The concept ‘global’ means, “to affect the whole world” (Schwarz, 1992, p, 380). Which makes global operating a complex and powerful concept. Things which happen globally will have an effect on companies acting world wide and the things that these companies do will have the return effect of influencing global markets, globalization can be one of the biggest influences for change (Andriopoulos and Dawson, 2009,p, 16). For example, new technological advances will shape companies all over the world.
One major benefit of globalization is that it drives down ‘economies of scale’ as predicted by Theodore Levitt in the 80’s, as Levitt says below:
“Constantly drive down prices by standardizing what it sells and how it operates. It treats the world as composed of few standardized markets rather than many customized markets. It actively seeks and vigorously works toward global convergence.”
(Bilton and Cummings, 2010, p, 55)
Which means that because of the availability to a bigger market, prices will be forced down because people realise that they can now access the things they need from a wider range of sources. The Internet is a key factor in this process. With the introduction of sites like ‘eBay’ it has now become so easy to buy and sell products at a low price, thus creating a highly competitive market.
As shown in the diagram (Yip, 1989) above in the ‘Appropriate Setting for Global Strategy Levers’ box, there are certain factors that organizations have to possess or have access to in order to implement a global strategy.
So for companies to go global they have to firstly have the want and the need to go global, which are also referred to as ‘drivers’. A company needs a reason to enter global markets, reasons may include, because using global suppliers they can save money, a primary reason is because it opens up the company to dealing to a larger market. Next they need to be able to fund a global operations, now this would have been harder 20 years ago, but because of technological and communicational advances, it is easier to communicate with anyone in the world and to exchange goods/products through postal services.
In conclusion the main factor that needs to be considered is that globalization holds endless opportunities for companies and the organizations should view the global market as a market in its own respect. Yes, it has to be considered that there are added values in some cases and that the rate of change in a global market will be much greater than that of local markets, and yes the cultures will vary across the global market. But the underlying point to consider is that THE MARKET IS BIGGER and by making your products/services available to more people is much more likely to have a greater positive effect for your organization.
Reference List
Catherine Schwarz. 1992. Chambers Pocket Dictionary. Chambers Ltd. Edinburgh.
Constantine Andriopoulos and Patrick Dawson. 2009. Managing Change, Creativity & Innovation. Sage Publications Ltd. London.
Chris Bilton and Stephen Cummings. 2010. Creative Strategy: Reconnecting Business and Innovation. John Wiley & Sons Ltd. West Sussex.
Image available from:
http://businessblog.winweb.com/industry-solutions/ebay-sellertrader/winweb-launches-solution-for-ebay-sellers-and-ebay-traders
Accessed on 30/12/2011
Image available from:
http://cdn.mitsmr.com/files/2008/12/3113-ex2-lo10.png
Accessed on 30/12/2011
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