Impact of Globalization Essay

It has gradually evolved from the 1970s after the advent of different forms of high speed transportation and communication to the age of information technologies around the millennium, to make a single unified community where all the major sources of various social conflicts have disappeared (Scheuerman, 2010 and World Regional Geography, 2009). There are several ways of defining Globalization. As defined by Dr. Nayef R. F. Al-Rodhan (2006), â€Å"Globalization is a process that encompasses the causes, course, and consequences of transnational and transcultural integration of human and non-human activities. The effects of Globalization are manifold. It influences industrial sector, financial sector, labour markets and consumers of a particular country. On one hand it gives rise to more jobs and industries, however, on the other hand, countries are becoming dependant on the other country for a specific product/raw material. Additionally, because of outsourcing jobs from developed economy are being transferred to the developing economy, which has a negative effect on the developed economy and positive on the developing economy. 2. 2 Consumer Packaged Goods and Globalization Consumer Packaged Goods (CPG) are sold at relatively low price and are non durable goods like grocery items, soft drinks etc. Large CPG manufacturer has an advantage of strong brands, greater geographical coverage and having major retailers. CPG industry is affected by the change in fashion, fads and consumer preferences, which in turn effects the purchasing decision of a consumer. Therefore, I believe that in the fast and ever changing world of Consumer Packaged Goods (CPG) it is imperative to discuss the effects of globalization on this industry. Additionally, there is immense pressure and intense competition between the manufacturers globally to fulfill the demand of consumers. 2. 0 Impact of Globalization on CPG Industry 3. 3 Costs and Benefits of Globalization on CPG Industry There are diverse ways in which globalization impinge on CPG industry. Some are beneficial for the industry and some aren’t. The good side of globalization is explained as follows: a. Profits from emerging markets: Procter and Gamble in year 2006, showed a total sales of US $ 68 billion, out of which US $ 21 billion was from emerging markets. Additionally, from 1992 to 2006, globalization has boosted the American economy by US $ one trillion in Gross Domestic Product (Veiders, 9th July 2007, Supermarket news). b. Consumer’s advantage: The consumer gets the advantage of choosing from wide variety of goods, in addition to the comparative advantage. Additionally, the offshore markets are producing goods at a price which is lower than the domestic production of a particular country. Though this is an advantage to the consumer, this could hamper production and associated profits in some countries (Oline Thompson, 2006, CPG Manufacturing) c. Foreign capital access: Foreign capital access is the main driving force of globalization. This in turn increases the investment power of a particular country to produce better produce economically (13th February, 1996, WTO News (press releases). The other side of globalization illustrates some problems faced by CPG Industry: a. Cultural disparity: A product that might be a necessity in one country might not be even known or used in the other, which would have a negative effect on the CPG industry while trying to encourage its use in a particular country. To cite a salient example, Brazilians usually don’t have breakfast, because they sleep late at night and consumers in China for breakfast eat hot, soft and savoury, while the North Americans love cold, crunchy and sweet breakfast. This was the difference analyzed by Kellogg Company in 2007 (Veiders, 9th July 2007, Supermarket news). b. Global Competition: In this fast paced environment any CPG company have to constantly innovate and differentiate their product, to maintain or increase their market share. Every year large number of new products are being roduced and capture the shelve space of the existing labels and compete with them.