Globalization is beneficial as first; it reduces the trade inhibitors noted in elements like commercial tariffs that act as inhibitors to exchange. This is quite notable in the developing and underdeveloped nations that have dismal trade restricted to the domestic setting because they lack funds necessitated as tariff payments for permitted international trade. Secondly, through the enhanced foreign associations’ job creation is enhanced. As one nation sets its investment within another nation, as compensation for eliminated trade tariffs it maybe mandated into offering employment to residents of the host country for instance in the export processing zones (EPZs) in underdeveloped nations (Jaffe, James, & Ilan, 2006).
Thirdly, nations tend to progress inflows through the institution of comparative advantage; for instance developed nations center on the manufacturing element as a comparative advantage against producing raw material that are economically sourced from developing nations. Lastly, globalization enhances trade competition leading to low product and service charges that are beneficial for consumers. For instance, as the provision of a given product increases while the demand is held as constant, the prices have to reduce making the product affordable.
Cons attached to globalization include first; inequitable competition that often leads to a dismal effect to the needy nation (Jaffe, et al., 2006). For instance, the investing nation may impart unfair competition to infant industries leading to closure. Secondly, as developed nations associate with underdeveloped nations in trade relations, it may lead to domineering instances for instance coercing the poor nation into a given affiliation in order to make an investment.
Global marketing is exceptional in three areas. The first is the monetary element that involves dealing with differing currencies that are controlled by exchange rate variations in contrast to the domestic setting with a single currency that is not influenced by the same. Secondly is the political element with regard to commercial guidelines, as global marketing tends to have lower forms of obstructions as evidenced by tariffs in a bid to enhance investment intensity as opposed to local establishments that have to bear a higher part of the requirements (Kotabe, & Kristiaan, 2009). Thirdly, the cultural setting is varied within the global markets for instance as it comprises of various societies whereas domestic settings have less variations. For instance, the EPZs are allowed to operate at no level of tariff payments and recompense this by offering working vacancies for native for the host nation, whereas local establishment have to align to tax compensation.
Part II Global Strategy
The chief object of the global strategy is the handling of the colossal divergences infused from the association of various cultures and settings within extension element, both in terms of spatial and non-spatial terms. Therefore, the first challenge is presented in terms of resources with a larger leaning towards the labor element. With globalization, an institution has to deal with a diverse workforce bearing various communal divergences that translating the management procedure as difficult. The second constraint is presented by the consumers as the main literal blocks within the markets (Hitt, Duane, & Robert, 2009). This is realized by the fact that all consumers bear varying needs and thus infusing an intricate element within the manufacturing requirement. The third challenge is noted in terms of the new business associations within the foreign establishments, as all comprise of various trading cultures that are complicated in handling.
The adaptation global approach involves the inclusion of domestic aspects of a company’s products within the alien markets as a form of branding for instance the inclusion of a local name in product delivery within the new markets. The second approach termed as arbitrage involves a cost-effectual policy that centers on the utilization of comparative advantages amongst the various regions (Ghemawat, 2009). For instance, an American company may decide to institute its customer care units in Japan due to reduced technology outlays and its manufacturing plants in India as attributable to an affordable workforce. Through this discriminative approach, the institution reduces the overlay element leading to trade optimality.
The third approach is aggregation that centers on the realization of economies of scale in its entire establishment centers through the inclusion of homogeny in its products; for instance, the company may analyze the needs evidenced across its international markets and then resort to the creation of a sole product suiting all the various needs in all nations (Ghemawat, 2009). With the homogeneous product, the company is able to lessen the additional costs it should have incurred upon customization to fit the diverse markets and consequently lead to enhanced inflows.
The aggregation approach assumes highest returns to a company by the fact that it imparts the capacity to operate under complete economies of scale in contrast to the other two approaches. Complete economies of scale mean that the organization is working at the optimality plane that translates to the highest returns possible for the institution. Arbitration offers a restrained level of scales through the creation of market niches and thereby leading to varied economies that are aggregated for the collective economies of scale (Ungson, & Yim-Yu, 2008). The same approach lies within the adaptation technique with regard to niche markets but as defined by the local products that may not necessarily serve as required elements within the new establishments. As this mandates promotional elements for awareness, the same proportion acts as an outflow and subsequently a higher outlay inhibiting the economies of scale element.
Ghemawat, P. (2009). Strategy and the Business Landscape. Portage, OH: Prentice Hall.
Hitt, M. A., Duane, R. I., & Robert, E. H. (2009). Strategic management: competitiveness and globalization : concepts & cases. Clifton Park, NY: Cengage Learning.
Jaffe, E. D., James, B., & Ilan, A. (2006). Globalization and development. New York, NY: Infobase Publishing.
Kotabe, M., & Kristiaan, H. (2009). The SAGE handbook of international marketing. Thousand Oaks, CA: SAGE Publications Ltd.
Ungson, G. R., & Yim-Yu, W. (2008). Global strategic management. Armonk, NY: M.E. Sharpe.