Globalisation And The Benefits Of Globalization
Benefits of Globalization for M/s Sun Shine
1. Economic growth: It will help M/s Sun Shine to grow its economy. GDP growth of an open economy is higher than a closed one because of it access to various national and international markets and better exposure to new and sophisticated technology. A closed economy has no economic transactions with any other economy while an open economy has economic interactions with other economies.
2. Lower costs: Being a part of open economies, M/s Sun Shine can import inputs, raw materials, and technology at cheaper rates. As a result it will have lower cost structure than closed ones.
3. Improved availability of goods and services: The countries which have open economies have access to many countries and hence can use the best and cost-effective among all that are available. India has been able to use cheap Chinese goods due to open trade.
4. Global prosperity and flow of productive resources: Benefit of both M/s Sun Shine and its customers is there because there will be exchange of raw materials and other goods with each …show more content…
Incentives for research and adoption of innovations: The countries that have human resources can develop new products and technology. M/s Sun Shine can use the market of these less-developed countries to increase trade.
6. Raise cheaper loans: M/s Sun Shine will not only gain on the customer end, but will also have access to financial markets of the countries of these countries. In this way, it will be able to raise cheaper loans than its home country.
Demerits of Globalization for M/s Sun Shine
1. Open economies are dependent on each other and this makes them prone to unavoidable risks like trade cycles. There can be no better example than the American recession that had affected the whole world and many business sectors. Being a part of the global market, M/s Sun Shine can also become susceptible for such mishaps.
2. There can be undue political, economic and cultural risks due to import dependence on other countries.
3. Some countries have become prone to large indebtedness as a result of large scale increase in international capital flows. There is also a risk of being unable to repay the debts.
4. Due to different currencies of different countries, problems of foreign exchange can be