Drivers Of Globalization Technology Logo
- Drivers Of Globalization Technology Logos
- List The Major Drivers Of Globalization
- Drivers Of Globalization Technology Logos
Aug 04, 2015 A: Drivers of the globalization of firms include government, competition, cost globalization and market drivers. Globalization has also been driven by technology, including use of the Internet, mobile phones and satellite-tracking technology.
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Technology and cheap access to energy have altered the way the world does business, by reducing the costs of certain types of business-to-business transactions. These reduced transaction costs, driven by changes in government policies and improved communications infrastructure, have led to a wide array of business practices referred to as globalization.
- Cost Globalization Drivers. The globalization of customer needs and the opportunities for scale and standardization it brings will fundamentally alter the economics of many industries. Economies of scale and scope, experience effects, and exploiting differences in.
- The dynamics of globalization have changed significantly and globalization in the past differs from the present. In the past much of the drivers of globalization were interstate, but currently the major players are no longer the states but blocs such as the EU, which define global dynamics on trade.
Preconditions for Globalization
A significant precondition for globalization is safe sea or air transport. The two prior eras where something comparable to modern globalization occurred were the early Imperial Roman era, and during the height of the British maritime empire of the 18th and 19th centuries. In both cases, a singularly powerful political entity, with a vested interest in overseas trade, kept risks to shipping at a minimum. The U.S. Navy provides that role now. A second precondition is an increase in the ease of communications compared to contemporary practice. For the Roman Empire it was the Roman network of roads. The British Empire straddled the transition from roads to telegraphs. For the US, it's cellular phone and Internet communications that have improved communications.
Business Purchasing Impacts
Businesses benefit from globalization by being able to access cheaper labor and materials. In the modern era, this leads to businesses contracting manufacturing to China and Thailand. The cost of shipping the finished product is still less than the price differential in wages and manufacturing costs. Cloth and clothing were the first goods outsourced, but has since included electronics, injection molded plastics and office jobs, like computer programming and telephone customer service.
Business and Brand Management Effects
Reliance on globalized resources makes managing businesses much more dependent on factors that are outside of the business owner's control. When a volcano erupts in Iceland and shuts down air and ocean traffic in Northern Europe for a week, the effects are felt around the world. When cartels control a vitally needed material such as oil, lithium (used in batteries) or rare earth metals (used in electric motors), price fluctuations occur. While the benefits for globalized businesses are substantial for investors, the risks are also enormous. Brands compete for customers on a global basis, and billion-dollar companies can vanish quickly. Consider the fate of Palm, which went from being the dominant player in smart phones to an abandoned subsidiary of Hewlett Packard in less than three years. There are, effectively, no 'safe niches' in business, where local conditions can shield a business from a global marketplace.
Government Policy Effects
With reduced barriers in communications and transportation costs, business are free to move to places where conditions favor them. American businesses move their manufacturing to China not just because Chinese labor is cheaper, but because China has less restrictive environmental and worker safety regulations. Globalization's secondary impact on government policies is in monetary policies. Countries that are net exporters of goods, such as China, want to keep their currencies weak against the Euro and US dollar; this acts as a magnet for foreign investment, because dollars or Euros have greater relative purchasing power.
Limited Duration of Globalization
Historically, globalization periods are short lived. The British experiment with globalization lasted 40 years. America has been importing heavily for 30 years, and there is growing rejection by consumers. Two things end periods of globalization. Economic crises in the economies of the nations that provide naval security, and technological disruption, where a new technology re-shapes the market in ways that favor their rivals.
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About the Author
Ken Burnside has been writing freelance since 1990, contributing to publications as diverse as 'Pyramid' and 'Training & Simulations Journal.' A Microsoft MVP in Excel, he holds a Bachelor of Arts in English from the University of Alaska. He won the Origins Award for Attack Vector: Tactical, a board game about space combat.
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Globalization refers to the breakdown in barriers that prevent the exchange and integration of finances, trade and ideas across the world. While debate remains about the precise features or importance of any given cause of globalization, some general agreement exists about the causes themselves. As an integral, but ultimately subordinate, feature of business, the causes of globalization in marketing reflect the causes of globalization in business.
Technological Advancement
Technological advancement at almost every level, from widespread Internet access to standardization of transport containers and rapid global transportation, serves as a key driver of globalization. Standardization of manufacturing processes allows businesses to harness the economies of scale that make it feasible to serve a global-sized market, and reliable, worldwide transportation provides the necessary element to build a supply chain to serve that market. The 24/7 nature of the Internet gives consumers easy access to products from across the world and, in turn, drives a need for globalization in marketing.
Global Communication
Global communication, aided in large part by online communication channels, such as social media, aid in the transmission not only of ideas, but of social norms and wants. In essence, global communication leads to more homogenized tastes in everything from tablet computers to music. This trend toward global-level interest in products, regardless of origin point, calls for marketing that deals with brands from a global perspective, rather than a local or even national level. Marketers must craft imagery and messages that transcend cultural particulars and reflect universally appealing core ideas.
Capital Mobility
Capital now moves across national borders with comparative ease, which makes it easier for companies to secure financing from a variety of sources. This ability to secure funding from abroad, should domestic sources prove unwilling, can facilitate domestic growth and foreign expansion. In order to secure foreign funding, a business’s marketing team must prove capable of demonstrating that, for example, a foreign market exists for the business’s products, and that it knows how to address both domestic and foreign markets to capture share in both.
Considerations
Globalization presents a conundrum for small business owners. On the one hand, small businesses often find themselves competing with and marketing in competition with better funded global brands. On the other hand, these same businesses have access to a worldwide consumer base that can prove a substantial source of income. Choosing between offering service to a worldwide consumer base or focusing on capturing local and regional business means weighing a number of factors, including logistics, expense, and the difficulty inherent in developing global-friendly marketing materials. Although some businesses lend themselves to serving the global market, selling information products for example, many small businesses opt out of globalization.