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Many experts believe that the pandemic is going to have a massive effect on globalization. Learn what Benjamin Gordon Palm Beach has to say on the matter.

Will the Pandemic End Globalization: Insights by Benjamin Gordon Palm Beach

The freedom to move around the world, incorporated global supply chain, and successful national economies and interconnected markets have become more or less absent in the last year. According to reports, since March 2020, there have been quarantines, travel limitations, increased unemployment, lockdown, and business closures.

The entire world felt the impact of the pandemic outbreak. And since September 2020, almost most advanced economy got into a recession and the emerging economies are witnessing recession. Most would argue that the dependency and interconnection between countries, with a reason for globalization, might have made the potential and economic public health impact worse for various countries.

Has globalization taken a backseat? Views by Benjamin Gordon Palm Beach

For a while, the globalization of businesses got speeded up by the essential geopolitical events like the slow opening up of China since 1979 and the Berlin Wall fall in 1989. However, before the pandemic, globalization wasn’t as potent as the earlier years. Specific aspects of globalization were getting reversed because of two political aspects: the election of President Trump and the United Kingdom’s vote for leaving the European Union. However, other aspects like the increasing cost of oil, which went up to $147 a barrel back in 2008, and organizations wanting to deglobalize the expensive supply chains have triggered the calls for the globalization reversal.

When mulling on the fact whether the pandemic will leave a permanent mark on MNC strategies, the answer is on how far it will last and the threat of upcoming pandemics. The impact of a pandemic on globalization strategies arrives through four mechanisms:

  • The way the national governments behave
  • The consumer attitudes
  • The mindset of the primary stakeholders and executives in MNCs
  • The economics of the business globalization

The trade-off of the global supply chain

Meanwhile, Benjamin Gordon Palm Beach says for the MNCs, it’s a simple choice between flexibility and commitment. And a commitment to a specialized supply chain that is less costly and offers the required levels of quality, will get the best short-term profit. However, this strategy does pose a high risk.

Every organization needs to develop certain flexibility and duplication in the global supply chain, comprising a guard to secure themselves from adverse bargaining positions. The cost of flexibility and duplication can get high, and the organizations can compromise on a short-term profit margin for their long-term security.

Europe versus Anglo-Saxon and the Asian models

Simply put, the United Kingdom and the United States have an “Anglo-Saxon” structure of corporate governance that mostly prioritizes the short-term interests of the recent stakeholders, instead of the company’s long-term interest. Today, more profitable organizations can afford the short-term expense of flexible supply chains. And for this reason, it’s said that the MNCs that have their base in Asia or Europe that provide security to the organizations in comparison to the shareholders are likely to develop flexible global supply chains.

However, Benjamin Gordon Palm Beach asserts that more profitable organizations can afford the short-term expense of flexible supply chains. It only shows how such organizations are making way for other initiatives, for instance, sustainability.

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