Why Is the Globalization Process a Concern for Industries?

Why is the globalization process a concern for industries?

In recently, Globalization is a much-discussed topic in business world. Businessmen pay enormous attention on exports and imports to rise benefit of companies in the global market. Well understanding benefits and costs of globalization to businessmen is significant. In other words, people should know why is the globalization process a concern for them if they want to gain achievement in the global marketplace.

There is no denying that businessmen can gains benefits of globalization such as Free Trade. Free Trade is a way for countries to exchange goods and resources. It means that countries can specialize in producing goods where they have a comparative advantage which can produce goods at a lower opportunity cost. Moreover, Free movement of labor also is a benefit of globalization. Both workers and recipient countries can get advantages from increasing of labor migration. Workers should gain opportunities to look for work elsewhere, if a country has high unemployment rate. The process of free movement of labor helps reduce geographic inequality. Also, it helps countries with labor shortages fill important posts even though some countries are concerned that labor migration might cause pressure on housing and social services. For instance, the US was trying to prevent migrants from other countries actively.

However, the globalization still becomes a concern for firms since some challenges of the globalization. Aspect of the foreign environment such as political or legal forces, level of technology and geography which cannot be controlled by industries.

First of all, politics and laws raise amount of uncertainties and become challenge for industries. Increasing of political uncertainty can add costs by operating business so that increase the political risk for business. People’s resentment toward government, territorial disputes between nations such China and Japan and ethnic, racial or religious disputes might arises conflict and violence. Therefore it reduces ability to obtain materials and equipment, manufacture and distribute products, etc. Furthermore, host country set restriction for foreign industries for example, foreign companies are no more than 20% for electron industry in host country. Also, property seizure could increase political risk. Nationalization is the classical example, it means that force asset transfer to the government of an entire industry. As we know, uncertainty is creasing with government change its policies and laws so that firms should be as proactive as possible and refine strategies continually. If the firm cannot anticipate change, it would be replaces by others. That is the reason why the globalization process a concern for industries.

Secondly, the level of technology is a concern in the globalization. It often be misread because of the vast difference that exist between developed and developing countries. A marketer cannot assume that level of technology between two nations are same. Technical expertise may not be available in both countries, and the general population may not have an adequate level of technical knowledge to maintain equipment correctly. In such situations, a marketer has to take extra steps to make sure that workers use equipment properly. If technical support is not readily available, local people will have to be trained specially, or the company will provide support.