Globalization Advantages And Disadvantages Essay
With faster communications, technological progress, transportation advancements and financial flows, the barriers between nations have disappeared and the world is becoming a borderless market. Globalization has various opportunities such as:
• Economies of scale: Global markets offer exciting opportunities to exploit the latest demand in the world markets and expand their production volumes.
• Reduced cost: Firms reduce costs by locating their production facilities in countries where they can be produced more economically.
• New customers and performance enhancement: It helps in increasing customer base Eg: India and China with their huge population are considered very attractive for expansion. Also it helps in improving performance of the firm by gaining access to outstanding technical and professional talents.
Despite of the above advantages firms face many risks when expanding globally. They are as follows:
• Political and Economic Risks: Some countries are not politically stable, forces such as social unrest, military turmoil, violent conflicts, terrorist attacks can pose serious threats.
• Currency Risks: Currency
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Trade liberalization allows for a substantially easier flow of goods, capital, people and knowledge around the globe. A long list of advantages lures companies into globalising. Geographic expansion abroad offers the vast potential benefits of a much larger market arena, spread risks, scope/scale/location-based coast advantages and exposure to a variety of new product and process ideas. But there are a number of complexities of global environment. When introducing the complexity concept to executives in globally operating companies, complexity is multiplied to its current heightened level. A core challenge of globalised companies, complexity cannot be made simple. It is crucial to understand what drives complexity. Four major sources that interact together to create today’s
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