Introduction
The main objective of this paper is to understand, analyze, and explore globalization and discuss factors that influence the global business environment. There are many strategic intricacies in the global environment, which will be evaluated in this report. Furthermore, the effects of structures, cultures, and functions on the global environment will be explored. The paper will also cover the changes that globalization makes in an organizational decision making.
Globalization
Globalization is the process through which organizations tends to develop transnational influence in the international market. In this concern, the theory of Marxism will be appraised as it gives an idea regarding the relation of globalization with the cost
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The companies seek markets to do direct investment which it is relatively cheaper or has a low cost of production or operations. To remain competitive, it is important for companies to produce their goods and services at low cost. Globalization has permitted companies to set up their offices and production units in other countries that have abundant resources at low cost. A country’s financial climate is one of major fuel in the influencing of globalization. It can be a magnet which attracts investments, say for example China there is an abundance of cheap labour, vast technologies and the know how therefore persons/ countries will prefer to sent things to be manufactured here, thus will fuel china’s economy. In countries with regard to an oversupply of labor companion to capital which is the row in largest disobedient countries the contrariwise resolution occurs. The international economic integration is also related to the cost management as the business and trading costs differ from one nation to another. Therefore, the respective economic integration process enables the organizations to select and choose in which part of the country they want to operate. Another reason a company thinks about globalizing is because the economy rises, the cost of development also decreases and the number of products increase. Therefore, it can attain economies of scale …show more content…
The value-added taxes have been increasing in Europe and are as high as 22% (Czinkota & Ronkainen, 2011). A multi-national organization exploits their taxes in other countries to evade those taxes. Another challenge for a company to globalize is that building products in those countries might put a technological risk and it might be copied by others.
One of the biggest challenges that a manager finds during globalization is to select the best way to identify a global demographic (Cuterla, 2012). The process of moving from a localized product to an international product is difficult. Environmental concerns are also a huge challenge for organizations. They have to make sure that they minimize the damage done to the environment while using their energy-creating resources. In addition to the benefits derived from tariff reductions, few small companies are able to afford the required finances to acquire these technological advances to continue in the twentieth century. Technological developments have made it possible to outsource services as well, big companies will send their manufacturing and to cheaper labouring countries. This forces major competition for smaller companies in less developed countries. Companies that are unable to do outsourcing will have to find cheap labour force which will burden the company‘s finances. They are faced by trade
This paper will explore the ongoing challenges that today's companies face in the global business environment. These challenges are mostly attributed to unethical business practices, failure to embrace technological advances and stiff competition. The business selected to explore these concepts is the Hersey Company of Hersey, PA. This paper will be divided into seven sections. These sections will:
Globalization can not only affect a company opening an office in another country but it can affect a small local business as well. As the internet brings the world closer together it becomes far more likely that a business that opened with no intention of selling internationally will have customers form different parts of the world asking for their product. For instance a steel company located in Pennsylvania may suddenly find orders coming in from South American factories. How the steel plant chooses to handle this new international customer could mean ...
Many, including the public and governments, misunderstood the concept of globalization, especially in emerging markets with state owned and controlled enterprises. IBM leaders in mature markets had concerns about the impact of globalization. IBM was experiencing a rapid expansion of both workforce and revenues outside the United States. Even though IBM staffed locals in its many worldwide IBM locations, outside the United States it was still a foreign enterprise (Moss Kanter, 2008).
With the advent of the Internet, decreased shipping costs, and the removal of trade barriers, the world market has shrunk in such a way that everyone can be a player. While many businesses thrive solely on serving a small local area, a globalized company has the benefits of increased customer markets, gross production, and brand awareness. Take for example Coca-Cola; this multi-national corporation offers products in countries all over the world, operates in over 200 of those countries with the help of its franchisees, and is the most well-known beverage companies. It is interesting to note however, that as positive as globalization may seem, there are many negative ramifications and a large population of detractors to this movement. While increased product availability is good for profits, if a local market is inundated with imported products, locally grown or manufactured items may be squeezed out, to the detriment of the local economy. Although it is cost effective to have your product produced in another country with low wages, you are essentially taking away jobs from the people of your own country, negatively impacting your national economy. However, if you manufacture your products in a country with higher wages, you must increase your products’ prices which may be harmful to your profits. While maximizing your companies profits is always of great importance, it is essential that you weigh the pros and cons of globalization and its effects on not only your company, but the areas in which you wish to spread.
Today, many companies enter the global market, and some companies have become extremely successful in the global marketplace and others still struggling. In Theodore Levitt’s article “The Globalization of Markets”, he states that a well managed corporation focuses on selling standardized products with high quality and low priced instead of focuses on selling on customized products with high cost. Levitt defines the differences between multinational corporation and global corporation, and adopts many specific examples to proves his view. He defines the multinational corporation who operates in many countries and adjust its product based on the taste of specific region. This will result in a high cost to produce the product because company have to input more resource into each individual product. However, global corporation sells similar product worldwide at relative low cost. According to Levitt, the cultural differences are becoming more and more “homogenized”; therefore, becoming a global corporation will lead to the successful of the company in the global market.
The global marketplace is an area that is very difficult to be successful in. It is for this reason that businesses must compete with each other in an attempt to pip their opposition and gain a competitive edge amongst the constantly changing global environment. At the heart of this are managers and leaders to ensure that the company is able to stay on track whilst maximising revenue and limiting production costs.
As globalization increases, a global strategic perspective will be as important for big companies as for those of medium size. The fast flow of information around the world has caused people to be more conscious of the tastes, preferences, and life styles of the citizens in other countries. By means of this flow of information, we are all getting to be - at different speeds and speaking from an economic perspective global citizens. Nowadays more and more economies have opened their borders to deal and to invest abroad. Specific elements of a strategy, such as market coverage or production specifications can become global. But strategies that are global in all of its aspects are few. To successfully turn a global vision into reality, a company must carefully outline what means for its particular business to go global. This depends on the industry, product, or service, and the extension at which total success requires an internal condition in different parts of the world. So, it is important to recognize that globalization is different for every company or industry. Globalization forces a company to rethink its strategic attempt, global architecture, central competitions, and their complete common product and service mixture. The results can cause dramatic changes in the way the company does business, with who, why and how. So there are five factors that every company needs to be aware of when going global, these are dimensions with the goal of developing and to maintaining a global competitive advantage. In essence, these decisions determine a focus on continuous strategy. These factors are market participation, product/services, intensity and focus of the company's activities, government's role in the country to export, and coordination in the decision making of the market.
In business competition, the world economy has been continuously developed and also influenced on the volume of international trade and financial transactions. One of the most critical issues affecting national economies is the process of globalization (Oknation.net, 2009).
Labor laws, wage disparities, intense competition and fluctuating currency values are the challenges that are making organizations worldwide to compete in marketplace with products requiring a great deal of labor, and it is now getting harder for some of these organizations to maintain employees abroad. As Mello (p. 610) mentioned that a greater percentage of United States workforces are moving their operations abroad to developing nations like China and leaving an increasing number of United States domestic workers without employment. The foreign markets for the products and services are not the only things enticing these organizations to enter these global marketplaces. There are other reasons these companies are joining the global market arenas. For example, the foreign labor markets, this has attracted interest in many organizations to expand globally (Gersten, 1991). The labor force growth rates in developing nations alone will continue expanding by approximately 700 million people by the year 2010, while the United States labor force will continue to grow by only 25 million. This shows that United States’ growth rate will drop and the opportunities for productivity growth rate will increase in developing countries.
What globalization means for the whole business at all? Companies that pretend to compete on the global area faced with the problem of new demand not on...
Globalization remains a pivotal topic in many schools of thought, and continues being a topic of controversy even in local economies today. Perhaps the reason for this is integration and competitiveness the world over. Conceivably, even more than integration, is the competitiveness of organizations, has possibly facilitating the fascination and misconception about of globalization. Nevertheless, globalization has brought about a number of effects influencing the design and geographical location of the organization. However, globalization has effectively placed the world in a bubble, or maybe one could equate the changes to being placed in an envelope.
The recent liberalization of national financial markets, for example of China and India, expands options for companies to accelerate global expansion. Not only are companies expanding, they are also given the opportunities to use resources to the fullest. For example, The Volvo car is made in 38 different nations and states, achieving low production costs, high quality products by simply outsourcing to distribute labor. A strong understanding of the local market will allow companies to target the consumers, meeting their needs effectively and consistently. With this globalization of business, companies can focus on “in the market for the market”. This model allows companies to cut down production and transportation costs, utilizing local resources to create products for the local market.
... A lot of companies have directly invested in developing countries like Brazil and India by starting production units, but what we also need to see is the amount of Foreign Direct Investment (FDI) that flows into the developing countries. Companies which perform well attract a lot of foreign investment and thus push up the reserve of foreign exchange. CONCLUSION Globalization In conclusion, international business is best described as globalization.
Globalization’s history is extremely diversified and began during the beginning of civilization. Now we live in a world that is constantly evolving, demanding people to use resources in locations that are very difficult to obtain certain resources. This could make it completely impossible to operate in these specific parts of the world. However, globalization allows people across the world to acquire much needed resources. Globalization creates the opportunity for businesses to take advantage and exploit the ability to take part of their business to a different country. Nevertheless, globalization is part of today’s society and will be involved in virtually all situations.
Daniels, J. D., Radebaugh, L. H., and Sullivan, D. P., (2011). International Business: Environments and Operations. Prentice Hall, Upper Saddle River, New Jersey.