WHAT IS GLOBALIZATION?

Globalization is the process of streamlining and standardizing communications, business functions and management practices throughout the global organization. Globalization takes a bird’s eye view of the world by approaching worldwide markets with standardized products and services.

The introduction of the Internet provided the gateway to the world. Companies operating in the various business sectors can market their products and services to the world through the Internet, allowing them to become a global organization. It is also an effective communication channel for organizations to gain global recognition in a short time-frame. The Internet allows the organization to acquire business opportunities and stay ahead of the game by connecting with people and firms operating in the various business sectors. Because companies operate in an ever-changing world with continued improvements in technology, companies must not only plan with the world in mind but also develop and implement a global mind-set whereby thinking is of a global perspective compared to a narrow-minded approach.

Challenges:

1) One challenge pertains to the foreign exchange rate of a country’s currency. Some currencies like the United States Dollar or Euro Dollar has a high conversion rate in some countries whereby the price of a product may prove quite costly for the domestic market based on the foreign exchange rate. As such, consumers may decide to purchase the local products because it would prove less expensive, and by extension circulate money within the local economy. On the other hand some foreign currencies such as the Japanese Yen may have an extremely low conversion rate in some countries so that the cost of goods would prove quite attractive to consumers encouraging them to buy. As such the Japanese supplier may have to sell a high volume to maximize profits. Countries in which some foreign exchange rate “floats” or continually vary would contribute to consumers buying behavioral pattern and prove challenging for foreign suppliers.

2) Another challenge pertains to countries, for example, China that mass-produces or has lower prices because of lower labor rates, and as such the demand for goods would focus on this country. In addition demand would also shift to those countries with improved and differentiated products omitting other countries thus reducing the need for their products. The primary challenge of globalization refers to increased global competition whereby companies compete on a global scale.

Opportunities:

A) Globalization fosters international business because it provides a world of opportunities for companies to expand and spread its wings. Firms globalize to take advantage of foreign markets by using advances in technology to build the company’s and remain viable.

B) Another opportunity associated with globalization pertains to expanding sales. Companies can sell their products and services throughout the world as well as on the open market.

Globalization allows companies to gain world recognition and more so increase its market share and client database.

C) Companies can acquire skilled personnel, financing, materials, and labor as an effective mechanism to develop and offer better prices. For example, countries may employ Chinese labor for the construction industry because of lower labor rates. The government of a country may encourage foreign investors or firms to operate in the local market to build the economy, create jobs and produce additional products for use on the local and foreign market. An example pertains to the production of steel in another country for both domestic use as well as export to the European market.

D) Another opportunity is that of familiar trade names such as Kentucky Fried Chicken, Volkswagen or Dell Computers. The company’s brand name provides the opportunity to increase sales and maximize profits.

E) Globalization also gives companies the opportunity to work with numerous people from a multicultural and multi-generational perspective with various skill-sets. The combined synergies help to develop the respective companies as it provides the mind-sets, work experience and more so, the knowledge to drive the company forward. Global companies carry more weight and as such it enhances their image and reputation versus a local company. In addition, international companies attract foreign investors and stakeholders who can inject money into the company for future growth and development.