Globalization is actually the process of economic, technological, political and socio-cultural forces i.e. globalization refers to the adaptation or development of values, knowledge, technology and behavioral norms across different societies and countries around the world.
The characteristics of globalization are mostly linked with global networking (i.e. internet, electronic communication or technology and many more) with interflow of information in the economic, social, political and cultural learning areas, interflow between international alliances and competitors, international collaboration and multi-cultural integration and global village and technology.
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Globalization amplifies the cultural diversity of an organization and the company needs to be aware of the culture diversity within the organization so that they can guide the managers when they take decisions. Managers need to further their contributions to the organization by being informed about cultural differences among the company’s international operations.
The company’s role is not to object to or block technology transfers or other innovations to facilitate them. The growing globalization of business also means grater movement of employees among countries. (Edwards, 2006)
Companies large and small believe in global expansion and the companies find that thinking globally can provide them with a competitive edge over their competitors. International markets provide many opportunities for companies to expand themselves. Large companies are the ones who carry out international business .
Companies who are global or in the global or stateless stage of international development transcend any single home country. The companies operate in a global fashion, making sales and acquiring resources in countries where the cost is the minimum and where a lot of business opportunities are there.
At this stage, companies have their offices located at different locations around the world with total control and ownership. The companies that operation internationally encourages free flow of ideas, products, manufacturing and marketing among countries so that they can achieve great efficiencies. (Daft, 1997)
Ways to Expansion
There are different methods of global expansion for any large company. All companies have a couple of ways in which they can expand their business globally. One if the ways a large company can expand itself it through seeking out cheaper sources for supplies and looking for cheaper suppliers who would supply the company offshore, this process is called the outsourcing method.
Another method for a company to expand globally would be by developing markets for the company’s finished products outside the company’s home country, this may include licensing, direct investment or even through exporting etc.
This kind of method is called the market entry strategy where the company introduces itself and its products for selling in a foreign market. What happens is that the most companies start with exporting and they work up to direct investing in the foreign market. The different ways for a company to expand itself globally are as follows:-
Outsourcing here is being referred to as global sourcing or outsourcing, basically means engaging in the international division of labor so that the production of the company’s products can be done in the cheapest sources and supplies available to the company.
For example, the company may take away a contract from a domestic supplier because the supplier was providing the company with expensive materials and can replace it with a supplier in Far East because that supplier is providing with the cheapest material for the production of the products. Outsourcing is mostly conducted by the company so that it can increase its profits. (Fullmer, 1983)
With the help of exporting the company can maintain its production facilities within the home nation and then transfers the product for sale in the foreign market. Exporting basically helps the country to market its product in other countries at modest resource cost and with very minimum risk for the company and the country.
There are some large companies that usually do not want to be involved in any kind of investment in the foreign market, therefore for such companies who want to expand globally usually export their product to the foreign markets like Gerber Scientific Inc. (high-tech equipment supplier).
With the help of licensing a company in one country makes certain sources available to companies in another country. These resources include technology, managerial skills, patents or even trademark rights. Franchising is a form of licensing in which the franchisor provides foreign franchises with a complete package of material and services, which include equipment, products, product ingredients, trade mark and trade name rights, managerial advice and a standardized operating.
Some of the best known international franchisors are the fast foods chains and coffee shops like Starbucks, Costa Coffee, Burger King, Dunkin’ Donuts, KFC, Pizza Hut or McDonald’s. Licensing and franchising offer a business company relatively an easy access to international markets at low costs, but the limit its participation in and control over the development of those markets. (Fullmer, 1983)
Direct investment can be described as a higher involvement of the company in an international trade. Direct investment means when the company is involved in managing the productive assets, which distinguishes it from the other entry strategies which stops less management control.
Joint venture is a also a part of direct investment which can be defined as a variation of direct investment in which the company would share costs and risks with another firm to build a manufacturing facility, or to develop new products or even to set up a sales and distribution network. (Fullmer, 1983)
This paper basically stresses on the growing importance of an international or global perspective of the company that how it can expand itself.
Large companies that have been a huge success in their home countries have begun to expand their business overseas and are preparing themselves even now to withstand domestic competition from the foreign markets competitors. Business in the global arena involves risks and difficulties that have to be faced by the company’s management.
Daft, R.L. (1997) “Management”. Orlando: The Dryden Press
David Roman (2008), Going Global, Available from <http://www.eetimes.com/global/>, on 5th December’08
Edwards, W. (2006), ‘Why go global? Compelling reasons to expand internationally’, Available from < http://www.allbusiness.com/retail-trade/4017371-1.html>, on 5th December’08
Fullmer, R.M. (1983) “The New Management” New York: Macmillan Publishing Company
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