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Impacts Of Globalization On Swedish Economy And Businesses

2124 words - 8 pages

2. Impacts of Globalization currently and potential impacts in the future

2.1 Current Impacts of Globalization of the Swedish economy.

Globalization is currently becoming an increasing force, driving business sectors to develop more comprehensive business strategies to further enhance their competitive advantage. For instance Globalization has been recognized as an unfriendly benefit for companies looking to take advantage of cheaper labor elsewhere in Asia (Soh, p1. 2013). According to Soh (2013) to keep its supply chain cost-efficient, massive Swedish companies such as IKEA have limited their scope of their manufacturing within Sweden and rely on a global sourcing and global manufacturing approach. IKEA have chosen the path to stay locally based to help stimulate the local economy through their massive exportation of furniture internationally. Overtime, more companies have outsourced their production facilities to stay competitive; the Swedish manufacturing industry will eventually shrink in scale, which can have detrimental impacts on the domestic economy (Soh, 2013). Swedish industrial designers who choose to manufacture their products locally can face the challenge of price pressure due to increasing costs creating limited options in complex manufacturing techniques. This is partly why Swedish manufactures have to keep manufacturing as simplistic as possible while trying to enhance their innovation within their limitations.

2.2 Potential future impacts of Globalisation of the Swedish economy.

Globalization has also raised concerns on quality of output such as Ericsson and their Joint venture with Sony to launch the Sony Ericsson. Ericsson is a Swedish brand, and their joint venture has lead to outsource their productivity of communication devices on the assembly line in Asian Region’s such as China and Japan. Potentially resulting in reduction of quality due to the materials and labor used to assemble the final product. The low costs of products being sold has led to consumers to make simplistic decisions rather than think about brand loyalty towards the origin of the product. Ikea is the complete opposite, when it comes to production of good, due to the fact it being home based production. To consumers Ikea is known for producing long lasting products for lower costs, creating a strong brand loyalty worldwide.

3. Economy impacts.

3.1 International Sector

The component of the Swedish economy over the last ten years has been the international sector; this includes the manufacturing industry and other business related services. “This sector accounts for around one third of the Swedish period has been the economy, and its value added grew by 4.3 per cent per year from 1993 to 2010” (McKinsey & Company, 2012, p. 10). The report produced by McKinsey & Company, 2012) highlight that as of 2012 the international sector has achieved a rate of annual productivity growth of 5.7 per cent, which is considered to be above international...

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