Global Finance EnvironmentThis paper will analyze the drivers and consequences of globalization, describe the risks associated with global investing, and explain the importance of cultural sensitivity and ethics in global finance. However, there first must be an understanding of what globalization entails. Globalization is the expansion of companies and entities into the international market; working, manufacturing, and selling or buying from two or more countries. Companies that sell to other countries or buy from other countries are not a good example, but those that have investment, manufacturing, or other divisions of the company in another country is definitely globalization.
Drivers of GlobalizationMany drivers of globalization affect an organization financially. Improvements in communication and transportation such as internet, emails, mobile phones, formation of trading blocs, depletion of trade restrictions and creating of new trade agreements among nations, comparative and competitive advantage being offered by certain nations and markets are all driving globalization and increasing trade among nations.
Today, countries are increasingly becoming dependent on each other and companies are making a foray into global markets, either to increase their sales or to achieve comparative advantage in terms of production and thus satisfying the needs and wants of ever increasing demands of customers.
These changes are increasing the resource requirements of global corporations who require more resources, financial as well as non-financial today than ever before to compete in this globally competitive scenario and to support the increasing scale of business. Some of the most important drivers of globalization are the elimination of trade barriers and establishment of free trade agreements: This has been one of the most important drivers of globalization as the removal of trade barriers and establishment of trade agreements opened up huge markets for global corporations and significantly increased bilateral trade. For our money transfer business, the increasing...