Globalization has become a highly debated subject in the world of business and politics. That is because globalization is not perfect, and it does not suit every business. Globalization and international sourcing can be a competitive advantage for a company, however it also comes increased risks. Even with an increased risk, globalization has grown in popularity over the past several decades. Many factors have led to this growth including communication and technological advances, increased competition, and higher consumer expectations. Firms must consider the pros and cons of globalization before determining if it is good for their company. The advantages of globalization are increased availability of resources, use of core competencies, access
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These core competencies can stem from natural resources the country is home to, example of this is grain in the United States or oil in the Middle East. The availability of resources is also an advantage of globalization, because natural resources are not always prevalent in all countries. Movement of goods in and out of countries stimulates the global market. The United States also has a core competency in technology and therefore can send jobs to countries like China has a competency in cheap labor. Firms can take advantage of this as well, such as the way Apple develops software and sends work to China to build the hardware. This is Apple doing what they do best, and leaves other tasks to places that are better suited to accomplish …show more content…
A domestic company may only have a few competitors, but when selling globally they may have hundreds. Other international companies may move into another firm’s area to increase competition. All this competition can lower market prices, which can hurt profitability. Global competition causes companies to change more rapidly or they could miss a marketing trend. Moving into different countries also comes with different risks. “Emerging markets have inflation issues, environmental questions and social problems, but overall they have better economic growth. In the developed markets you have slow growth and the risk of a new sovereign debt crisis,” says Alain
These core competencies can stem from natural resources the country is home to, example of this is grain in the United States or oil in the Middle East. The availability of resources is also an advantage of globalization, because natural resources are not always prevalent in all countries. Movement of goods in and out of countries stimulates the global market. The United States also has a core competency in technology and therefore can send jobs to countries like China has a competency in cheap labor. Firms can take advantage of this as well, such as the way Apple develops software and sends work to China to build the hardware. This is Apple doing what they do best, and leaves other tasks to places that are better suited to accomplish …show more content…
A domestic company may only have a few competitors, but when selling globally they may have hundreds. Other international companies may move into another firm’s area to increase competition. All this competition can lower market prices, which can hurt profitability. Global competition causes companies to change more rapidly or they could miss a marketing trend. Moving into different countries also comes with different risks. “Emerging markets have inflation issues, environmental questions and social problems, but overall they have better economic growth. In the developed markets you have slow growth and the risk of a new sovereign debt crisis,” says Alain