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Globalization means the integration of the societies and economies. With the changing business
world, the opportunities have not been only left limited to the nation boundary but these have
been expanded to the different regions within the globe [ CITATION TCl03 \l 1033 ]. Now a
days, the trade is not as difficult between two countries even a far from each other as compared
to a decade or two ago. It is the primary rationale for globalization, as the trade barriers are
reducing across borders. Even the countries now a days have started giving status to other in
terms of trading, it has not only been made easy by the governments to attract local investors but
also the foreign players to invest in the country. The other indicator of the globalization is
increased communication due to advancements in media as there were not too much channels 20
years ago and due to current media fragmentation, people are aware of the foreign brands and
they can easily make a comparison in different products by different players even outside their
country. Similarly, the technological advancements have made “globalization” expanded, as
advancements in hardware, software as well as telecommunication has increased the ability of
people to access diverse information on single click. At the same time, the cross border
movement also is giving boost to globalization, the transportation hasn’t only made the
movement of people possible but also the movement of goods is not difficult these days. With
these changes, the cultural exchange programs have been designed by different countries in order
to make the people aware about diverse cultures, the countries do have education exchange
programs at the students’ level which helps the students to share culture [ CITATION MMc92 \l
1033 ]. Finally another important aspect of enhanced globalization is the foreign investments,
there are financial brokers which do provide the option of purchasing securities of the
international firm. The organizations like Tesco have taken a lot of benefit from “globalization”
as it is currently operating in more than 18 countries with diverse culture and generating good
financial results for its stakeholders.
Globalization do have good for the customer, as the customers can have larger number of option
in the selection of the product or services, and also in this way their bargaining power increases
which may provide result them the same products at the lower price. It also makes the standards
high for the quality of products as well as services, and customers can have the finest quality
offerings due to intense competition. It also leads to improving social links within the countries,
which can provide the long-term benefits [ CITATION PPr05 \l 1033 ]. While at the same time,
there are certain disadvantages for globalization, like; it can lead to unemployment due to cheap
imports, it can also lead to the intense competition for the infant industries, with that some of the
companies dump their products which are then exported to other countries and it may be harmful
as it can lead to too much lower cost availability of products due to which the local players have
to bear the financial loss. With certain advantages as well as disadvantages there are number of
challenges for the force of “globalization”, like; the benefits of the globalization can’t be
distributed to all countries, globalization also leads to instability of the environment and makes
the processes to change in the rapid pace, globalization can also have the negative impacts on the
human rights in terms of lower wage rates for the employees in under-developed or developing
countries, and also there is the benefit of natural resources with some of the countries
[ CITATION HNS84 \l 1033 ], so it becomes difficult to transfer that benefit to other countries.
Talking about Tesco, it has availed benefits of globalization in terms of number of stores around
the world, and has improved its product line in terms of number as well as in terms of quality.
But at the same time, there is a challenge of the strong intensity, which is present in terms of
increased competition, as globalization is giving boost to increased competition which might be
good for the customers but it is not good for the company.
Going international is not an easy task, there are number of concerns for which some of the
organization do limit themselves to the specific regions of the world, ad these concerns act as
barriers which inhibits globalization. Ethical issues are one of those, the organization must act
responsibly where-ever they go. Otherwise they do face ethical dilemmas, which is not good for
a company [ CITATION MLD03 \l 1033 ]. There are two main factors which lead the company for
ethical behavior in an international market; the first is to develop the competitive advantage in
the host-market and the other one is to avoid being perceived as irresponsible. These objectives
pressurize the company’s management to adapt certain changes as well as to perform certain
corporate social responsibility programs in the host market. The need is always there to respect
the cultural identity, let’s take the real business example; France fined the BodyShop for using
English in their French stores, Finns are not happy with Multinational organizations to introduce
non-Finnish architecture in their Finnish facilities. Now the question arises that why there are
these kinds of issues, the countries should have focus on the developments and the foreign
investments within the region, but the simple argument for it is “the existence of cultural
identity, which differs from country to country”. Similarly there are some of the ethical issues
that are needed to be considered before going international, like; corruption and bribery
[ CITATION Hen99 \l 1033 ]. As bribes are the payments or promises to pay cash of anything of
value and it affects both; the performance of the company as well as the economy of the country.
High level of corruption is related with the lower national growth rates and lower level of per
capita income. There have been number of scandals reported in this respect, like; a Chinese
government official was jailed (head of the state food and drug administration) who was
convicted for accepting bribes in return of approving certain medicines flow within the country.
Nike is another example which has been affected by the issue of child labor [ CITATION Mic92 \l
1033 ]. These kind of issues have the major impact on the corporate governance which is the
system by which corporations are controlled and directed, the management actually needs to take
the local culture in the consideration while designing the management strategies for the business
operations in host country. The companies are needed to take the corporate responsibility, if not
followed then it can lead to legal headaches for the corporations, consumer boycotts, lowering
employees’ morale, and the negative publicity in the host market. Similarly in terms of the
cultural differences, according to the Hofstede’s cultural dimension theory, there are following
dimensions of national culture; power, individualism vs. collectivism, uncertainty, masculinity
vs. femininity, long-term orientation vs. short-term orientation, and indulgence vs. restraint.
These are the dimensions which differs across nations, some of the Nation’s prefer individualism
over collectivism, and some prefer long-term vision over short term objectives. Similarly there
are ethical frameworks; like hedonism which implies that pleasure is the chief good thing in life
and the actions should be leading to pleasure, the other approach is utilitarianism which implies
that good is that which brings great benefit to great number of people, one of the others
approaches in Marxism which implies that good is which that promotes social and economic
equality in the society. These dimensions and framework have the strong impact on the strategies
designed by the management [ CITATION PZi00 \l 1033 ] . Due to globalization, companies have two
options, either to standardize (use same marketing mix in different markets) or to adapt (use
different marketing mix for different markets). But these options have their own disadvantages,
like; Standardization may lead to face the loss of responsiveness from the customer because
when an organization expands its products internationally, cultural difference regarding different
taste of customer leads to the reduction in the response of customers towards the products.
Customers have different tastes regarding products and services and buy them every time for
different reason due to continuously changing world. In the standardization the products and
services are targeted globally, but in many countries or across the borders, organizations may
face trade barriers and duties like government an institutional constraints which is the
disadvantage (transportation cost) for the success of the organization. Standardized products are
same whenever customer buy it, so its loss its uniqueness and totally undifferentiated [ CITATION
IPA91 \l 1033 ]. Some aspects of the business including advertising, customer service, pricing and
distribution driven by the local market situations to be the successful organization in the
competitive market so standardization is not suited these aspects. When an organization produces
same products, then it may loss innovation in its products and operations which is the main
factor of competition in the changing global world. Standardization is the product oriented
approach while for the success of organization; the customer oriented approach is most
beneficial [ CITATION IBB93 \l 1033 ].

Globalization also poses challenges to the company in terms of external environment, for
example: Tesco is currently operating in more than 14 countries, so it is one of the biggest threat
for the company, as different countries have different political conditions. Just like in case of
employment laws, the company is needed to take care of the legislative issues by different
governments. The company is still too much dependent on the UK economy even though it do
have stores in number of countries, so the factors like demand in the market, pricing of the
product, inflation, and interest rates have high impact on the strategies of Tesco. One of the key
factors in social aspect is the consumer behavior, as Tesco is operating in food business, while
the preferences of people in United Kingdom is changing day by day and people are more
inclined towards the health consciousness while looking for food, so due to these kind of changes
Tesco has to enter in to non-food category in order to have the presence in the market. Future
changes of such kind are also needed to be addressed. The improvements in the technology can
be the advantage for the business, the technology that is being used in the Tesco stores include;
shelf labeling, electronic point of sale, check-out machines, electronic fund transfer system, and
radio frequency identifications. Customer are also demanding improvements in the systems, as
well as it is helpful for the company to improve performance in terms of business processes.
Similarly, the performance of the organization is directly affected by the legalities imposed by
the authorities, like; food retailing commission has set the standard prices for the food products,
and Tesco had to reduce its pricing by the fair margin. So, these kind of changes are do affect the
results for the company. To overcome the threat, Tesco actually reduced the prices on the
promotional products but increased the prices on the regular product lines which helped the
company to recover the margins from the other section. So, company like Tesco needs to be
reactive in nature. In terms of environmental concerns, the company needs to perform certain
corporate social responsibility programs. Cutting wastage, decreasing usage of extinct resources,
and reducing damage have been the key activities followed by Tesco. Talking more about
barriers there are different sort of trade measures which are of most concern. Standard related
trade measures known in World trade organization plays a very important role in the global
trade. There are different sort of restriction on different markets and the businesses which are
operating in the related marked have to follow those rules and regulations. Different sort of
measures have to be taken to determine if the product is conformed to the technical
regulations. There are a number of procedures which are used to measure the conformity of
the products such as technical regulations, testing, and certification. The product has to pass
through these regulations before going for standardization. Then there are different sort of
cultural barriers which are faced by different companies when they are opting for globalization.
It is difficult for companies to do business in other countries rather than in the home country
because companies are totally aware of the home culture as compare to the other countries
[ CITATION IBB95 \l 1033 ]. As the globalization has increased and trade between countries has
also increased to a good level so different cultures have met and it is unavoidable that cultures
don’t meet. When the globalization occurs it becomes harder for people of different countries
to communicate with each other. Globalization also become harder because of the differences
in the culture, there are a lot of cultural differences in different parts of the world.

Expansion to the other country requires a lot of knowledge about the other country in which
the cultural data is of most importance because the businesses have to learn about the
purchasing behavior of customers and learn about their preferences [ CITATION SCJ89 \l 1033 ].
Ethical barriers are also of most concern, there are a lot of ethical issues which are faced by
companies while expanding their operations to the other countries. There are a lot of
international laws and declarations to cover the ethical concerns of different countries but
instead of those rules and regulations there are different issues which are needed to be
covered.
The country that has been selected for the analysis is Pakistan, which is having following ranking
in terms of Globalization Index:

Ranks Scores
2012 2011 Change 2012 2011 Change
Overall 136/139 133/139 -3 5/50 5/50 0
Trade 136/139 135/139 -1 3/50 4/50 -1
Capital 108/116 107/116 -1 7/50 7/50 0
Informatio 105/139 103/139 -2 20/50 19/50 1
n
People - - - - - -
Considering the current situation of Pakistan, there are number of problems which are causing
hindrance to the forces that foster the economic trade with other countries [ CITATION CIA14 \l
1033 ]. Like; Terrorist activities have been the serious problem facing our country for the last
decade; those are continuously damaging the positioning of country in international business,
similarly poor law and order has been the biggest challenge faced by the country. According to
the president of Lahore Chamber of Commerce and Industry, due to terrorist activities, goods
that are being manufactured in Pakistan are becoming expensive and uncompetitive. Pakistan has
not only loss precious lives and infrastructure, according to official estimates it has also suffered
a loss around $ 35-40 billion since [Link]‟s economic growth came to a near halt at
around 2.00 per cent in fiscal year 2009, not only as a result of the global financial crisis, but also
because of internal issues (Pakistan Statistical Review of War Against Terrorism; 2009). These
included a war on terror launched by security forces in the North West Frontier Province
(NWFP) now a day known as Kyber Pakhtun khwa and also on the Federally Administrated
Tribal Areas (FATA) bordering on Afghanistan. Reduced investments [ CITATION Wor14 \l 1033 ] ,
flights of capital and lower growth rate are the resultant products of these issues in the economic
terms. Exports are also going on the negative side due to the low production, shift to domestic
sales, and disruptions in international market which is causing lot of damage to the economy of
Pakistan. Rehabilitation cost is increasing and it is the point that why the government is not able
to work on new developmental projects which can have the positives for the economy.
According to the National Counterterrorism Centre, Pakistan is now on the second position after
Iraq in the list of the countries which are being affected by the terrorist activities. The graph
below represents some of the statistics.
These statistics shows that how worse the condition of Pakistan is in respect to security. (Institute
of Economics and Peace) The institute known as IEP, has worked on developing the index to
find the scores of the countries on terrorism. There are 158 countries listed on Global Terrorism
Index, and the table below shows the score of the position holders.
Unfortunately, Pakistan has second rank in (Global Terrorism Index) with the score of 9.05.

The fatalities that have been caused due to the terrorism in Pakistan are being shown in the
following table, according to (SATP Pakistan database).

Year Fatalities
2004 863
2005 648
2006 1,471
2007 3,598
2008 6,715
2009 11,704
2010 7,435
2011 6,303
2012 6,211
It reflects the intensity of terrorist activities in Pakistan, and shows that how much these have
been damaging and are continuously destructing security in Pakistan.
There is more need of check and balance on each and every aspect of conducting business due to
terrorist activities. Terrorism has been affecting and will continue to affect business in number of
ways within Pakistan, the most of the concern for the businesses in regard to the terrorist
activities is the cost incurred for the purpose of the security which includes the installation of the
security systems within and outside building and also the equipment’s which are being used in
ensuring the safety of customers as well as employees [ CITATION RAN93 \l 1033 ]. The issue can’t
be resolved by the business, single handedly as governments need to play their role because
terrorism is the mutual concern of the business and government. The cost like insurance damages
the financial position of the business and is incurred mostly due to the terrorist activities (G.
Sudar, Terrorism and International Business Environment). The terrorism affects many aspects
of the businesses, like the main impact goes on to the movement of the goods and the people.
The security has to be tightened in a way which ensures full protection of these resources. As,
after terrorist attack in USA on 9/11, General Motors and Toyota banned the movement of their
staff internationally for a certain period which depicts the certain action taken by the company on
terrorist activities. Similarly Ford and General Motors had to stop production of their goods, until
the thorough checking of materials on the Canadian border. It impacted their supplies worse as
manufacturing got delayed. From the past decade, companies are having their inventory systems
under the model of just in time (JIT) and the main reason is to minimize the cost as there is less
stock keeping and goods are acquired as needed, but it does suits to the company if terrorism is
on its hype. Like, the company will have no stock to sell their products to the consumers and
terrorist activities will surely impacts the time of the supplies. So even it becomes costly to
operate in just in time (JIT) when the country faces terrorism. Due to these kinds of activities,
audio and video conferencing are the means to which the executive have confined their offices.
Though that saves some cost and time but somehow there are places for meetings where physical
presence suits more than using these mediums. It is becoming quite important to keep the record
of the data, if there are chances of getting the data lost in office attacks. So, keeping the back-ups
of the data require effort as well as cost. Another point is dual sourcing; the companies do need
to have second option for the sourcing due to terrorist activities while considering of expanding
their operations in Pakistan. As if, the sourcing company get damaged from the attack then it will
damage the business in a way that its supply will get late and it will not be able to produce and
sell further until the supply from that particular company.
The exact relationship between terrorism and business is difficult to measure as it is impossible
to find the intensity of future terrorist attacks. So, it becomes challenging to find its impacts on
the macro level of business operation. The macro level also refers to the impacts even across
borders, for example at the micro level the bomb attack that was done on a night club in Bali
(City of Indonesia), it affected the nearby businesses like hotels, restaurants and transportation.
While at macro level, its impacts extended to the perception of the residents of other neighboring
countries particularly in terms of their perceived security.

The impacts can be further classified as direct impacts and indirect impacts. The direct impact’s
best example is the decline in the spending of nearby residents in the upper case as it is the panic
change in the typical activity. On the other hand indirect impact reflects the long term action
taken by the stakeholders of that event, for example, the making of security body by the
government of Indonesia after that bomb attack as it will continue to operate even in future. The
parties who are being damaged by the so called terrorism includes; consumers, producers and
government. The consumer demand get distorted due to these activities, and the producers suffer
from loss of revenue due to the distortion in consumer demand which leads the government to
collect less amount of taxes which were to be used in the welfare of the society. Due to this,
short-term shortages may occur and there may be the rise in the business insurance packages.
Government imposes new laws after such activities which become essential for the businesses to
follow in its operations and it may involve heavy costs in terms of employees training or
installation of new security systems, similarly there are issues related to current infrastructure
within Pakistan, people have low purchasing power which results in lesser savings for further
investment.

Certain changes for Pakistan, in commencing International business with current security
situation are: Consumer demand tends to decline due to the fear and panic that, ensues on the
wake of the terrorist attacks. Changes do occur in supply of the inputs, resources and services.
Government policies and laws are enacted to deal with terrorism which causes certain alteration
in business environment. The nature of relationship among countries change due to terrorist
activities.

Though globalization has encouraged the companies to expand their operations in international
markets, as it highlights the opportunities of growth, low production costs and sometimes the
advantage of having cheap labor, but at the same time these markets expands the sphere of risk
as it prolongs even across the borders, and similar is the case with Pakistan. So, it is the
challenge to choose the appropriate strategy to operate in international market and to have the
decent reputation in terms of international business.
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