Stages in Globalization
1. Domestic Company
Market potential is limited to the home country. Production and marketing
facilities are located at home only. Surplus may or may not be exported. There
are no overt efforts to develop foreign markets. It may add new product lines,
serve new local markets but whole planning is limited to national markets
only.
Features:
Their focus remains with domestic market.
Their productions facilities remain based in home country. Their analysis is
focused on the national market.
They do not think globally and avoid taking risk in going global.
Their top management may have traditional kind of business management
competency and less global expertise.
They perceive that there is risk in expanding into global market and thus they
try to play safe and satisfied with whatever gains they are getting in domestic
market.
2. International Company
Some ambitious efficient domestic companies after going beyond their
domestic marketing capacities start thinking of expanding their operations in
International Markets. The main strategies for entering international market is:
a) Off-shoring/global outsourcing (seeking cheaper source of raw material or
labor)
b) Exporting
c) Licensing
d) Franchising
e) Joint Ventures/Acquisitions
f) Direct Investments
Even though they think of international markets, still they are of ethnocentric
or domestic oriented. These companies adopt the strategy of locating the
branches of their companies in other countries and practice the same
domestic operations in foreign markets, including the same promotion, price,
product etc. policies.
Features:
Focus on going beyond domestic
Their management remains ethnocentric with a vision to expand
internationally. They extend their domestic products, domestic prices and
other business practices to foreign countries.
They keep their marketing mix constant and extend their operations to new
countries.
Their management style remains centralized for their home nation and
extended top down to the overseas market country.
3. Multinational Company
After sometime, international companies realize that the domestic model and
practices adopted through extension policies do not serve the purpose. The
foreign customers may not prefer the products that are sold in domestic
market. Hence, these companies respond to the needs of different customers
in different countries and produce such goods and services that will satisfy
them.
Features:
Companies when they spread their wings to more nations become
multinational companies.
Sooner or later they realize that they have to change their marketing mix
according to the foreign market.
This can also be termed as multi domestic, in which different strategies are
adopted for different market.
The management of such companies remains decentralized and even
production may be in the host country.
Performance evaluation is done at different host countries.
4. Global
The global company adopts global strategy for marketing its products. It may
produce either in the home country or in any other single country and market
its products throughout the world. It may also produce the products globally
and market them domestically.
Features:
Such companies have a global marketing strategy.
They either produce in home country or in a single country and focus
marketing globally.
They adapt to the market conditions according to the foreign market.
Their performance evaluation is done worldwide.
5. Transnational Company
Transnational Company operates at the global level by way of utilizing global
resources to serve the global markets. It has geocentric orientation and has
integrated network. Its key assets are dispersed and every sub-unit of the
company contributes towards achievement of the company objectives. It
produces best quality raw materials from the cheapest source in the world,
process them in the country wherever it is economical and sells the finished
products in those markets where prices are favorable.
Features:
Transnational companies have a geocentric approach, which means they think
globally and act locally.
Transnational companies collect information worldwide and scan it for use
beyond geographical boundaries.
The vision of such to grow more in a global way.
Their human resources procurement and development remains globally.
Importance of Studying Globalization
In today’s contemporary world, it is important for students to understand and
appreciate the study of globalization for the following reasons:
1. There is greater demand in business and industry, health, engineering and
technology to have people who can work with people of other nations and
cultures.
2. There is a greater demand of prompting the local business and industry to
other countries and if need be, owners travel independently and
internationally for promotion.
3. The contemporary world face global challenges that will take
interdisciplinary groups to solve. These challenges are: how to provide access
to
Clean water
Clean environment
Clean renewable energy that is affordable to everyone
How to deal with the unpredictable climate change
These challenges need to be solved as soon as possible through the gathering
and sharing of information across disciplines, institutions, and other entities in
a global scale.
4. Creating meaningful, harmonious, and workable relationship that link
globally is an important aspect of the merits of globalization.
5. Knowledge of the merits and demerits of globalization will enable the
students to work as a model of collaborative international team in the near
future along the areas of business, education, health, science, arts,
engineering, hotel industries, and etc.
The Importance of Globalization for Everyone
According to Neil Kokemuller, a writer, globalization is the expansion of local
economies and businesses into a broader international marketplace. Even
small businesses have gotten active in the global environment as the internet
and mobile technology have enabled communication across continents and
countries.
The internet revolutionized the business arena, because it created a whole
new virtual marketplace that expands beyond physical and geographical
boundaries. Companies in foreign countries can now compete for customers in
other countries by leveraging their own country’s resources
The development of business, industry and income levels in several large
population centers has also contributed to the importance of globalization.
Competition
Even if companies want to avoid the globalization movement, they often have
no choice but to compete. The influx of foreign competitors limits the number
of companies in some industries that can succeed domestically. In the same
way, if competitors expand globally, businesses have to consider following
suit.
Diverse Population
Business trends often mirror broader social trends. The world has become
very diverse. As people move to different parts of the world, they spread
different ideas, perspectives and customs.
