Globalization and SC Johnson

Globalization is the shift toward a more integrated and interdependent world economy (Hill, 2005). Globalization has several different areas including the

globalization of markets and of production. The Globalization of markets is the blending of different markets from different nations into one large global marketplace. Cross-border trading has made it easier to sell internationally. Companies can sell standardized products efficiently and effectively all over the world thus helping to build a global marketplace. The globalization of production refers to the sourcing of goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital) (Hill, 2005). By doing so, companies hope to lower their costs and improve the quality of their product and increasing their distribution. This would allow the companies to compete with other companies on a worldwide basis.

There are many trade theories that support the idea of globalization. The theory of absolute advantage states that all countries differ in their ability to make goods efficiently. The theory suggests that each country should specialize in manufacturing products in areas where it has a distinct advantage over other countries. And that same country should import goods in areas where they are weaker. Another theory is the theory of comparative advantage. It suggests that unrestricted free trade between countries brings about increased competition and world production. This is truly in-line with globalization. Lastly, the Heckscher-Ohlin theory believes that the pattern of international trade is determined by differences in countries. It believes th...

... middle of paper ...

...s. Products in Mexico have to be much lower in cost for the general public to purchase compared to the US. This is where market share and sales volume come in to play.

The South American Community of Nations (CSN) is another important region to target for SCJ. Currently SCJ operates in Brazil, Argentina, and Venezuela. But SCJ’s market share in those and other South American countries is low and the opportunities are endless. Since SCJ has operations already in the region, incremental growth is a cost effective way to grow profits. New products and new channels of distribution need to be developed building off of current product lines and trends. This can lead to large incremental growth in the region at little cost to the company. Perusing other regions where SCJ is not currently present could be more costly than building brands already in the marketplace.