Two-thirds of today’s business is conducted globally through global markets, global transactions, global finance, global supply chain. Globalization can be expressed as selling in foreign markets, producing in foreign countries, purchasing products from foreign suppliers or establishing partnerships with foreign businesses. Companies “go global” to take advantage of advantageous prices, to access the international market, to be more sensitive to demand changes, to create a reliable source of supply, and to be aware of the latest developments and technologies.
Increasing strategic commitments such as joint ventures, licensing agreements, research consortia, supplier partnerships and direct marketing agreements are further evidence of increasing globalization. Joint ventures in the automotive industry such as GM-Toyota are transforming technology and providing access to closed markets. MCI and British Telecomm have partnered to consolidate their telephone networks in North America, Europe and Latin America.
Four airlines in North America, Europe and Asia (United Airlines, Scandinavian Airlines, Air Canada and Thai Airways International) share earnings in route selection, purchasing, ticketing and frequent flyer program. American products and services are bought and sold all over the world. Whirpool manufactures most of its products in Mexico and Europe; General Electric is the largest private sector employer in Singapore; More than half of IBM’s workforce is located outside the United States. American multinational companies produce twice as much as European or Japanese companies outside their own borders. However, no country can dominate world trade.
Despite the benefits of increased foreign trade and investment, globalization is risky. E.g; Rapid economic growth in Asia has pushed back the limits of transport infrastructure. Narrow aisles in ports, roads and railways delay products from reaching the market. The market itself is also highly fragmented due to different languages, customs, trade barriers and levels of sophistication. In addition, distribution channels in the region are not organized and inadequate. This means that transactions must be personalized to each country and logistics must be carefully planned. In countries in Latin America and Eastern Europe, the instability of governments and the inadequacy of the economic situation continue to hinder the growth of trade and the decentralization of transactions.
Opponents of globalization; At worst, they say, rich Western economies will benefit from poor ones, and at best they will try to impose their own lifestyles on countries that want to stay true to their origins. The recent terrorist attacks on the United States and its foreign sponsors have blocked global growth activities and radically changed the way business works around the world.
However, globalization is expected to increase as companies begin to adapt to a more risky world, especially in countries where security is tight, such as China.