The Effects of Globalization and Foreign Direct Investment Essay

The Effects of Globalization and Foreign Direct Investment - Essay ExampleThis has served many companies in producing cheaper goods by taking use of the minor cost of labor and machineries involved, from antithetic countries. The other side of globalisation that is also prominent is the decline in product quality, by outsourcing cheaper equipments and commencement cost of the untaught labor (Pragmatic Outsourcing, 2012). Employing the trend of globalization has increased significantly in the industrial sector of the European countries. The increase in population and global competition has narrow the profit margin of many industries and has ignited the need of producing more volume of products, to beat other competitors (Isidro, 2011). Hence, many European industries utilize the cheap labor, fuel and low government taxes of under developed nations to produce bulk quantity of their products within the limited budget for it. A flashback of the European industries would lead to the fact that globalization started from the fabric industry in the early 20th century and then it was adopted in electronics, furniture and books publishing sectors (Blass, 2005). With the change in policy by Markets in Financial Instruments Directive (MiFID) of trade tariffs and eradicating the concentration rule in Europe, monopolization in industrial sectors was broken to a great extent. It allowed several new companies to write in code into the corporate grocery and intensify the business competition (Blass, 2005). In this respect, the Italian footwear industry is considered to have gone through considerable changes in its managerial and production strategies, by implying globalization in its system. Historical trade data of Italy suggest that its footwear sector that has a prominent contribution in its boilersuit GDP and has a high impact on the international footwear market (Milan, 2010). However, present market position and sales figures present a different scenario of promin ence of the Italys footwear industry. Pressure of the international market and emerging entrants has forced Italys footwear industry to delocalize their resources, which has resulted in losing their distinct image. The vertical integrating methodology of these industries was replaced with a global supply chain network, which resulted in less flexibility and control over the finished product. This paper aims to provide hypotheses of the effect of globalization on Italian footwear, based on the understanding and evaluation of sales figures and current standing in national and international market. The will use the schoolman and theoretical data to compare other footwear industries with the Italian, to justify the hypothesis presented (Larch, 2005). Theoretical Overview The pattern followed in the Italian footwear industry involves conflicting grade investment in the production cycle. Since, Italy footwear sector is largely delocalized several of its resources are involved in produ ction and designing is being outsourced (Amighini & Rabellotti, 2003). This brings the ownership of foreign investors in different production units carried out in other countries. One essential thing to consider is the formation of several business groups, which is the result of market fragmentation. Such business groups act as the middle man between the actual producer and the company been outsourced. Therefore, there are