Student
Boiko A. I.
Donetsk national university of economics and
trade named after Mykhailo Tugan-Baranovsky, Ukraine
The globalization of business in modern world
The globalization of business is one of the
most exciting features of the present transition. Formation and exchange of
goods and services involve an ever-increasing part of the population globally
with the great scope of participation every year.
The aim of this paper is to examine the
phenomenon of globalization of business in the modern development of
international economic relations.
More and more countries, cultures, and people
are becoming a part of interactive economic trade. The goods, labor, and
services get exchanged more broadly, and the portion of world population away
from global economy continues to shrink. This globalization has effectively
done some fundamental changes in business outlook as well as practices [1].
There are five business responses to globalization. They are:
1.
Competing in a new environment: The
rise of companies from emerging markets has changed the game and the outlook
for business.
2.
Expanding internationally:
Despite the downturn and concerns over state intervention, companies are still
planning geographic expansion.
3.
Innovations in innovation:
Companies must rethink strategies to ensure that innovations developed in one
country are commercially viable in others.
4.
Diversifying management: As
companies deepen and broaden their presence in international markets, the need
for culturally diverse management teams becomes all the more pressing.
5.
Policy matters: Business
will have to engage with governments and other policy makers on global issues
such as protectionism, regulation and trade issues [2].
Business firms want
to globalize in order to expand their markets, increase sales, and increase
profits [3]. The decision to enter international business activities is based
on the comparative advantages of countries and the competitive advantages of
the individual business. A country has a comparative advantage when it can
produce goods more efficiently or cheaply that other countries because of its
specific circumstances [4]. Free trade agreements facilitate those activities
and promote economic globalization.
Trade agreements
facilitate the activities of major companies. For example, Ford Motor Company
is working to create a "world car" that can be sold and used
throughout the "global village." Trade agreements facilitate
distribution systems, franchising, joint ventures, and other cross-border
collaborations between and among businesses. Coca-Cola and Pepsi-Cola are sold
in hundreds of countries throughout the world. Franchises for McDonald's
hamburgers, Pizza Hut, Subway, Burger King, and others carry U.S. trade names
as well as U.S.-style fast foods (and fast eating styles) throughout the world.
There is no
established definition of the "global" business, but it is helpful to
look at companies that operate on a worldwide basis to try to identify
characteristics that show how their outlook and operations are global. One
group of researchers identified and studied how the following large companies
are responding to the forces of globalization: Banque National' de Paris;
Canon; CSX; Electrolux, JCB; Pirelli; Royal Trust; TNT Express Worldwide; and
Waste Management, Inc. That study identified four common characteristics of
global companies. First, activities such as marketing, manufacturing,
logistics, and research and development are approached based on a holistic,
worldwide plan. Second, the global company does not confine itself within
boundaries; its headquarters is, ideally, transparent to customers. Third,
global business adjusts its business to meet the needs of local customers;
cultural diversity and understanding are crucial. Fourth, the company strives
to balance an integrated, global system with the need to be sensitive to local
needs.
The automobile
industry provides excellent examples of the globalization of business. Toyota
(a Japanese firm) manufactures its Camry model in the United States. Major U.S.
automobile firms have all formed alliances with Asian or European firms. GM is
allied with Toyota and Saab; Ford has alliances with Mazda, Jaguar, and Volvo;
and Chrysler has joined forces with a European company to become Daimler
Chrysler [3].
Thus, in
modern world most companies find it necessary to globalize in order to extend
an organization's operations to other countries based on profits, stability, or
competition. Such companies as Coca-Cola, McDonald's, Pizza Hut, Subway, Burger
King, Banque National' de Paris, Canon, CSX, Electrolux, JCB, Pirelli, Royal
Trust, TNT Express Worldwide, Waste
Management Inc. , Toyota, Ford and others are the examples of the globalization
of business.
References:
http://www.dart-creations.com/article-tree/businessfinance/career_in_business_management.html
2. Redrawing the map: globalization and the
changing world of business - Five business responses to globalization // Ernst
& Young Online
http://www.ey.com/GL/en/Issues/Business-environment/Redrawing-the-map--globalization-and-the-changing-world-of-business---Five-business-responses-to-globalization
http://www.enotes.com/biz-encyclopedia/globalization
4. How
Globalization Affects Management // Workaholic http://work-a-holic.narod.ru/globalization/glo.html