Globalization
What is Globalization?
Globalization is the change in the way countries do business. Countries no longer choose to trade amongst themselves but have expanded their business abroad to nations far and wide. It is this type of transformation that changes the look and feel of the world economy and it requires the cooperation of all countries involved. The world today "is moving towards a world in which barriers to cross-border trade and investment are tumbling; perceived distance is shrinking due to advances in transportation and telecommunications technology; material culture is starting to look similar the world over; and national economies are merging into an interdependent global economic system" (Hill, 2005).
Majors Drivers of Globalization
When countries first began developing products, they made just enough to satisfy the country's demand without any surplus. As companies became larger their output increased and the country's desire and need for new products grew. There are several motivators or drivers that encourage globalization and the expansion of companies into foreign lands. Examples of these would be:
? Increase Company Profits-by expanding overseas, companies are able to produce and sell more of their products and services.
? Reduce Fixed Costs-by producing more products the company actually reduces it fixed costs and can increase the profit margin.
? Increase Market Share-increased sales lead to an increased share of the market along with increased profits.
? Reduce Costs-by operating overseas and hiring cheaper labor companies are able to reduce their cost of doing business leading to increased profits.