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What is the understanding and definition of globalization
Globalization definition in my own words
Globalization definition in my own words
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Globalisation could be defined as “the interactive co-evolution of millions of technological, cultural, economic, social and environmental trends at all conceivable spatiotemporal scales (Rennen & Martens 2003). When discussing globalisation, the topic transfer pricing always seem to arise which could be because this multi-nationals trade between themselves and the government also uses transfer pricing. Therefore transfer pricing is used wold wide and could be said to be an important accounting factor which enables the success of a firm due to the fact its set up to induce optimal decision making in decentralized firms. Transfer pricing could be defined when a company trades goods/services and the allocation of profits and taxes with another sub-unit of the same company in a different country (Matt Barbella 2011). The four major aims of transfer pricing is to provide information for making good economic decisions, provide information for evaluating the divisional performance, promote congruence and sub-unit autonomy. There are three major types of transfer pricing method that firms use to transfer goods/services. These methods are market-based transfer prices, negotiate transfer prices and cost based transfer prices. Although there are four major aims of transfer pricing, there is no actual transfer pricing method which fulfils the four purposes. Therefore managers are forced to make a choice to which purpose is to be fulfilled or to which method is to satisfy the objective at hand. For example, if a manager is to choose a method such as marginal cost transfer pricing, it motivates the short run optimal economic decision of the manager but undermines the concept of autonomy. Market-based transfer price is a situation whereby... ... middle of paper ... ...countries, especially developed countries like America, England and Australia etc. use this guideline as a basis to monitor internal transactions. This guideline also reflects the arm’s length price principle. Countries like America could be noted to have over 300 pages on this topic. But the enactment of these regulations as a basis to monitor abusive transfer pricing is lagging in undeveloped and developing countries. The damaging effects of the transfer policy could be limited if the international co-ordination amongst countries tax authorities are enhanced. Secondly, transfer pricing audits should be carried out in order to follow and monitor the transfer methods used by the firm. By constantly getting the report of each transfer policy used, the tax authorities would be able to monitor and also reduce tax evasion through transfer pricing methods.
Trade is the most common form of transferring ownership of a product. The concepts are very simple, I give you something (a good or service) and you give me something (a good or service) in return, everyone is happy. However, trade is not limited to two individuals. There are trades that happen outside national borders and we refer to that as international trading. Before a country does international trading, they do research to understand the opportunity costs and marginal costs of their production versus another countries production. Doing this we can increase profit, decrease costs and improve overall trade efficiency. Currently, there are negotiations going on between 11 countries about making a trade agreement called the Trans-Pacific
Globalisation, in the simplest sense, is economic integration between countries and is represented by the fact that national resources are now becoming mobile in the international market. Globalisation sees: an increase in trade of goods & services through the reduction of trade barriers; an increase in financial flows through the deregulation of financial institutions and markets and floating of currency; an increase in labour
Paul Wetherly and Dorron Otter define globalisation as the “special level that adds the supranational level to focus on to the focus on business activity but emphasizes the inter-linkages across the spatial levels from local to global” (Otter, The Business Environment Themes and issues 2nd Edition, 2008, p. 207).
Redding (1999) defines that globalisation as the increasing integration between the markets for goods, services and capital and at the same time the breakdown of borders. Others found that the progression of globalisation doesn’t only include opening of world trade, development of innovative technologies such as communication, internationalisation of financial markets, increasing importance of multi-national corporations, population migrations and generally increased mobility of persons, goods, capital, data and ideas but also critical issues such as infections, diseases and pollution (Braibant, 2002).
Globalization becomes important today because increasing in depending to the world. Globalization can be determined as increasing in trade and exchange in open economy, integrated and borderless international economy (Intriligator, 2003). Globalization is often used to refer to economic globalization. The integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology. Besides that, globalization also can be defined as process of greater interdependence among countries and their citizens. It consists of increased integration of product and resource markets across nations via trade, immigration and foreign investment-that is via international flows of goods and services, of people and of investment such as equipment, factories, stocks and bonds. It also includes non-economic elements such as culture and the environment.
The development of free-market economics has, since the 18th century, resulted in the spread of a set of ideas, creeds and practices all over the developed and much of the developing world. Today, the globalisation of trade, capital, technology and innovation has accelerated competitive conditions for businesses all over the world. Globalisation may be defined as the opening of markets to the forces of neoliberalism and capitalism; it is characterised by the free movement of people, talent, skills, capital (intellectual, social and economic) across international borders. All kinds of barriers have either been swept away, diffused or made obsolete by the forces of globalisation: trade barriers, subsidies, geographical boundaries, linguistic and cultural differences. Technological advancements have pulled the world closer and, in the process, affected how labour relations and worker/employer relations operate and develop. The multinational corporation as well as the public sector alike are affected by global competition.
When the term “Globalization” is discussed, most academics, scholars, professionals and intellectuals attempt to define and interpret it in a summarized fashion. My main concern with this approach is that one cannot and should not define a process that altered decades of history and continues to, in less than 30 words. Global Shift is a book with remarkable insight. Peter Dicken rather than attempting to define the commonly misused word, explains Globalization in a clear and logical fashion, which interconnects numerous views. Dicken takes full advantage of his position to write and identify the imperative changes of political, economic, social, and technological dimensions of globalization.
In BASF Group, Business Units are responsible for profit and for return on investment (profit centers), each reporting to an Operating Division. Products within a company of BASF Group that are supplied from one profit center to another for further processing or for sale (i.e. they leave the boundaries of the particular Business Unit or Operating Division) should as a basic rule be charged within the arm’s length principle establishing the downstream unit as a privileged partner. These supplies are therefore charged at transfer prices. Long-term effects of transfer price agreements on business developments and the strategy of upstream and downstream profit centers are taken into account in transfer pricing. BASF’s ZZ clearing desk is responsible for resolving transfer price definition and calculation disputes. As per clearing desk step wise process for calculation of transfer price is defined, which will be used for calculation of transfer pricing. The process cannot be mentioned in this thesis because of confidentiality reasons, and only a general review of approach will be explained.
Globalisation is a broad term that is often defined in economic factors alone. The Dictionary at merriam-webster.com describes globalisation as “the process of enabling financial markets to operate internationally, largely as a result of deregulation and improved communication.” Also due to deregulation on the financial market, multi-national companies are free to trade and move their businesses to areas where a higher return or profit can be achieved. New technology also enables companies to relocate to areas where labour costs are lower, for instance movement of call centre jobs from the UK to India.
An outstanding mechanism frequently used to interpret ‘Globalization’ is the ‘World Economy’. Back to the colonial age, the coinstantaneous behaviors of worldwide capitals and energy resources flowed from colonies to western countries has been regarded as the rudiment of the economic geography (Jürgen and Niles, 2005). Nowadays, the global economy was dominated by transnational corporations and banking institutions mostly located in developed countries. However, it is apparently that countries with higher level of comprehensive national strength are eager for a bigger market to dump surplus domestic produce and allocate energy resources in a global scale, thus leads to a world economic integration. This module was supported by several historical globalists (Paul Hirst, Grahame Thompson and Deepak Nayyer) ‘their position is that globalization is nothing new but more fashionable and exaggerate, a tremendous amount of internationalization of money and trade in earlier periods is hardly less than today.’ (Frans J Schuurman 2001:64).
Globalisation goes back as far as the era before the First World War. During that time globalisation’s general tendencies produced a very uneven pattern of global economic development, exposing the limits of global economic integration. For example, the integration of the African economy into the capitalist economy is part of the globalising tendencies of capitalism.
The expression "globalization" is generally utilized as a part of business rings and matters of trade and profit to depict the expanding internationalization of businesses for merchandise and administrations, the budgetary framework, companies and commercial ventures, innovation, and rivalry. In the globalized economy, partitions and national points of confinement have liberally diminished with the departure of tangles to market access. Furthermore, there have been decreases in transaction expenses and layering of time and separation in global transactions.
Globalization is a new concept that was introduced to the world after the fall of the communist regime. Globalization has to its identity social, economic, and political reforms, .however the globalization that we are about to discuss is the term that combines the past socio-economic and political reforms and cross with them to the world where their are no boundaries, restrictions, and immobilization what Mittelman describes as ? cross-border flows of capital, knowledge, and consumer goods ? (Mittelman 1). For the world to become a one or a single entity it has to pass through a process of economic, and technological integration. The consequence of this unification is the aim of this research, positive and negative, although the negative aspects will be the dominating part.
Globalization is the new notion that has come to rule the world since the nineties of the last century with the end of the cold war. The frontlines of the state with increased reliance on the market economy and renewed belief in the private capital and assets, a process of structural alteration encouraged by the studies and influences of the World Bank and other International organisations have started in many of countries. Also Globalisation has brought in new avenues to developing countries. Greater access to developed country markets and technology transfer hold out promise improved productivity and higher living standard.
Globalisation is a very complex term with various definitions, in business terms, “globalization describes the increasingly global nature of markets, the tendency for transnational businesses to configure their business activities on a worldwide basis, and to co-ordinate and integrate their strategies and operations across national boundaries” (Stonehouse, Campbell, Hamill and Purdie, 2004, p. 5).