It is also happening as a gift of globalization. How it affects stakeholders of financial services industry are followings; Firms – When it comes to provided services on the world level, the small and local firms of the industry are not capable for it. As the number of financial institutions is increasing and they are coming with new and innovative services, financial institutions have to provide qualitative services on reasonable prices (Smith, 2002). Copyright 2020 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Competition increased with the entry of new companies in the market. In this study, secondary data has been used for analysing the effects of globalization and for studying the extent of globalization on financial services industry. Investing in foreign companies creates a global interdependency that can stabilize the economy on a temporary basis. Causes E nvir onmental D amage. Free resources to assist you with your university studies! Competition also forces industries to go global In search of new markets for their products. Due to globalization, most global economy jobs are insecure and temporary. If you need assistance with writing your essay, our professional essay writing service is here to help! Similar need of customers may include credit cards, debit cards, deposit accounts, banking transactions, online banking, loan, advances, etc. The effects of globalization can be felt in practically every aspect of our lives today. Benefits / Gains from Globalisation. By this way globalization is a catch all, malleable concept which can be interpreted the way user wants (Scholte, J., 2000). has to introduce some restriction and define transfer modes to keep check on flow of money. But, for the poor and developing countries negative effects seems very large (Future-econ, 2009). Negative Effects Of Globalization On Business. Yip (2003) defines global customers in two ways. As the countries reduced trade barriers the industries form those countries start going global. Information technology is playing a crucial role in delivery these services. Reviewed by: Hashaw Elkins, MSPM, PMP, CSM, CSPO, PMI-PBA, LSSBB. All work is written to order. Most of the financial services are based on information technology, so the costs of these services are similar in all the countries where these are delivered. It should not be treated as authoritative or accurate when considering investments or other financial products. Economies of Scale – Large companies may not be able to utilize full capacity of their manufacturing units due to closed economy and small market. 2008). The availability of cheap consumer goods helped those nations to lower down inflation, which was disturbing their economic growth. Better Uses of Resources – Resources are scare but still the countries were not able to utilize them efficiently, in the lack of technology. If one tries to find the technical standards in today’s financial services industries, one finds that almost all the countries are using same technical standards. The other cultural forms like movies, music and art are also affected by globalization. When we say global financial services, it means any one can access the services in any country any time after paying the applicable charges. Some financial conglomerates like Citi Bank, HSBC, are providing same services to their customers. A global industry takes advantages of environment and satisfies customers’ needs and wants around the world. A company’s negative public reputation in how it treats its employees, even if they are overseas, can cause a loss in customer support of products. For example, greater frequency of building different types of new business models was brought about by advanced technology and … A company considering outsourcing a service needs to look at all related expenses and possible risks associated with having it done overseas. This results in the unemployment of the citizens of the developed countries. Copyright © 2003 - 2020 - UKEssays is a trading name of All Answers Ltd, a company registered in England and Wales. Within the country an organization wouldn’t get much scope for increasing it operation but in a globalized economy it can go mile for increasing it operations (Tanzi, 2004). Inequality has also increased in terms of skilled jobs. For some, it is a positive process leading to shared social values worldwide. Some of the positive effects are following; Free Capital Market – With the introduction of globalization countries opened their capital market. It points out the rising level of dependency between countries in term of cultural, military alliance, trade, and domination. When large companies start their operations in developing or under developed countries, they use advanced technology for operations. Even after that it doesn’t mean globalization only has positive effects; it does have negative effects on business. Recently H1N1 flue was also a result of fast and increased movement of people. Competition has put pressure on investment bank, banks and non-banking financial companies to create and provide sophisticated financial services to their customers. Market Globalization talks about the extent, that effect globalization in any of the industry. Economics The reasons for this are limited resources and the infrastructure; because of this these firm are not able to attract more customers, which restrict firms’ growth prospective (Hoekman et.al., 2004). It’s not the developing countries who has benefited from globalization, developed economies have also enjoyed the fruits of globalization. By globalization financial services industries have the potential to reduce cost. Some countries set-up special economy zones for giving extra boost to export (Rugman, 2002). Technological Improvement – Countries those adopt globalization, opens doors for advanced technology. Some dictionaries define globalization as ‘the act of globalizing’ or ‘to render global’ (Waters, 2001). In this study, we intend to ransack files to see how the on-going process of globalization has positively contributed to the growth of world … Foreign workforce offers cheaper labor for many service-related positions, but the control of the quality of service, shipping expenses and time delays can create sizeable hidden costs. This is not an example of the work produced by our Essay Writing Service. Student exchanges are of great value for both of these groups. There are several examples where people learnt the subject from other countries and earned name in their own country (Kulkarni, 2009). Where in some countries it is intensively used, in some countries financial services are still the in the infant stage. Wendy Smith began writing professionally in 2010. Removal of Protection Th… When financial series industry is operating on world level it can provide the services, where it gets highest source efficiencies. Negative Effects of globalization on industries: 1. Study for free with our range of university lectures! But these services do need continuous development of high end services, which cost a lot. Globalization has its affect on every industry; the difference is in the extent of the affect and in the aspects of its effect, positive or negative. Negative Effects of Globalization Today, the world seems to be smaller than before as interactions among different countries have increased. 2. Conversely, operating globally also opens the company up to new sources of cheaper labor, which results in existing employees losing jobs due to outsourcing. The noticeable difference here is the time of services introduction, in developed and their home countries services are introduced as there are developed but it takes times for other countries. Financial services are utilization, manipulation, management, storage, and creation of money. Figure 1 shows all these drivers of globalization. It is also helpful to understand markets’ or industries’ different aspects. Humans tend to pick new and correct things from other cultures and drop the flaws in their culture. Increased production means more natural resources are used and this can be used up before they are regenerated leading to a negative impact on the environment. Global Competitors – Global competitors have more power to compete with local companies as they can get profit from other countries where the competition is not as high as in that country. Dumping also enhanced completion in these markets (Lane, 2006). National global customers – These types of customers also look for best services around the world but they remain in one country. Trade policies – The trade barriers were removed after the formation of World Trade Organization (WTO). Customers – The user of financial services are benefiting from the competition in the financial services industry. VAT Registration No: 842417633. Technological improvement is also possible by to running R&D programme in collaboration with big companies and by providing training to its people (Tanzi, 2004). Transferable marketing – When due to globalization marketing mix elements are used in many countries without considering their local aspects, it is named as transferable marketing (Campell et.al., 2004). 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