Over the past few decades, the world has seen an exponential increase in connectivity and globalization. Globalization encompasses the nuances and economic factors of conducting business internationally and existing in a global economy. With the advancement of transportation and technology, businesses have a better opportunity for global expansion.
Here are the advantages and disadvantages of globalization:
|Economic Growth: |
– Access to foreign labor
– Creation of foreign jobs
– Access to foreign resources
|Increased competition from globalization may lead to the elimination of local businesses.|
|Increased global cooperation reduces international conflict. This causes more economic stability and decreases the fluctuation of foreign currencies.||Environmental Concerns: |
– Deforestation caused by infrastructure development
– Greenhouse gas emissions caused by increased transportation of goods
However, companies undergo new challenges to ensure a successful product launch when entering foreign countries. Here are a few environmental factors to consider when thinking about how global business impacts your organization:
- International Laws and Politics: When doing business in another country, it is important to keep up with current foreign affairs and international laws that may regulate what products are allowed in and out of certain countries.
- Environmental Sustainability: When choosing a country to manufacture products or conduct business in, companies should consider sustainability factors. Globalization can often negatively impact climate change as businesses increase transportation of products and materials.
- Macroeconomics: The branch of economics concerned with large-scale or general economic factors, such as interest rates and national productivity, is an important consideration for globally-expanding companies. Companies should review the overall economic health of the foreign markets that they are attempting to enter. Unstable economies can create unnecessary financial risk with currency fluctuations.
- Ethics and Human Rights: Throughout the world, there are variations in legality. Companies need to consider their overall brand image and customer perception when engaging in legal but unethical foreign business practices. For example, labor laws could allow for the creation of a company product for pennies on the dollar. However, if customers analyze the supply chain, the discovery of cheap labor will inevitably decrease sales and the overall profit.
- Cultural Differences: It is imperative to understand the variations in cultures around the world. Strong cultural competencies are required for successful product integration within the foreign market. Companies can utilize prior cultural research, such as Hofstede’s Dimensions of Culture, as seen here.
The fundamental principle of marketing is communicating value to the customer. Therefore, international marketing is contingent on having a clear understanding of how different countries communicate, and what is valuable in the eyes of the consumers in foreign markets. International marketing requires in-depth market analysis and research to better understand the variations around the world. A company's understanding of these changes in market communication and perceived value will allow them to successfully launch its product in new, international markets.