Impact of Globalization
Patrick Martin
Global Business Strategy
Topic Paper
Impact of Globalization
If you go into your local store you will likely find a shirt made in Taiwan, a toy made in China, and an electronic made in Japan, all of which are made under a U.S. firm. This is a prime example of globalization which has become common place for large firms. While globalization is viewed as a way to increase business by firms, it is a risky venter with both positive and negative impact. Globalization is the act of moving away from distinct national economic units and toward one huge global market. For business, globalization is a means to boost their profitability. It is a financially driven act that can impact their finances in multiple ways. A fresh market has potential to enhance sales and raise profit margins. If entered early enough you get a head of potential competition and make a name for your firm within the market giving you the competitive advantage. Another way for it to help profitability is for your firm to move production outside the home country. While maybe the new market you’re in may not be enormously profitable, their labor cost can be cheaper, meaning expenses can be cut and the price you sell your product for is much more than what you built it for. Not every financial impact is guaranteed to be a good one. One downside of a new market is while you may sell more it may not be enough to make it worth the move. There is no guarantee of success in any business decision, especially one as expensive and risky as entering a new market. There are variables after variables of things to consider, and even when you choose the best possible option success is far from assured. The cost and energy involve in taking on such a task can, and has on multiple occasions, bankrupted and ruined firms. From constant shifting external factors like political environment and currency exchange rates, to internal factors like manpower and funds, globalization is one of the
Global Business Strategy
Topic Paper
Impact of Globalization
If you go into your local store you will likely find a shirt made in Taiwan, a toy made in China, and an electronic made in Japan, all of which are made under a U.S. firm. This is a prime example of globalization which has become common place for large firms. While globalization is viewed as a way to increase business by firms, it is a risky venter with both positive and negative impact. Globalization is the act of moving away from distinct national economic units and toward one huge global market. For business, globalization is a means to boost their profitability. It is a financially driven act that can impact their finances in multiple ways. A fresh market has potential to enhance sales and raise profit margins. If entered early enough you get a head of potential competition and make a name for your firm within the market giving you the competitive advantage. Another way for it to help profitability is for your firm to move production outside the home country. While maybe the new market you’re in may not be enormously profitable, their labor cost can be cheaper, meaning expenses can be cut and the price you sell your product for is much more than what you built it for. Not every financial impact is guaranteed to be a good one. One downside of a new market is while you may sell more it may not be enough to make it worth the move. There is no guarantee of success in any business decision, especially one as expensive and risky as entering a new market. There are variables after variables of things to consider, and even when you choose the best possible option success is far from assured. The cost and energy involve in taking on such a task can, and has on multiple occasions, bankrupted and ruined firms. From constant shifting external factors like political environment and currency exchange rates, to internal factors like manpower and funds, globalization is one of the
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