Stephen Mago, Gabriel Musasa, Jephias Matunhu / East Asian Journal of Business Management 3-2 (2013) 31-37 31

Print ISSN: 2234-3040 / Online ISSN: 2234-3059

The impact of globalization on business and economic development in Zimbabwe

Stephen Mago*, Gabriel Musasa**, Jephias Matunhu***

1. Introduction
Abstract
Ideally, globalization is about connecting world economies for
Purpose - This paper objectively analyzes the effects of glob- the benefit of society. It creates a web of closely linked coun-
alization on Zimbabwe’s business and economic development tries that are different in terms of geography, demography, cul-
using the Business in Context (BIC) model. ture, economy, politics, and social issues. The assumption is
Research design, data, and methodology - We employed a that interconnectedness of different nations could spark global
qualitative research methodology, following an exploratory secon- development. Nations have benefitted from the industrial revolu-
dary research design in this paper. tion in Europe. Today, Africa and the West are benefiting from
Results - The findings reveal that businesses in Zimbabwe the unprecedented economic growth of China. Technological
have benefited from globalization as it has drawn investments change has become the profound driver of globalization. In fact,
from international companies in the country. In addition, the technological development, especially Information and
business sector is benefiting from the economies of scale real- Communication technologies (ICTs) have made the globe shrink
ized from the investments made by companies in Africa, East to a cybernetic village. The internet has connected businesses
Asia, Europe, and America. However, we also discover that across the world. This paper discloses the challenges that glob-
globalization has resulted in the proliferation of cheap sub-stand- alization has imposed on businesses in Zimbabwe. The country
ard goods and services from East Asia, and has increased suffered severe economic recession between 2000 and 2009.
competition between indigenous companies and foreign-owned The standpoint of the paper is that globalization is not wholly
multinationals. negative but has a positive side as well. This paper provides an
Conclusion - Our findings suggest that globalization has both objective analysis of the effects of globalization on Zimbabwe’s
positive and negative effects on business and economic devel- business and economic development. Using the Business in
opment in Africa in general, and Zimbabwe in particular. Context (BIC) model, it analyzes the impact of globalization on
However, we note that the advantages, to a certain extent, out- business and economic development in Zimbabwe. In terms of
weigh the disadvantages. What, then, could be the way forward structure, the paper begins with a theoretical framework of
for Zimbabwe, in the face of globalization? As a solution, this globalization. The second section exposes the impact of global-
paper recommends the development of a policy on global asso- ization on economic growth and businesses in Zimbabwe. The
ciations by the Zimbabwean government, to enhance business Needle (2010) model of business analysis is employed.
and economic development.

Keywords : Globalization, Global Economy, Business, Economic 2. Objective

JEL Classifications : F01, F02, F23, F41, M16. The objective of the paper is to carry out an analysis of
globalization to establish how it has benefited business and the
economy in Zimbabwe. It is however important to note that the
globalization process could have both negative and positive ef-
* Corresponding Author, Lecturer, Faculty of Commerce; Department fects on business and economic development.
of Accounting and IS, Great Zimbabwe University, P.O. Box 1235,
Masvingo, Zimbabwe. Tel: +263- 7-7960-5587. E-mail:
[email protected].
** Department of Development Studies,University of Fort Hare, P. Bag
3. Globalisation: A Theoretical Reflection
X1314 , 5700, Alice, South Africa. Tel: +27-7-3687-5591.
*** Midlands State University Development Studies, P. Bag 9055 Gweru Globalisation is an abstract and complex concept that is diffi-
Zimbabwe. Tel: +263- 7-7872-3952.
32 Stephen Mago, Gabriel Musasa, Jephias Matunhu / East Asian Journal of Business Management 3-2 (2013) 31-37

cult to define comprehensively. The World Bank proffers a 2010; Carbaugh, 2011; Geofrey, 2000 ; Needle, 2010). Krugman
standard definition of globalisation as "The global circulation of & Obstfeld (2009), Palowoda & Thomas (1999) and define glob-
goods, services and capital, but also of information, ideas and alization, from a marketing perspective, as "the process by
people. It has shaped all of the 20th century, albeit with large which firms operate on a global basis, organizing their structure,
cyclical variations and has become and increasingly visible force capabilities, resources and people in such a way as to address
in recent decades."(World Bank, 2000). Waters (1995) defines it the world as one market". The objective in its purest sense is
as: "As social process in which the constraints of geography on to serve the global market by maximizing the capabilities and
social and cultural arrangements recede and in which people advantages that individual countries have to offer in manufactur-
become increasingly aware that they are receding." It is a mul- ing, productivity, research and development capability, market
ti-facetted concept there is globalization of culture, globalization access, attractive interest rates and marketing experience.
of the financial and economic sectors etcetera. It brings greater Furthermore, globalization involves ongoing searches for technol-
interdependence among countries and their citizens (Carbaugh, ogy, people and alliance partners from which a globally sustain-
2011 Waters, 1995 World Bank, 2000). In business, global- able competitive advantage (GSCA) can be achieved.
ization implies increased interaction between product and re- The Organization for Economic Co-operation and Development
source markets. Globalization aims to bring about a unitary eco- (OECD) (2010) defines globalizationas "the geographic dis-
nomic order. Notably, globalization is not a new phenomenon. persion of industrial and service activities, for example research
Globalization began in the late 15th Century when Northern and development, sourcing of inputs, production and distribution,
European nations began to exert their values, authority and in- and the cross-border networking of companies, for example
fluence on other nations. It was the late 15thCentury through joint ventures and the sharing of assets". The
Portuguese Prince II, the Navigator who first sent his captains International Monetary Fund (IMF) (2012) considers globalization
to explore the world and make a profit out of what they found as "the process through which an increasingly free flow of
(McMahon, 2004). When the other Northern European nations ideas, people, goods, services and capital leads to the in-
saw the profitability obtained from the venture, they followed tegration of economies and societies". From the above defi-
suit. This later resulted in the scramble for Africa and the seeds nitions, it is apparent that globalization is best thought of as a
of globalization were sown. process that results in some significant changes for markets and
Globalisation is not a one-way process but a dynamic dia- businesses to address various business transactions.
lectical interaction of activities involving the changes As cited by Jones (2005) & Porter (1990) in Needle (2010),
aforementioned. Mezulanik (undated: p.625) states that global- the phenomenon of "Globalization" is not new. In fact, it has
isation involves an intermezzo of social, economic and political been creeping on us since the dawn of time; it just has not
processes that are overly interlaced leading to interconnected- been so visibly impactful until recent years. The broad mac-
ness of institutional structures. According to Mpofu (2009), ro-economic effects of globalization being experienced today ar-
"Globalization has also become an umbrella term for a complex guably became most identifiable with the end of the cold war,
series of economic, social, technological, cultural and political and have only continued their rapid advancement with the de-
changes that are seen as increasing interdependence, in- velopment of developing countries and other emerging markets,
tegration and interaction between people and companies in dif- the establishment of free trade agreements, the creation of the
ferent locations". Internet and other ICT improvements, the growing multinational
Developments in Information and Communication Technologies footprint of business, the emergence of the European
(ICTs) have softened the borders and reduced the globe into a Community, the stabilizing impact of the Euro on global cur-
"village" the so-called "global village". This has made possible rency markets, as well as the increased liquidity of more so-
the easier and cheaper movement and spread of ideas around phisticated and efficient capital markets.
the world. The barriers to international business are falling as In order to meet increased consumer demand, many busi-
technological advancement increases. It is now much easier for nesses are attempting to expand their geographic footprint and
enterprises to expand into new markets. Globalisation involves extend their value chain to an international level. The impact of
the liberalisation of trade activities which is catalysed by less globalization on business is best evidenced by the huge pro-
emphasis on protectionism (Mercantilism), better international le- liferation in cross-border transactions. In order to protect yields
gal frameworks and convergence of consumer cultures thus and maintain competitiveness, businesses are continuing to di-
making the world look like a ‘global village’. It is now less risky versify their footprint as it lowers the beta factor on their invest-
to deal with unfamiliar partners due to market liberalisation and ments by spreading risk across a broader market.
digital communication systems. This paper discusses the impact
of globalisation on economic growth and businesses in the
Zimbabwean context. 4. Methodology
A number of authors have attempted to conceptualize global-
ization from different perspectives (see for example Al Saleh, The present paper used qualitative research methodology to
 Stephen Mago, Gabriel Musasa, Jephias Matunhu / East Asian Journal of Business Management 3-2 (2013) 31-37 33

answer the questions about the impact of globalization on busi- development. These are already on the global market and
ness and economic development in the Zimbabwean context. It Zimbabwe only needs to import the technology. Recently, the
followed an exploratory secondary research design to gather da- United Bottlers Company in Zimbabwe acquired state of the art
ta that provided answers to the question of globalization, busi- processing and packaging machinery. This has seen the com-
ness and economic development. pany retaining its competitive advantage over substitute drinks
from abroad. In the absence of inter connectivity of business,
each country would have to rediscover the wheel technology,
5. Results and Discussion computer technology and so on. There is no doubt that
world-development would be hampered in a great way.

5.1. The impact of globalization on economic growth The impact of global technological innovation is also evident
and business in the transport sector where although Zimbabwe does not have
haulage trucks manufacturing plants, the vehicle market is
This paper analyses the impact of globalization following awash with them. Apparently, most of the haulage trucks are
Needle’s (2010) Business in Context (BIC) model. The model used vehicles from the East and the West. The used vehicles
states that every business entity comprises of five levels, which have improved the movement of goods and services to and
are the activities level, the strategic level, the organizational lev- from Zimbabwe. Put differently, the imported vehicles have kept
el, the environmental level and lastly the global level. Each of Zimbabwe connected to the global economy. The challenge is
the levels is presented below. that the used vehicles pose a health problem. Most of the sec-
ond hand vehicles have gone beyond their recommended life-
5.1.1. Activities level span and emit fumes which pollute the air. The problem with
the fumes is that some of them are carcinogens. They have a
This is where innovation, operations, marketing, human re-
long term effect on the health and productivity of labor.
sources management, financing and accounting occur. Garrett,
Guisinger & Sorens (2000) point out that the information tech-
The advent of the Internet and e-commerce has significantly
nology revolution has made it very difficult for governments to
contributed to the growth of businesses in Zimbabwe by con-
control cross-border capital movements, even if they have politi-
necting markets all over the world at very minimal costs.
cal incentives to do so (see also Muller, Cloete & Badat, 2001).
According to Garrett et al. (2000), the shrinkage of time and
Technological innovations in transport and Information and
space has been so dramatic and so pervasive that there is es-
Communications Technologies (ICTs) have also impacted on
sentially nothing that can be done to stop it. It is through tech-
businesses and thus economic growth in different ways. It is
nological advancement in business management that
now easier for people, goods, money, ideas and information to
Zimbabwean companies are able to produce goods and services
move from one end of the world to another. Garrett et al.(2000)
for the international market. Bata Shoe Company in Gweru and
argue that the faster and bigger semiconductors, fibre optics
Monarch Steel in Bulawayo, for example produce goods that are
and the Internet have radically cut the costs of transmitting in-
exported to economies outside of the country. Because of glob-
formation in the past 20 years. Financiers can literally operate
alisation, Zimbabwean companies are able to bench mark their
wherever and whenever they like, cutting deals in whatever fi-
business practice with international standards. Because of ad-
nancial instruments they can dream up. For example in Africa,
vanced technology, businesses in Zimbabwe make use of elec-
there are money transfer agencies such as Western Union,
tronic money transfer systems such as Electronic Funds
Exchange for Free and Money Gram that are used in various
Transfer (EFT), Telephonic Banking, ATM ‘cardless’ services,
business transactions in transferring and receiving money from
and Real Time Gross Settlement System (RTGS). With the help
abroad. These have made national borders invisible. Kerr &
of mobile phone providers, the development of mobile mon-
Sweetman (2003) comment that due to technological in-
ey-transfer services is becoming popular. For example Eco cash
novations, international financial transactions can be executed in
has over a million subscribers (Mandell, 2012) who are using it
a split second, changing the fate of national economies
to send money to relatives and friends and for making
overnight. Events unfolding in Asia can be beamed into living
payments. Employees and management can transact or commu-
rooms in Zimbabwe in the course of a few minutes.
nicate on line. We have come to the conclusion that techno-
logical changes in the global economy have significantly im-
Globalization has played a significant role in technological
proved the face of business activities in Zimbabwe.
innovations. Zimbabwe does not assemble planes, but because
of globalization, the country is enjoying the fruits of this techno-
Globalization has also impacted heavily on the marketing as-
logical innovation. There is no need for Zimbabwean companies
pect of business activities. This year (2013), a delegation from
to spend money to discover hypertensive drugs, quinine, ARVs,
Zimbabwe went to Malaysia to market its tourism industry. This
the wheel, computers, cement and other essentials for
34 Stephen Mago, Gabriel Musasa, Jephias Matunhu / East Asian Journal of Business Management 3-2 (2013) 31-37

event has significantly improved the number of tourist arrivals in Zimbabwean business organizations have benefited from skills
the country. Such efforts have contributed to the selection of inthe global market. The advent of the economic crisis in
Zimbabwe to co-host the United Nations World Tourism Zimbabwe at the turn of the new millennium saw a huge traffic
Organization General assembly of August, 2013 in Victoria Falls of qualified personnel migrating to greener pastures outside the
town. The internet has been widely used in Zimbabwe to inform country. This created a skills vacuum in Zimbabwe. Globalization
the world about business opportunities in the country. Examples has allowed the country to import labor from the global market.
of such websites are www.swedenabroad.com/.../Business/; For instance, Zimplats sourced skilled personnel from abroad to
www.zimbabwe tourism.net/ and www.thedirectory.co.zw/compa- kick start their platinum extraction plant in Chegutu. Zimbabwe’s
ny.cfm%... The e-business system has connected business in three mobile phone service providers, Econet, Netone and
the country with those outside of the country (Mpofu, 2009). Telecel have engaged mostly Chinese engineers and technicians
Laudon and Traver (2002) define e-business as the digital en- to erect their base stations. This has resulted in the mobile op-
ablement of transaction and processes within a firm involving in- erator’s workforce acquiring new skills without the costs asso-
formation system under the control of the firm." Through e-busi- ciated with staff development programs. Globalization has also
ness, raw materials and machinery have been purchased out- created a window for beefing up the skills levels of the people
side of Zimbabwe. The Zimbabwe United Passenger Company of Zimbabwe through programmes such as the Presidential
(ZUPCO), National Railway of Zimbabwe (NRZ), the Airforce of Scholarship Fund. Thousands of young men and women have
Zimbabwe (AoZ), and Air Zimbabwe are ‘parastatals’1) etc. that been sent outside the country to acquire skills that are on de-
have benefitted from training, vehicles and equipment from mand in the country under bilateral human development
China through the e-business medium. Midlands State arrangements. The understanding of the Presidential Scholarship
University, as a business has undergone massive expansion in is that these people will one day come back and participate in
terms of construction. Over 78 percent of the building materials the development of the country. In the absence of globalization,
were sourced from South Africa and China. this might not have been possible.

Some of the most common e-business tools used in business 5.1.2. Business Strategic Level
organizations in Zimbabwe includes e-mailing, e-learning, e-com-
At the business strategic level, management and leadership,
merce, e-marketing, and e-auctioning. E-governance has also
strategy and business ethics take centre stage. In examining the
improved operations of government departments hence cutting
upside of going global, one has to consider the sheer size of
the bureaucratic umbilical code that haunted government oper-
international markets as contrasted with the size of the domestic
ations for a long time. The challenge is that attacks on the cy-
market. The international market offers greater opportunities for
bernetics have affected the operations and privacy of some of
growth, which in turn could double, triple or quadruple business
the business entities. Hackers have stolen security information
revenue. It is for this reason that businesses in Zimbabwe ag-
from banks. For example, Techzim (2013) reported that
gressively pursue the goal of going international. In the for-
Metropolitan Bank was hacked in January 2013. The other bank
mulation of business strategies, business managers in Zimbabwe
that was reported to have suffered the access of malicious
are now looking for opportunities and threats beyond their
hackers was MBCA. It further reported that the Ministry of ICT’s
borders. The Zimbabwean textile industry for example is facing
e-Tech website was also hacked. Notably, most business enti-
stiff competition from the United Kingdom and Asian countries.
ties in Zimbabwe have adopted the e-mailing system to commu-
This resulted in companies like Cone Textile in Bulawayo clos-
nicate urgent information and requests both within an organ-
ing shop. David Whitehead, a Chegutu based company, is cur-
ization and outside it. This has replaced the traditional memo
rently under judiciary management due to the slow uptake of its
system and has resulted in improved communication within
products, and Edgars Stores has significantly downsized in the
organizations. E-business tools are also used to market and sell
past three years. On the other hand, Zimbabwe has managed
an organization's products. Business organizations such as Delta
to penetrate the world market in the sale of diamonds, tobacco
Corporation, Econet and so on, have created websites where
and some minerals. Due to its involvement in the world market,
they advertise and sell their products and services. Businesses
Zimbabwean companies have greatly improved their business
in Zimbabwe are also making use of e-commerce to source
ethics in order to comply with world standards. The bottom line
products and new opportunities locally and abroad.
is that globalization it creates an opportunity for businesses to
"Globalization has brought in new opportunities for developing
expand revenue streams, diversify risk and increase brand
countries to access developed countries’ markets…"
equity.
(http://economics.about.com/od/globalisation).

5.1.3. The Organization Level

kets have been engaged in the systematic reform of basic soci- Chinese and other Asian business people. This situation has
etal values. These include property rights, legal processes, and raised some concerns from the locals who feel that foreigners
published regulations and statues. addition, specific reforms such are benefitting more than they are. The enactment of the
as privatization of state-owned industry, relaxation of capital con- Indigenization and Economic Empowerment Act in 2009 has al-
trols, and liberalization of rules regarding foreign direct invest- lowed many Zimbabwean to have a stake in most prosperous
ment are all encouraging growth and investment in businesses. business firms in Zimbabwe. This law states that in all business
Due to the need to align ‘parastatals’ with new global trends, ventures where foreigners have an interest, ownership should be
the Zimbabwean government has moved to commercializesome 51% in favor of indigenous Zimbabweans.
of the state enterprises. This has pushed ‘parastatals’ such as
Dairiboard Zimbabwe, Cotton Company of Zimbabwe, Cold 5.1.4. The Environmental Level
Storage Company, Tel One and Net One to operate as com-
At the environmental level, globalization influences businesses
mercial entities. The disadvantage is that services to the poor
to varying degrees. It depends on what business one is talking
electorate will be out of reach as government-owned companies
about. If a business sector is subsidized by its government,
move from being welfare based to profit making. There is a
globalization can only be labeled as a cause. Although the state
down-stream benefit of commercialization. Commercialization of
is regarded as the custodian of the national economy, global
the ‘parastatals’ increases competition, which also improves the
events can force a government to revisit its economic policies.
quality of goods and services on the Zimbabwean market.
According to Mohr &Fourie (1995), the most successful econo-
Competition compels companies to increase the volume of
mies are those that have economic links with the rest of the
goods and services on the market, which in turn may reduces
world and are able to compete successfully in international
the price of goods and services without compromising quality.
markets. The Global Economy is in a constant state of change
Ownership and organizational culture are now major chal-
and is influenced by variations in the demand for services and
lenges to businesses and their managers in Zimbabwe. A mul-
products worldwide. For example, the need for raw materials to
ti-national business environment is more complex with more vari-
manufacture products and the necessity to move produce/prod-
ables, and so is more difficult to manage. Econet Wireless is a
ucts to global consumers has forced companies in Zimbabwe to
Zimbabwean company that has gone international. The company
search for raw materials from outside the country. According to
is now paying fees for many students in Zimbabwe through cor-
Needle (2010), variations in the price and supply of labor, which
porate social responsibility. The expansion of Econet Wireless
gave rise to a cheaper workforce in the Far East, has lead
has resulted in a multi-cultural employment policy. The policy al-
some businesses to move their manufacturing abroad to cut
lows employees of many different nationalities, languages, reli-
their overall costs.
gions and cultures to converge at the company through its dif-
Businesses in Zimbabwe have taken advantage of the im-
ferent offices across the globe. The multi-cultural employment
proved levels in communication. The global communication net-
policy allows world cultures to live in harmony with each other,
work (internet) has allowed companies to outsource tele sales
thus creating an opportunity for a global culture. The challenge
and administration, reducing their costs. Companies in
with a multi-cultural employment policy is that employees react
Zimbabwe need not travel to China, or Japan or Europe to pur-
in quite different ways to incentives and to motivation and it is
chase vehicles and machinery. They access these companies
very difficult to find managers who are sensitive to all these dif-
on the web, negotiate prices and conclude deals within the con-
ferent factors. It is very easy to inadvertently cause offence and
fines of their offices. Businesses in Zimbabwe owe this con-
de-motivate workers. The Japanese were initially very dis-
venience to globalization. An understanding of the global busi-
appointed with their Thai employees who did not respond well
ness environment is essential to companies in Zimbabwe. For
to Japanese methods of building up corporate loyalty and
instance, commodity fluctuation has a bearing on pricing of
motivation.
goods and service. As the price of imports rise, companies are
Ownership of businesses is no longer confined to the geo-
able to buy fewer goods. This affects countless businesses
graphical boundaries of states. Most states have legislation
throughout Zimbabwe because they may then have to take oth-
which supports ownership of businesses by foreigners. While
er measures to obtain necessities to run a business.
this is good, it has resulted in the local communities being
Businesses in Zimbabwe have an option of outsourcing and
pushed out of business by foreigners with stronger financial
off-shoring in order to make up for any incremental loses. Out
muscle. For instance, Chinese companies dominate the mining
sourcing refers to the act of contracting a different company to
sector in Zimbabwe. They also dominate the supply of cheap
supply goods and services that are required by the outsourcing
clothes to the Zimbabwean economy. Most large corporations in
company. The tender system is used in Zimbabwe to identify
Zimbabwe are foreign-owned. Zimplats and Mimosa platinum
suitable companies for sub-contracting. The rules and regu-
mines are owned by South Africa’s Impala Platinum. Standard
lations governing out-sourcing or sub-contracting are put in
Chartered and Barclays banks are both British-owned. A good
place by the Zimbabwe Tender Board. The regulations and pro-
number of small businesses in Zimbabwe are owned by
cedures guard against unethical practices. Off-shoring is where
36 Stephen Mago, Gabriel Musasa, Jephias Matunhu / East Asian Journal of Business Management 3-2 (2013) 31-37

an outsourcing contract is signed with a company that is not easy credit has prompted the world wide use of credit cards.
registered in Zimbabwe. According to Needle (2010), outsourcing The VISA credit card brand has become a common feature in
is commonly known as sending work to an outside provider in Zimbabwe and is widely accepted not only in Zimbabwe but in
order to cut costs. Considering the fact that Zimbabwe has not the whole world. Local banks such as Standard Chartered Bank,
fully recovered from the recent economic recession, many strug- Barclays Bank, FBC Bank and Stanbic Bank produce VISA
gling businesses may have to begin outsourcing to keep the branded credit cards that are also accepted in other countries
companies functioning in this difficult economy. However, out- outside Zimbabwe. This is a way of supporting globalisation of
sourcing and off-shoring have both benefits and misfortunes re- companies.
lated to them. Needle (2010) goes on to say that outsourcing Transferable marketing promotes market globalisation and this
and off-shoring arelooked upon as a way to save money, main- has culminated in brands such as Coca-Cola being successfully
ly due to lower labor costs. It is also viewed as a way of ex- marketed in very similar ways across the world. Zimbabwe is
panding recognition and competitiveness. Benefits to the home not an exception and Coca-Cola has manufacturing and bottling
firm include lower labor costs, the displaced workforce can plants in Zimbabwe. The success of new economic power-
move to jobs of higher value, an increase in the market for the houses such as the BRIC (Brazil, Russia, India and China)
home industry and creation of new jobs. The negativity lies in countries is generating new opportunities and challenges for
the fact that there is unemployment at home when operations business internationally. According to Hellriegel & Slocum
are moved abroad, skilled workers maybe forced to move to (1989), management stresses each region and nation’s
lower jobs and product standards may go down due to a lack uniqueness. They further point out that each overseas subsidiary
of control by the home firm. is somewhat independent and each is a profit centre that is ex-
pected to contribute earnings and growth in line with market
5.1.5. The Global Level opportunity. Corporate headquarters then coordinates financial
controls and broad marketing policies worldwide.
At the global level a firm focuses on how it interacts with the
Johnson et al. (2011) argue that global/international competi-
whole world and places less emphasis on national boundaries
tion has led to global branding, global advertising campaigns
and geographical barriers. These boundaries are broken by the
and global retailing such as for Coca-Cola whose brand adver-
Internet, telephone, mobile phones, electronic fund transfers and
tising and retailing is similar in all countries where it is
air travel. Hellriegel and Slocum, Jr (1989) argue that a global
produced. The presence of ‘globalized’competitors increases the
strategy stresses operating with consistency, standardisation, and
pressure to adopt a global strategy in response because com-
low relative cost. Subsidiaries in various countries are highly in-
petitors may use one country’s profits to cross-subsidise their
terdependent in terms of strategy and operations. This point is
operations in another country. A loosely coordinated international
corroborated by Johnson, Scholes & Whittington (2011) who ar-
strategy is vulnerable to ‘globalized’ competitors, because it is
gue that costs can be reduced by operating globally. They go
unable to support country subsidiaries under attack from tar-
on to say that increasing volume beyond the national market
geted, subsidised competition. Kefalas (1990), in his book enti-
might support economies of scale, both on the production and
tled Global Business Strategy: A Systems Approach gives a
purchasing and supply sides. Such companies as Nestle
convincing discussion about global competition and how it en-
-Zimbabwe, from Switzerland, tend to become, therefore, pro-
hances economic efficiency.
portionately much more global than companies from the United
National borders are becoming less and less important.
States of America, which have a vast market at home.
Markets stretch across borders and multinational corporations
Economies of scale are important in industries with high prod-
(MNCs) are well-placed to take advantage of this. MNCs have
uct development costs. Nestle has set up shop in various coun-
impacted heavily on most economies. Needles (2010) Kefalas
tries to cut on transport and storage costs as most of the com-
(1990), point out that MNCs have influenced national economies
pany’s products are perishable. Globalisation is therefore a way
in a variety of ways. He further says that because of their size,
of avoiding localised costs. The need to contain costs, assisted
most MNCs control much of global production, global resources
by trade policies amongst the various governments, has driven
and money flows. Anglo American Corporation and Coca Cola
the world towards globalisation. Garrett et al. (2000), comment
have had an impact on the world economy. Issues of language
that governments can still insulate their businesses from external
and culture arise as consumers are more alike but by no
market forces if they so choose. But the "increased opportunity
means the same. Many businesses have made expensive mis-
costs of closure" (Garrett et al., 2000), have become sufficiently
takes by not taking local variation sufficiently into account.
large to tip the balance in favor of the liberalization of foreign
Marketing, in particular, is amine field because of its depend-
economic policy in country after country.
ence on language. The marketing books are full of stories, often
As pointed out by Johnson et al.(2011), a critical facilitator of
very amusing, of how businesses got it wrong.
globalisation is standardisation of market characteristics. The
6. Conclusion and Recommendations
presence of similar customer needs and tastes, for example, the
Globalization has impacted both positively and negatively on
fact that in most societies, consumers have similar needs for
 Stephen Mago, Gabriel Musasa, Jephias Matunhu / East Asian Journal of Business Management 3-2 (2013) 31-37 37

business and economic development in Africa in general and United Kingdom: Addison Wesley.
Zimbabwe in particular. It should, however, be noted that this International Monetary Fund(IMF) (2012). Retrieved February 21,
paper establishes that the advantages, to a certain extent, out- 2013, from http://www.imf.org/external/np/exr/key/global.htm .
weigh the disadvantages. Globalization has increased interna- Johnson, G., Scholes, K., and Whittington, R.(2008). Exploring
tional trade between countries. Increase in trade means in- Corporate Strategy: Text and Cases (8th edn.). Harlow:
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