Globalization as a force concerning business

Globalization, in this context, refers to the expansion of businesses from domestic to international markets. Due to this expansion their access to resources, good and services reach a wider geographical area which makes the businesses susceptible to conditions outside the home countries. Some factors contributing to businesses to go global are:

• Increase in expansion of technology

• Increasing consumer pressures

• Potential for growth

• Development of services that promote global integration

• Liberalization of trade policies

• Increase in global pressures to expand

• Changing political situations

Recent events in history which allowed for globalization to take place is the collapse of the soviet union in 1991, opening up and relaxation of trade restriction by China, rapid development and access of Internet and the rise of India and Brazil after 2000 which became centres of cheap R&D and economic development.

Companies opt for different ways to go global depending on their specific needs. These prove to be successful for some while disastrous for others. 'Going Global' can be divided into two methods, internal and external. The Internal methods of globalization allow for companies to retain methods of production and distribution. A company can export their goods directly to other countries, as does apple, since they moved their production back to the US. Another internal method of going global is Direct investment, this allows companies to keep a centralised chain of command and retain control over distribution lines and production. Tesco attempted this method in the US but did not achieve success. E-commerce is yet another way a company can go global via the Internet. Companies like Amazon have access to international market yet they have no physical presence outside of the US. Businesses can market their products on websites to be purchased from anywhere in the world.

Companies or businesses go global by expanding their branches to different countries, off shoring, outsourcing and e-commerce. Off shoring refers to getting work done in a different country to leverage cost advantages such as in the case of Apple products being manufactured in China. Outsourcing refers to a company contracting a business process to a 3rd party such as a US company hiring an independently operated call centre in Pakistan to handle telephone customer service.

Other external methods for going global include, Joint venture or strategic alliances. This allows a company to utilise the experiences and expertise of local producers and sellers. Tesco is now attempting this strategy in China as they have learnt from experience. In the recent past, Franchising has proved to be a sure shot method of having a global reach for a company. McDonald's has become a trans-global corporation due to the thousand of franchises it has across the globe. It maintains the quality of its brand and product but outsources the rest. Companies like Google, Facebook and Microsoft have achieved global dominance by acquiring other companies like Motorola, Whatsapp and Nokia respectively. Hence, mergers and acquisitions are also a useful way for a large company to exert its dominance globally.

Hurdles in the way of Globalization can be numerous. Tariffs applied by certain trading blocks or countries. Hostility by nations whose sovereignty is being threatened. Quotas on certain goods, especially luxury items and automobiles. High duties and corrupt officials. Subsidies for local producers to encourage economic growth can also put global companies at a disadvantage. Embargoes and sanctions applied by the United Nations on conflict regions.

Globalization has been a force for change and development the world over but with these large strides in technology, education and development come some negative impacts as well. Globalization has come under criticism by anti-globalization forces which contend that it has far reaching negative implications for the host country. By allowing international companies to set the economic and often the political agenda, critics argue that the nation state becomes irrelevant. The economic divide between segments of the society that benefit from this sporadic development and those who do not is increasingly widening. A loss of culture and westernization is experience by countries in the Global south where most large corporations outsource their labour.