Globalisation

Despite the existence of the compelling theory and evidence, Globalisation has its critics

Globalisation is the expansion of companies, people, technology and communication from having a purely national reach, to having an international reach. Globalisation has been around in various forms for a number of centuries but has seen rapid expansion since the turn of the 20th Century. There are a number of key factors that have aided in this expansion and continued growth which need to be examined individually to fully appreciate their impact.

Technology

Technology is of vital importance to the expansion of globalisation. As technology improves, so does the speed at which services and transactions can occur. One of the key drivers that has helped global expansion is due to the development of the internet which allowed for improved communication and gave birth to E-Commerce. Companies have had to embrace the internet to stay competitive in the new global economy. At the cusp of the dot com business phenomenon many businesses decided to embrace the new medium that was the internet. Companies that were pioneers in this field were able to, in many cases gain a strong market share and lead over companies that choose not to adapt to the new technology. Furthermore, E-Commerce allowed businesses to expand from their own domestic markets, expanding into international markets and thus opening the company to new customers and expanding their business.

Increased Competition

Another key feature of globalisation is increased competition both from increased competition domestically and also from abroad. This increased competition is normally seen as a positive as this encourages companies to become more competitive and offer customers the best value for money in their bid to survive in business. Businesses will for sure be impacted by this increased competition and failure to remain competitive in this global market can be the reason that some companies will fail. Companies must ensure that they are offering great value for money and appropriate quality of product or service to customers to ensure that customers continue to choose the to engage with that company.

Barriers to Entry

In order for Trade to be increased across the global, barriers to trade need to be reduced, such as import taxes or tariffs. This reduction in barriers allows companies to be able to trade on a level trading field and there are less complications to trading. For companies, this is important as the reduction of complexity makes it easier for international trade. Many companies have been able to take advantage of the reduction in barriers to international trade. This can be seen with many companies setting up offices and trading across the globe. An example of which can be seen in companies such as McDonalds or products such as Coca-Cola. These companies and products can be found in most countries around the world. Failure to understand the few remaining trading rules internationally can cause companies to fail, in particular around how complex items like International Tax are paid in all of the different companies.

Increased Consumer Demand

Customers have become used to the idea of being able to procure items that they demand across the globe. Customers expect to be able to find many of the same products across The Americas, Europe and Asia for example. This is driving companies and products to expand across the world and contributing to the expansion of globalisation. This increased global demand has meant that companies need to invest more in global production plants and also by having an increased supply chain and logistics network. Constant demand has put extra pressure on companies also, as customers are normally not willing to wait for stock shortages. Companies that are not able to keep with this increased global demand, can lead to companies being economically impacted.

Reference:
http://www.economicsdiscussion.net/international-economics/forces-behind-globalization-with-diagram/4217