Globalization And Arbitrage Strategies

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Recommended: Negative effects of globalization

The general public and policymakers have mistakenly perceived an exaggerated view of globalization throughout the years. The greatest misconception among many about globalization is the overestimation of its impact on the U.S economy. Globalization is the method a company uses to diffuse internationally benefiting from the free flow of exports and imports within different countries. According to Ghemawat’s article “Globalization in the Age of Trump”, globalization has been the culprit for major financial events and trade wars, while maintaining a steady rate throughout the years. Globalization is expected to continue advancing despite President Trump’s attempts to enforce localization by generating a trade war with foreign nations.
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Aggregation, is a strategy that helps businesses extend beyond the border. Adaptation, helps diminish country differences more effectively. Lastly, arbitrage takes advantage of foreign incentives such as low labor costs (Ghemawat, 2017). When taking a look at the most successful global businesses, the incorporation of aggregation and arbitrage make the most sense. With aggregation, companies get to produce at a lower cost compared to their home country. Finding a balance among the three components is the key to success outside the country especially when the threat of protectionism is present (Ghemawat. …show more content…

For example, a country can manipulate their currency and engage in import and exports only when it is beneficial to them (Collins, 2015). Ghemawat wrote that supporting policies that will protect and benefit one another is key to a successful union. If globalization is in the future of a company, being informed of future alliances and policies is of utmost importance. Also, Collins mentioned that countries who share the same financial and governmental interest will combine information that will benefit those involved. In contrast, President Trump’s efforts for localization may cause more harm than good to the economy by forcing it to produce goods and services inefficiently, and eventually destroy alliances that the United States needs (Zoellick,

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