Impact Of Globalization On Fashion And Pharmaceutical Industries Economics Essay

Globalization is a wide construct and it has been defined in many ways by different writers. Harmonizing to Freedman ( 1999, p 156 ) and Woods ( 2000, p78 ) , globalisation means “ assorted quantitative and qualitative developments runing from a dramatic addition in international minutess, particularly in finance, to the international and spacial reorganisation of production, the planetary harmonisation of gustatory sensations and criterions, liberalisation, deregulating, denationalization, the reaching of new information engineerings, the planetary diffusion of information, values, and thoughts, monolithic population transportations, tendencies towards a cosmopolitan universe civilization, the spread of a world-wide penchant for democracy, and the eroding of the state province ” . Globalization has different dimensions like economic, cultural, political and environmental. It has different impacts on different industries with changing strengths based on these different dimensions. In this essay, the impact of globalisation on manner and pharmaceutical industries are examined and compared. This is to analyze the differing strengths with which globalisation affects these two industries.

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In the following two subdivisions, the different impacts of globalisation on manner and pharmaceutical industries are discussed individually. In the last subdivision, the impact of globalisation on both these industries is compared and decisions are made.

2. Impact of Globalization on Fashion Industry

The most of import elements of manner industry are fabric, vesture or dress and footwear industries. It besides includes nutrient, lodging, music, cars, perfumery and beauty merchandises. Harmonizing to Davis ( 1992 ) , one chief separating characteristic of manner industry is its ability to distinguish between different societal categories or otherwise called societal distinction. For illustration, the most stylish points are ever really expensive and can be purchased by the upper category while the in-between category goes for cheaper points. This made it necessary to bring forth the stylish points in inexpensive monetary value in the manner industry to accomplish the merchandising mark ( Graham et al, 2006 ) .

Globalization affects manner industry through the production, distribution and selling channels. One chief impact of globalisation is to maintain the people informed and updated on each and every new tendency in the manner industry through old and new media like wireless, telecasting, newspapers, cyberspace, nomadic phones etc. Consequently, now there is a inclination for copying Western manner all over the universe replacing the traditional vesture in each state. For illustration to foreground secularism, a prohibition has been imposed on adult females have oning headscarfs in France by sing have oning headscarf as a traditional spiritual symbol. The authorities considered have oning headscarf adversely impacting the immigrants to absorb into the Western civilization, which is called cultural assimilation ( Huntington, 1997 ) . This cultural assimilation is an of import impact of globalisation in manner industry.

The updating of new tendencies in the manner industry was based on the economic systems of scale attack. This is intended to obtain new tendencies in manner to all markets at appropriate times and at the correct monetary values for cut downing the entire production costs. The demand for cut downing production costs has resulted in the inclination among the developed states to outsource production to developing states like China where the production will be cheaper. This has adversely affected the local concern in developed states and violates the economic systems of scale rule. The local industries got affected severely because of this outsourcing of production and many of them were non able to go on runing accordingly. Eg: bring forthing a trade name, jersey in Western China where no lower limit pay ordinances are at that place alternatively of bring forthing it in Australia for cut downing the production cost. In this instance, accomplishing high net income border in Australia is really hard compared to that in China ( Purdy, 2000 ) .

Globalization has changed this phenomenon nevertheless by cut downing the transit and communicating costs and thereby increasing the handiness of people to new manners all over the universe. This has besides increased the velocity of production in manner compared to the olden yearss. The modern communicating tools like cyberspace forums have enabled the development and spreading of new technological inventions, which has increased the effectivity of production in all states. Globalization has therefore resulted in more exchange of thoughts and information sing the handiness of fabric cloths and production, which has besides resulted in a rise in the demand for merchandises.

The effect of all these was the trade name names monopolising the manner industry and the spread of individualistic attitude alternatively of station mercenary particularly among the in-between categories. Base on these planetary conditions, the tendencies in manner industry were to allure the persons for self-improvement alternatively of accepting them as they are. The most seeable illustration of this can be seen from the turning tendency of going thin theoretical accounts as the ideals of female beauty. This has proved to be anatomically more right and has several psychological and physiological impacts. However, the negative side is that this has created by the force per unit area among female theoretical accounts for going thin theoretical accounts ( Collins, 1997 ) .

The virtues of globalisation in manner industry can be considered as the displacement in the tendencies among the in-between category from purchasing outsourced merchandises under the influence of station mercenary political orientations to purchase more locally produced 1s. However, the job is that the population of in-between category is seen to be diminishing compared to the other groups. In add-on to these, another impact of globalisation was the displacement in the production from developing to developed states to travel with the rule of economic systems of graduated table largely under the influence of new and old media all over the universe. However, this can non be considered as a favorable tendency particularly under the scenario of the present economic crisis ( Graham et al, 2006 ) .

Harmonizing to Abarnathy et Al ( 2003 ) , the globalisation of fabric and vesture industry is non a new one and its history can be traced back to even the 12th century. Harmonizing to this survey, in the earlier yearss the globalisation was concerned with motion of labor and capital across states based on comparative factor costs and productivenesss for labor, capital and other inputs between states and their impact on merchandise costs, alterations in international exchange rates, quotas and duties. In the present scenario, the motion of labor and capital is based on some other facets of distribution in add-on to these like tilt retailing, merchandise proliferation, onshore and offshore outsourcing. The Multi Fibre Arrangement that has been bing in the fabric industry for many old ages ended in 2005 with the determination of all WTO members to extinguish all quotas on fabrics. China after accessing WTO in 2002 became a quota free state in the WTO in the same twelvemonth.

The overall image in the manner industry therefore shows that globalisation has resulted in falling transit and communicating costs.This has significantly affected the growing of the markets in the industry.The construct of thin retailing has developed uniting reduced transit and communicating costs every bit good as new proficient inventions. The chief job nevertheless with the thin retailing is that it has enhanced the pricing force per unit areas ( Abarnathy et al, 2003 ) . As a portion of globalisation procedure, the quotas on fabrics besides were removed with consequence from 2005.

3. Impact of Globalization on Pharmaceutical Industry

In the instance of pharmaceutical industry, globalisation has its consequence through the combination of technological and economic dimensions ( SickBlog, 2009 ) . The focal point of this industry is to research, develop and administer drugs. Globalization procedure affects the industry through three major sections viz. production, research and development and selling. In the present epoch of globalisation, it is reported in many surveies that large companies in the industry, which were one time in their better times, are now in hard phases chiefly due to inefficient Research and Development ( R & A ; D ) ( Dufala,2007 ; Pouw,2008 etc ) . The established companies are reported to hold failed in bring forthing new points into the market chiefly due to the lifting R & A ; D costs. For illustration, Pfizer, which was the 4th largest transnational pharmaceutical corporation in the universe, is now confronting really bad clip with a 10-year market exclusivity granted to new drugs.

Globalization has resulted in enhanced handiness of information, which has changed the function of physicians ( Dufala, 2007 ) . For illustration, in the instance of patients who have information from cyberspace, the determinations made by physicians are found to be questionable. Therefore, the enhanced handiness of information has affected the value concatenation in pharmaceuticals. It has besides made the regulative bureaus to be more cautious. Therefore, globalisation procedure has affected the selling by switching towards patients.

As a effect of globalisation, the generic markets are reported to be turning by taking advantage of the market exclusivity of original drugs and bring forthing in low cost topographic points for eg: Ranbaxi and Teva. In add-on to these two developments, may little biotechnology companies face jobs due to the trouble in financing the undertakings in these companies ( Dufala, 2007 ) .

All the developments as a portion of globalisation procedure have resulted in heightening competition in the industry while it has non increased force per unit areas for restructuring unlike other industries. Contract Research Organizations ( CROs ) have outstanding function because of globalisation procedure ( Shuchman, 2007 ) . The globalisation has resulted in increased amalgamations and acquisitions of the CROs. Examples of CRO s are Pharmaceutical Product Development ( PPD ) , Quintiles, Parexel, Kendle and Covance. The CROs are technologically really advanced and makes Se of new concern constructs. Therefore, it can be seen that CROs were the chief histrions who were able to use the benefits of globalisation.At the same clip large pharmaceutical companies were non able to make so.

It is argued that globalisation has improved the conditions of developing states by bettering entree to medicine by fall ining organisations like World Trade Organization ( WTO ) . This has been enabled through compulsory licensing or by importing cheaper versions of drugs before the termination of patents ( Slick Blog, 2009 ) . On the other manus, it is argued that the Trade Related Aspects of Intellectual Property Rights ( TRIPS ) , which increases the range, continuance and coverage of the industrial patents of the WTO members, has marginalized the traditional cognition of local people. Furthermore, it has been argued that the growing and development of the domestic pharmaceutical companies are adversely affected by TRIPS ( Pouw, 2008 ) . However, exceeding instances are the Indian pharmaceutical companies like Ranbaxi and When Cipla, which have obtained important growing and expanded their operations.

It is besides argued that globalisation has adversely affected the development states through some other ways. In malice of the TRIPS holding clause that exempts states enduring from diseases like AIDS from patent observation, states like America opposed this through international jurisprudence suits.Thus many developing states like South Africa were left in a hard state of affairs ( Slick Blog, 2009 ) . Hence, it is argued that TRIPS has supported in set uping the laterality of some large pharmaceutical companies and lifting their presence worldwide ( Pouw, 2008 ) . The pharmaceutical industry has fond out the solution for this by outsourcing the production and research and development procedure as a portion of the globalisation procedure. These were intended to do them more cost effectual in response to their rise costs. However surveies have shown that these costs have been overestimated ( Sampath,2005 ) .For illustration, the mean cost of developing a pharmaceutical drug includes the costs of borrowing money to finance the R & A ; D procedure and the selling costs of the merchandise in add-on to the costs of R & A ; D. This has overestimated the entire R & A ; D costs.

In add-on to these, as a portion of the globalisation procedure, the large pharmaceutical companies are forced to execute many human tests with their new drugs before let go ofing them to the market. However, the chief job with this is that most consumers are reported non to be willing to take part in this procedure. For illustration, the consumers were non willing to take part in the stage three test of Macugen, the oculus disease drug by Pfizer ( Shah, 2006 ) .

It is argued that the reforms as a portion of the globalisation procedure has resulted in a national ruin by the development states through gap of markets and through the loans provided by IMF and World Bank attached with rigorous conditions ( Harvey, 2005 ) .

Globalization has besides affected the selling procedure in pharmaceutical industry through forestalling the direct to consumer selling in most states and advancing advertizement through planetary media. This type of advertizement through planetary media is reported to hold created deformed images of wellness and diseases ( Petryna and Kleinman, 2006 ) .For illustration, the diseases like AIDS, are picturized as incurable by these advertizements which has resulted in the marginalisation of many developing states. Furthermore, most of the advertizements have been related to allergic diseases instead than the existent wellness crises. This has resulted in making deformed images of many diseases and medical specialties.

Overall, it is reported that the globalisation procedure has increased the net incomes in pharmaceutical industry through cut downing R & A ; D and production costs. This has necessitated the demand for sustainable capital, which has resulted in the amalgamations of large pharmaceutical companies. Therefore, the large pharmaceutical companies have started monopolising the industry go forthing the developing states to be exploited for inexpensive labor and drug testing ( Pouw, 2008, ) . The outsourcing procedure, which is supposed to countervail the lifting costs in the industry, is reported to hold negative deductions as discussed here. The public private partnerships, where the authoritiess and large companies work together for deciding wellness crises, nevertheless are expected to convey many advantages for the development states ( Bull and McNeill, 2007 ) .

4. Decision

In this essay, the impact of globalisation on two industries the manner industry and pharmaceutical industry are discussed. In the instance of manner industry, the globalisation impacts are through the combination of cultural, technological and economic dimensions. In the instance of pharmaceutical industries, the impact is through a combination of cultural and economic dimensions. In the instance of both the industries, globalisation has resulted in diminishing the transit and communicating costs. Furthermore, it enhances the handiness of information through the universe media. In the instance of manner industry, these have resulted in a displacement from utilizing the outsourced merchandises by the in-between category to more locally produced points based on the economic systems of scale rule. This has resulted in switching labor from developing to developed states.Though this is intended to do the production in a more cost effectual mode, it is non obtained to be favorable in the present economic status. The impact of globalisation has affected the production, distribution and selling sides of this industry. The increased handiness of information had its impact through the cultural dimension of globalisation in the instance of manner industry. The positive impacts of globalisation in this industry include facets like heightening the velocity of production, cut downing clip slowdown between production and bringing and making an individualistic attack asking the demand for self-improvement. At the same clip, negative impacts include the shifting of labor from developed to developing states.

In the instance of pharmaceutical industry, the focal point is on the research and development of drugs in add-on to its production. Hence, globalisation affects this industry through three channels production, research and development every bit good as selling unlike the manner industry. The decrease in transit and communicating costs had its economic and technological impacts. Though this has helped in cut downing the production and R & A ; D costs, this had created laterality for the large pharmaceutical corporations. The enhanced handiness of information made the populace more cognizant of the inauspicious effects of drugs and hence made the determinations of physicians in some instances questionable.This can be considered as a positive facet of globalisation in the industry. At the same clip, the enhanced communicating through world-wide media has created distorted images in the heads of public sing many diseases and the construct of wellness itself. Thigh the globalisation procedure has increased the profitableness of the industry ; this has resulted in the monopoly of transnational giants in the industry. This has adversely affected the domestic pharmaceutical companies with merely a really few exclusions.

In the instance of pharmaceutical industry, globalisation procedure ahs resulted in making outstanding function for 3rd party participants like the CROs unlike the manner industry. Many large companies who were earlier profitable got adversely affected due to the lifting production and R & A ; D costs. Outsourcing which was fond as a solution to this had many negative cultural and economic effects. However, compared to the manner industry the effects of outsourcing were non so intense in the pharmaceutical industry, which can be understood from the treatment.

In the instance of manner industry, Quotas and duties were eliminated on fabrics as a portion of the determination of WTO members. In the instance of pharmaceutical industries, TRIPS understanding was aimed to help the developing states by increasing the entree to medicine for developing states. At the same clip, TRIPS was obtained to go forth the developing states in hard state of affairs by marginalising them in many instances. In the instance of manner industry, the globalisation procedure has resulted in increasing competition and restructuring of the industry with a displacement of labor from developing to developed states. However, in the instance of pharmaceutical industry, though globalisation ahs resulted in enhanced competition, it has non resulted in the restructuring of the full industry. Rather, it has created the outgrowth of the 3rd party participants, the CROs that made usage of new concern constructs and technological inventions.

The above treatment therefore shows that globalisation procedure has affected both the manner and pharmaceutical industries but through different strengths. The dimensions of globalisation through which it affects both the industries are besides small bit different. In the instance of similar dimensions of globalisation besides, the strengths of impacts are different for both the industries depending on the nature and construction of both the industries. Globalization affects both the industries through different channels in malice of the similarities. Hence, it can be concluded that industry specific factors play of import function in finding the strength of the impact of globalisation on each industry. The treatment above therefore shows that industry specific surveies are more relevant in analyzing the impact of globalisation. Though globalisation has both positive and negative impacts on industry public presentation, a generalised image can non be obtained in this respect. Macro surveies may hide many factors sing the impact of globalisation as is clear from the treatment above.

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