GLOBALIZATION OF MARKET

My Report

Globalization is the growing economic interdependence of countries worldwide

through increasing volume and variety of cross-border transactions in goods

and services, free international capital flows, and more rapid and widespread

diffusion of technology. (International Monetary Fund)

The globalization of markets refers to the merging of historically distinct and

separate national markets into one huge global marketplace. In many markets

today, the tastes and preferences of consumers in different nations are

converging upon some global norm. Examples of this trend include Coca Cola,

Starbucks, Sony PlayStation, and McDonald’s hamburgers.

There are a lot of factors that have made globalization attractive and feasible

for business organizations. There are two facilitating factors of globalization

and they are trade agreements and technology. Through trade agreements,

some international trade barriers were addressed such as tariffs and quotas. In

trade agreements, the intervening factors that resulted in none entry of

products and services were identified and negotiated to facilitate such entry. A

law will be passed through Congress to make the agreements official and the

terms and conditions will be followed that both parties are benefited. In

technology with its advancement in communication and information, sharing

has been very helpful. Various ways in communication like emails, telephones,

cellular phones, teleconferencing, and the internet. It is through

communication that the sharing of technology globally is within reach. The

technology was able to fast track the manufacturing of products, agricultural

products and services.

Companies are discovering a wide range of opportunities in making their

operations globally. Here are some benefits of globalization its market;

companies often seek opportunities for expanding markets for their goods and

services. In the globalization of the market, the entire world becomes their

entire arena for business expansion. Cost savings because other countries

provide lower labor costs, raw materials cost, and taxes. Legal and regulatory,

some countries made favorable liabilities and labor laws, and less restrictive

environmental and other regulations because they need investments and that

their people can work to lessen unemployment in their country. Financial

considerations, companies can avoid impact on currency changes. Some

countries provide tax holidays to new entrants to invite investors. Investing in

other countries can provide other benefits like witnessing local technology and

the chance for enhancement which might be another business, local products

worth exporting, including the potential to diversify products and services.

In every advantage, there are also equivalent disadvantages. These can include

the following, transportation cost becomes a disadvantage when the area has a
poor infrastructure this will entail higher cost. Security cost increases when an

area has security risks, wherein law and order are not stable. Companies will

hire more security personnel which again added cost for the investor. Unskilled

labor will result in a poor quality of products and the productivity of workers.

This will mean companies will increase their operating costs through its

training. Import restrictions, some countries place restrictions on

manufactured goods. They put a priority on their local products. Some

countries do perform related products that compete with their products.

Criticisms on globalization, some foreign businesses did give a lower salary

rate, poor working condition; some uses minors as their workers especially in

countries were only a few investors. This made a disadvantage when there is no

implementing rules or laws to guide in an agreement.

In globalization, it has also its risks like political, terrorism and economic

instability. Political unrest may result in a risk for the investors both local and

foreign. It has the possibility that when in unrest situation the government will

take-over all businesses in which foreign investors are forced to leave their

businesses for their security. For example during a civil war and the

government declared martial law. This will result in no return of investment for

the investors. Terrorism can result in no-security of personnel which can make

companies decide to a temporary or even permanent closure, for the safety of

their personnel. It will be a bigger loss if their personnel will be at harm so

better to have closure. As a result, more people will become jobless and the
economic movement of where the company is located will become lame.

Economic instability will result in inflation and the deflation rate of a country

which makes investors volatile to a losing situation in a business.

There are issues related to managing global operations like manufacturing

management, procurement, and logistics management. Manufacturing

management internationally provides an incomparable opportunity for

companies to grow into new markets at the same time boosting their

competitiveness. However, some companies just patterned it to some of its

expansion countries that failed to analyze the situation of a country about the

intervening factors. As a result, when the problem comes that’s the time they

take action to solve the problem. It is better to be preventive by analyzing all of

its factors. Global procurement of goods and services is being practiced

nowadays. Like the importation and exportation of products and services. As a

result, there is a healthy economic activity and can relate to economic stability.

Logistic management is a process of planning, implementing and controlling

the activity in storing goods and services. Studying the consumption rate of a

particular country and deliver its necessities. Oversupply could result in lower

prices in order to become competitive which sometimes manufacturers sold it

at break-even to compensate its capital. Careful analysis must be adhered to

make it a viable business.

As a summary, the globalization of the market brings new opportunities to the

business. The market place becomes the world and partnered by technology it

makes more the world smaller. The far reach countries can be served through

online business. Looking for the latest update of managing strategies and

functional technological advancement can be searched on the internet. No need

to go to libraries which needs much time. Just with a few clicks on the

internet, the needed information is readily available. It is just a matter of

checking the practicability of the strategies being introduced. As a matter of

fact, they are there as a resource before a businessman decides what strategy

best suits its business.