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Discuss the key drivers of Globalistion since the 1970s and demonstrate how these have altered the nature of international business?

  • Category:
    Business
  • Document type:
    Essay
  • Level:
    Undergraduate
  • Page:
    2
  • Words:
    1279

Drivers of Globalization and its Effects on International Business

Introduction

I believe globalization to be a key concept for economic development of a country; it leads to market integration and continued expansion of the world’s economy. There is a great shift in the markets over the past years towards a more integrated economy, the world’s economy is shifting towards high productivity which is considered to be brought b continuous cohesiveness of the markets (Gwynne & Cristobal 2014). Science and technology has contributed largely to integration of markets over the world, economic shift has been based on high cross-border division of labour that has long credited to increase in level of productivity across countries (Eriksen 2014). Multinational companies have been largely linked to high economic globalization across the globe; these companies are re-aligning their production points across the world through diversification of branches which have escalated economic growth and integration.

Drivers of globalization

Over the years, the world has experienced increasing trends in global integration. As a person I believe that increase in technology and transportation advancement has seen a rise in exchange of goods between countries thus increasing international trade and exchange of goods across the globe. From my perspective various drivers over the years have caused a shift in the economy among them being; technological change, political drivers, market drivers, cost, and competitive drivers (Beeson 2014).

Market drivers

I see Customer needs as the key aspect towards economic globalization across the world. People across the world demand goods which are in most cases similar, this demands leads to trade of goods from one country to another, the market thus creates trade which expands global markets (Dunning 2014). Multinational companies like coca cola operate in different countries; different cultures leads to different demands of some products, thus such large companies provide products depending on the demand of a certain country. I think Due to increase in convergent of global demands, global customers have largely increased and thus increase in globalization. From my believe, Many industries have drifted towards producing products which are widely demanded by global customers, the products are homogeneous globally and thus international trade comes in. The world has experienced large conversion of homogeneity in the consumer demands thus increase in globalization.

Competitive drivers

A rise in demand of certain products in some countries has led to some countries becoming battle grounds for competition. Accordingly, Companies increase their productivity in most cases targeting the rise in globalization as they move to benefit from the global market. Companies have also increased their productivity to target global market as the local market becomes unreliable due to high local competition. And this has left me thinking that the setting of international mind set for companies has increased the rate of globalization mostly improving the products available in the international markets. People are thus believed to consider purchasing products from the international companies as they are considered to be less expensive and of high quality due to competition. As a person I believe this competition has some disadvantages to local companies who are unable to compete favourably.

Government drivers

From my perspective, the government of a country is external factor that determines the setting and operation of a company. The politics of the country dictates whether the environment is safe for operation, companies thus decides to set up businesses in foreign countries having looked at the politics and business policies set by the government. The policies by the government according to me favourable or unfavourable largely defines the existence of global competition in an industry. The politics of a country and the global economics are intertwined; multinational companies have in respect started working on strategies that will ensure that they manipulate the global competition to favour them. This has in the present seen the change of power between the government and multinational companies due to policy change which is expected to shape the global competition in the coming years.

Cost drivers.

Large companies are seen to enjoy large economies of scale and thus manage the global market (Hill et al., 2007). Acquisition of products for the company is key towards its growth through productivity; this has led to increased links and cooperation between companies in different countries to come with strong company to manage the rising costs of production globally (Vagts et al., 2015). In this respect, I see globalization to have made it difficult for new companies to enter international market. Competition in such market is deemed to be higher for new companies to cope considering their low market capture. Such markets set higher level barriers to entry; new entrants find it difficult to cope up with the competition and may as a result bow out of the market (Wild & Han 2014). As competition grows in the market due to large economies of scale, companies opt to diversify and look for new markets in other places to stay on top, this give rise to international trade thus increased global market.

How globalization altered international business

I think as nations reduce their barriers to trade, businesses are forced to compete aggressively to stay in the market. Globalization has led rise to increased trade across nations; countries get what they cannot produce or what is expensive for them to produce (Wild & Han 2014). From my There is a rise in international business as companies compete global to manage the homogeneous markets where customers have proved to demand similar products across the globe. International business as it is known involves exchange of goods from one country to another, it involves imports and exports.

From my thinking, most countries strive to achieve the balance between what they sell out and what comes in. Globalization has ensured that countries are able to get what they cannot produce and sell some of their products to foreign countries (Hill et al., 2007). Globalization has enabled countries to manage its economy through adequate production strategies, countries base their productions in places where they predict minimum cost of production and high profits, and this is done through globalization of production (Gould, Pellow, & Schnaiberg 2015). I believe globalization to have driven Companies to set up their production base in places where they can easily access the raw materials at the same time get cheap labour to minimize on their costs of production. Through globalization, there is easy movement of trade and capital from one country to another. With these, I see international business to have become a manageable market for all across the world.

Conclusion

For my conclusion globalization to me is a shift from the local market to international market. Companies are seen to diversify their operations to cover the demand from other countries at the same time avoiding competition locally. I believe globalization gives rise to strong international business as the demand cuts across the global market. International business has in the recent past developed due to increase in globalization which is driven by factors such as competition, political, cost, and the market of operation.

References

Gwynne, R.N. and Cristobal, K.A.Y., 2014. Latin America transformed: globalization and modernity. Routledge.

Eriksen, T.H., 2014. Globalization: The key concepts. A&C Black.

Beeson, M., 2014. Regionalism and globalization in East Asia: politics, security and economic development. Palgrave Macmillan.

Dunning, J.H., 2014. The Globalization of Business (Routledge Revivals): The Challenge of the 1990s. Routledge.

Gould, K.A., Pellow, D.N. and Schnaiberg, A., 2015. Treadmill of Production: Injustice and Unsustainability in the Global Economy. Routledge.

Vagts, D.F., Koh, H., Dodge, W.S. and Buxbaum, H.L., 2015. Transnational business problems. West Academic.

Wild, J., Wild, K.L. and Han, J.C., 2014. International business. Pearson Education Limited.

Hill, C.W., Cronk, T. and Wickramasekera, R., 2007. Global Business Today: An Asia-Pacific Perspective. McGraw-Hill Higher Education.