WHAT IS GLOBALIZATION IN BUSINESS

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Figure 1

WHAT IS GLOBALIZATION 

According to the online course Global Business, globalization is the expansion of the flow of products, services, money, people, and ideas across national borders.

Forest Reinhardt, a professor of global business at Harvard Business School, asserts that "we live in a globalized age." That is, there is a stronger than ever connection between the national economies.

You need a solid foundation in the fundamentals of business globalization whether you're trying to understand your multinational firm better or considering extending your company into other nations. Here is a primer on what it means to be an international business, things to keep in mind when navigating the world of global commerce, and how to increase your expertise.


WHAT DOES IT MEAN TO BE AN INTERNATIONAL BUSINESS?

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Any company that conducts operations manufactures goods, or sells them between two or more countries is considered an international business. Three factors determine if a company is global:


  1. Domestically produced commodities are sold both domestically and abroad.
  2. It sells domestically but manufactures things abroad.
  3. It manufactures products in other nations and markets them both domestically and abroad.

There are two international business models to take into consideration whether your company fits into one of these categories: transnational or multinational.


Multinational firms have offices in various nations, with each one in charge of a certain aspect of the business. For instance, research and development might be located in Bogota, software development in New York, and marketing in London.

Using the regional division of business operations for each of its brands, Nestlé is an example of a successful international organization. Around the world, Nestlé has more than 100 offices, each with their own duties. In Switzerland, for instance, the 23 brand-specific R&D centers are all managed through the Nestlé Research Center, which serves as a central core. The Swiss corporate headquarters of Nestlé oversees all of the company's offices.

While multinational firms also have offices abroad, they differ from transnational organizations in that each location serves as a miniature version of the overall business. Because of this, each office, for instance, has its own leadership, marketing, sales, research and development, technology, and human resources teams. PepsiCo, which operates 32 locations in 24 nations, is an illustration of a multinational company.


WHAT IS GLOBALIZATION


Consider the advantages and disadvantages of each international business model before choosing one for your expanding firm. Everyone on a given team in multinational firms normally works out of the same office, though the development of remote work may change this. Being in the same office can improve communication and reaffirm the notion that every office is a vital component of the bigger organization. Despite the fact that multinational corporations may not foster the same mentality, they nonetheless gain by having representatives from each team present in each office. This can let them work together and personalize their efforts to the local audience without having to deal with time zones and linguistic hurdles when collaborating with other teams.

Globalization doesn't have a one-size-fits-all strategy; you must determine what is ideal for your company.

References

  • Aart Scholte, Jan(2002) "What Is Globalization? The Definitional Issue – Again" Working Paper Series;03/4.
  •  Catherine Cote(2021) "WHAT IS GLOBALIZATION IN BUSINESS?" [blog entry] 12 April. Available from https://online.hbs.edu/blog/post/what-is-globalization-in-business [Accessed 12 April 2023].
  •  Catherine Cote(2021) Harvard Business School. Figure 1 [online] What Is Globalization In Business? Available from https://online.hbs.edu/blog/post/what-is-globalization-in-business [Accessed 10 April 2023].
  •  Teeple, G. (2000). "What is Globalization?" In: McBride, S., Wiseman, J. (eds) Globalization and its Discontents. Palgrave Macmillan, London. https://doi.org/10.1057/9780333981610_2.
  •  Admin(undated) Tech Tecno. Figure 2 [online] What Is International Business? Available from https://techtecno.com/what-is-international-business/ [Accessed 10 April 2023].

Location: Sri Lanka

Comments

  1. Prageeth GamhewaApril 19, 2023 at 8:30 AM

    Vital facts could be understood by this post.Thanks.

    ReplyDelete
    Replies
    1. SanjeewaApril 23, 2023 at 8:08 AM

      Thanks, Mr.Pregeeth Just consider how global corporations like Coca-Cola, Apple, Microsoft, and others have grown their markets. The answer is through international business.

      Delete
  2. W.WarusapperumaApril 21, 2023 at 8:47 PM

    There are advantages and disadvantages in various industries. Anyway extending your company into other nations is important in modern business.

    ReplyDelete
    Replies
    1. SanjeewaApril 23, 2023 at 8:17 AM

      I appreciate you saying that, Wasantha.

      Delete
    2. SanjeewaApril 23, 2023 at 8:18 AM

      Yes, expanding a company into other nations can indeed offer advantages and disadvantages, depending on various factors and the specific industry involved.

      Delete
    3. SanjeewaApril 23, 2023 at 8:19 AM

      Advantages of Expanding a Company into Other Nations:

      Expanding into other nations can provide access to new markets with untapped potential. This can help a company diversify its customer base and reduce dependence on a single market, which may be beneficial for long-term sustainability and growth.

      Access to new markets can lead to increased revenue and profits, as it allows a company to tap into new sources of demand. Expanding into other nations can provide opportunities for higher sales volumes, economies of scale, and potential cost savings, which can positively impact the company's bottom line.

      Delete
    4. SanjeewaApril 23, 2023 at 8:21 AM

      Disadvantages of Expanding a Company into Other Nations:

      Expanding into other nations can be complex and costly, involving expenses such as market research, legal and regulatory compliance, setting up new operations, and hiring local talent. Cultural differences, language barriers, and varying business practices can also add complexity to international expansion.

      Operating in foreign markets exposes a company to political and regulatory risks, including changes in government policies, trade barriers, tariffs, and legal disputes. These risks can impact operations, profitability, and overall business stability.

      Delete

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