Globalization Theories in the Business Environment


Globalization is defined as a concept that refers to expanding network of international economic activities resulting from increased movement of commodities, technology and information across national boundaries. Globalization as a process, therefore, ensures that the state retains the political role while the economic functions of the state are being transferred to supranational organizations (Wetherly & Otter, 2008).

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Although globalization denotes different things to different people, practitioners ensure that that consumer needs are met and competitive advantage is exercised over competitors in the global market. Because, it spans the various levels in the lives of individuals, corporations and the world in general, this paper begins with the contribution of globalization towards prosperity for world countries. The paper further elaborates on the neo-classical, Marxist and structuralist perspectives on globalization before closing with the most concurrent theorem out of the three perspectives.

According to Wetherly & Otter (2008), most of the organizational activities are adopting a global approach in today’s business environment. With companies all over the world embracing globalization as a source of unlimited opportunities, environmental threats and competition have eliminated their weaknesses. However, the mere involvement in international business activities does not mean a corporation has become global; but instead, it requires pursuing the strategy fully. Globalization has lead to a new emerging trends in the business example is the South Hook which is an ambitious project undergoing current development.

This project is believed to have significant importance to the production of natural gas. This construction will, therefore, lead to high importation of liquefied natural gas. The LNG will, therefore, lead to the conversation of liquid gas which will, in the end, be delivered to the UK homes for business as well as a source of energy. The diversity of this will lead to a diversity of gas supply which will competitive source of energy. This will produce liquefied clean fossil fuels which are a brighter future for future business which has embarked on gas (Weatherly & Otter, 2008).

Neo-classical theory

The neo-classical theory is concerned with the assumption that particular individuals will want to maximize their utilities with a given set of preferences. This implies that some individuals will need to make some sacrifices for the efficiency of their own interest. This theory, therefore, emphasizes that individuals have rational behaviour and always they will tend to choose their paths which can help them to maximize their utility in order to meet their expected utility. Fundamentally, the state should be in a position to sustain economic growth by utilizing the underlying principle of agency theory.

According to the neoclassical theory, it is indicative that globalization will lead to a rapid increase in wealth making an assumption on the current situation of the market. Wealth creation will be achieved since the markets will lead to an increase in supply hence increasing demand causing equilibrium through pricing mechanisms resulting to either fall or rise dictated by the market forces of demand and supply (Wetherly & Otter, 2008).

The other example of the globalization is the recent merging of the British airlines and Spanish with more than 55 per cent shareholders who have teamed up to enlarge the industry. This has, therefore, lead an enhanced scale of competition with particular airlines participating for the future industry consolidation. The new company is intended to build a strong position or relationship between Europe to North America traffic which in the end has been planned to lead to a strong business alliance between the countries which is known as AMR Corps American Airlines (Weatherly & Otter, 2008).

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Globalization effects of our lives have resulted in debates about its relevance. While some see it as the genesis extraordinary wealth and opportunities to reduce poverty, others see it as the primary root of poverty especially in developing countries, resulting in job exports from developed countries, and while constantly widening the gap between the rich and the poor all over the globe. Therefore contrary to the neo-classical view of globalization, is the Marxist view.

Marxist approach to globalization

Secondly, the Marxism theory is concerned with the development of the economy’s political and developmental aspects. Marx believed that the establishment of a modern representative industry and world market prepared for the bourgeoisie to finally acquire a political sway. However, views of internationalization as a channel of reducing the surplus products from capitalist countries without maximizing the dynamics of the movement. The Marxist theory therefore argues that globalization is not wealth creator. Marxist therefore argues that due to inequalities that exist in the market capital markets it has caused the inhibition of the market expansion.

The theory therefore indicates that the mere fact that economies are expanding it does not mean automatic increase in wealth distribution. Similarly, the theory suggests a conservative restructuring perspective towards education through the marginalization of education through a radical way in the universities, schools and teacher education. Since it has an impact on the economy thus implying that it will lead to great impact to the economic growth (Wetherly & Otter, 2008).

Consequently the effect of improved education level as more changes continue to occur including a rapid increase in the technological level resulting in an increase in the level of education and overall enlightment as well. This clearly implies that the Marxist and neo-Marxist are a set of structuralist’s theories which tend to reject the idea of liberalists in view of conflict rather it encourages economic development and capital accumulation as well.

Structuralists’ theory

Lastly the structuralists’ theory conceptualizes the economy through the capitalist’s market system through the asymmetric central periphery relations. According to the theory, the worldwide economy is divided into industrialized and non industrialized countries. Therefore the structuralist view tends to look for the regulation and protection of free market from excesses of the capitalism. Due to this it has globalization has lead to the increase of wealth. The widening of the income gap (also known bourgeoisie) is associated to the operation of the aggregate through the aggregate effect of the world system. Globalization therefore leads to the widening of the gap between the developing and developed countries in turn industrializing the developed countries at the expense other countries (Wetherly & Otter, 2008). Consequently, globalization will lead to a rapid growth of the economy and increased production industries in the developed countries.


In a nutshell, the variations in the neoclassical and Marxist theories of globalization are summed up by the structuralists’ theory. The categorization of countries in form their industrialization depicts individual effort by each state to improve the welfare of the citizens, without looking upon the developed nations.


Wetherly, Paul & Otter, Dorron, 2008, The Business Environment: Themes and Issues, Oxford University Press. Web.

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