Regionalization

International business

(735N1)

Ref no.179341

Globalization 

Since1990s, with the premises of the unprecedented vast global investments flowing from one country to another, soaring development of muti-national enterprises and the expansion of global financial transaction system have taken place. These facts all mount to an irreversible and dynamic activity called globalization. This an inevitable trend we can no longer trifle with, and I would like to share my opinions on it.

As to the concept of globalization, the academic circles still have various interpretations on it, I would argue that globalization embodies the enhancement of communication and synthesis of international commodities and services that bond the countries to one abstract but influential league, it is complementary to every country in the world in terms of technology, capital and innovation of different industries. Globalization also diminish the likelihood of any country to become self-sufficiency, that is autarky. I understand there are three aspects the spurring the process of globalization, among which are producing material, including human resources, capitals, state-of-art apparatus ect. in the business; global and keen activities conducted by MNEs takes place in everywhere every time; economic reliance and bond among countries is increasingly tighten.

The ultimate goal of globalization, from my perspective, should be the integration of world economy into one entity. By that point of time, the global or regional production, finance and technology will melt into one complete market, in which the achievement of reasonable allocation of resource and capital is no more just a daydream. Through its global expansion and the rigid bound set up, financial and economic organization will gain more power and authority to counter-balance that of countries from which are originally and historically stemmed. This is a long revolution that no country will easily surrender to, but in the meantime, nor will they abstain from.

Economic globalization is a two-side blade undoubtedly. For any countries or regions, it brings opportunities as well as challenges, but it does not always bear the obstructions directly proportional to opportunities. Developed countries like U.S. or U.K. sustains the minimum impacts but yield the most fruitful outcomes. Obviously, the rule of globalization is preliminarily set by formidable countries, thus they would have upper hand to establish international economic orders that favor themselves most. As developing countries, like China or India and many other Asian countries that are able to provide cheap human resources are severely impacted but the profitable business chances are hidden within. The loose but enormous markets from developing countries has drawn countless foreign investors to pool their capitals and technologies into the markets. Empirically speaking, it did widely open the export and import opportunities, advanced managerial methods and solve the problem of capital shortage.

Home-Region direction

Since 1983, a famous marketing figure Theodore Levitt published his milestone essay, suggesting the ideal of ‘ Global Marketing’, which becomes the most controversial, challenging but lucrative trend all around the world. Globalization has become the only path to many raising companies as well as developing countries, but now thinking about the realistic situation of this prevalent trend. Could each and every company and country benefit from it? Or is it merely a game for full-fledged player to participate, should we take a step back and brood on the future of globalization, a future that we all eager to have a seat in. That is questions worth contemplating, for MNEs as we known are quite rational on this ‘Globalization fever’, only 9 of Fortunate 500 companies are ambiguously global, the rest of them still have an average 80% of total sale in home-region country, treading cautiously towards the path of being global(Meyer, 2006).

For the limitation of the length, their are 3 reasons I would like to draw upon to explain this unusual and unexpected phenomena.

Spatial proximity

In process of conducting global commerce, distance between home country and host country matters. MNEs are likely to deploy their attentions to proximal and familiar opportunities to minimize the cost of dynamic adjustments, thus favoring a regional strategy(Hutzschenreuter, Voll, & Verbeke, 2011) . For a company who wants to enter the market of another continent is far more harder for just entering that of the country nearby. Imagine a company wants to open a brand-new service in another country far away, this will demand a new building to operate in, hire employees from the host country and sending special core technicians to that country, month or even years to evaluate the depth of that potential but unfamiliar market, not to mention additional costs of acquiring information about the economy, language, business system.

Admittedly, geographical reason is always one of the most direct pretexts to dissuade company to expand their business (Tan & Mahoney, 2005). As a major decision as such, requiring discreet thoughts and evaluations over host countries, and always the country in proximity is a better choice to run for a trail, gaining experience for further move into other regions.        

Despite their are several methods to get into the host market, like franchising, licensing, exporting, FDI(foreign direct investment)and strategic alliance, none of which does not require a proper and thorough research upon that country. With remote distance, it comes with even higher price and level of difficulty to do so.