Forces Driving International Firms To Globalize Their Operations.
There are five major kinds of drivers that are leading international firms to the
globalization of their operations.
(1) Political
(2) Technological
(3) Market
(4) Cost
(5) Competitive
1. Political
There is a trend toward the unification and socialization of the global community.
Preferential trading arrangements, such as the North American Free Trade Agreement and
the European Union, that group several nations into a single market have presented firms
with significant marketing opportunities. Many have moved swiftly to enter either through
exporting or by producing in the area.
Two other aspects of this trend are contributing to the globalization of business
operations:-
(a) the progressive reduction of barriers to trade and foreign investment by most
governments, which is hastening the opening of new markets by international firms and
are both exporting to them and building production facilities in them, and
(b) the privatization of much of the industry in formerly communist nations and the
opening of their economies to global competition.
2. Technology
Advances in computer and communication technology are permitting an increased flow of
ideas and information across borders, enabling customers to learn about foreign goods.
Global communications networks enable manufacturing personnel to coordinate
production and design functions worldwide so that plants in many parts of the world may
be working on the same product.
The internet and network computing enable small companies to compete globally because
they make possible the rapid flow of information regardless of the physical location of the
buyer and seller.
The ease of obtaining information and making transactions on the Internet has started to
