketchup. In South Africa a hamburger comes delivered to your table with gravy on top.
- International shipping. Shipping products between countries in a timely manner can be challenging. Inconsistent address formats, dishonest customs agents, and prohibitive shipping costs are all factors that must be considered when trying to deliver products internationally.
Because of these challenges, many businesses choose not to expand globally, either for labor or for customers. Whether a business has its own website or relies on a third-party, such as Amazon or eBay, the question of whether or not to globalize must be carefully considered.