Why Go Global (Term Paper Sample)

Why go Global?
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Why go Global?
Introduction
Globalization is an active process. The global economy is witnessing rapid evolution, and organizations have been expanding to seek international markets. Therefore, globalization is not a new phenomenon, but the rapidness witnessed is new. This is apparent because many firms are taking the initiative to establish a global market. There are many purposes why the firms are going global. Perhaps, one of the drivers to global markets is saturation of the home or local markets. Therefore, the company opts to seek a global market to access strategic business resources. Others go global to explore cluster effects in a particular global market.
In addition, most companies start their activities in their home countries with value adding activities and taking the initiative to go global requires a change of perception. On the other hand, going global is not a smooth activity. Some of the firms face financial constraints, and lack experience in the international markets, which can result to declining of the company. Although there are substantial, challenges for firms goingglobal, using mixed strategies have proven effective in surviving the diverse global markets. Strategic moves, such as forming alliances with international firms, collaboration with suppliers, distributors, and joint venture partners can see to the company’s success (Yip et al., 2000).
Prior studies suggest that small firms have advantages over large firms when going global. This is because the small firms are flexible when it comes to create a position in a decidedly globalized system. Moreover, owing to inadequate experience in terms of managerial expertise, foreign direct investment made by small firms is concentrated on developed nations. Importantly, the decision to go global requires evaluation because it will involve changes to the company’s strategy, and objectives. Companies will also need to pay be thoughtful to values, and customs of the international markets. Such strategies will have the firm seize global business opportunities, and increase sales, which will enhance the global reputation.
Why go global?
One of the things that companies should go global is to seek an international market. In addition, companies can target specific markets abroad. Therefore, going global is essential in this context, for companies to seek international markets. In many instances, companies take part in foreign investments to exploit potential markets. In so doing, going global is essential if the firm seeks to generate extra revenues. On the other hand, foreign governments are offering other foreign companies incentives, which should motivate them into going global (Yip et al., 2000).
As for such, the companies should go global to enjoy incentives such as subsidized labor and trade barriers. In addition, foreign governments are developing policies, which encourage entrepreneurs to go global, and this fosters direct trade connections in other countries, including financial incentives.Going global will give the company an opportunity to obtain resources, which may include minerals, and agricultural products. This will help in the survival of companies that deal in such resources, especially if the resource comprises an essential part of the firm’s production.
On the other hand, going global can also help the company gain efficiency. In this context, the firm can gain from variations, which may include factor endowments, cultures, institutional arrangements, and economic systems. However, in gaining efficiency, companies that may gain in this when going global are those, which have experience, large and diversified. Going global also has the capacity to help the company gain a competitive advantage. In such a case, going global will weaken their competitors. Therefore, in such an instance, going global is a strategic move for companies(Sakarya, Eckman and Hyllegard, 2006).
Finding Global Partners
One of the challenges that firms face when going global is finding global partners. Large firms, which have established local markets, find it easy to find global partners. This is because of exposure in business, and experience. Nevertheless, when companies aim to go global they have to establish a market overseas. The market will be important because it will expose them to the international partners, such as suppliers, distributors, investors, and strategic alliances in the global level(Yip et al., 2000). When a local company goes global, this will result to strengthening of the local markets, and gain competitive advantage. Once the company has achieved this in the home country, it will be easy for the firm to form strategic alliances. This is because partners often feel safe when engaging with companies that have a strong background.
Perspectives on Foreign and Domestic Investment in the USA
Ironically, the Unite States supports liberalization of foreign investment, but the US had many forms of provisions to restrict foreign investors from controlling the country’s economy. It was apparent in agricultural, land, mining, and logging investments. Alternatively, some of the provisions discriminated against overseas firms in finance and insurance. It also prohibited foreign investment in shipping. Therefore, this is an important aspect when companies seek to go global, especially in the United States. Nevertheless, companies, which opt to go global, should evaluate the policies of countries that take part in global markets.
Enhanced Supply Chain
As stated earlier, companies that seek to go global will have to put up with the changes that may come across. One of the changes is in the supply chain, and the company will have to develop a complex supply chain, which will work well in the global market. The supply chain should be central to efficiency, matched with supply demand, low prices and considers the risks and opportunities identified via supplier financing. The company should develop a global network, which will give the firm the capability to serve many consumers. This will also help to meet the diverse needs of their global consumers (Sakarya, Eckman and Hyllegard, 2006).
The company should also employ a vertically integrated supply chain, which will help in meeting the demands of the consumers. In addition, this will help in the controlling of quality of the products used by the company. When going global, it is important for the company to have in place a working R&D department. This will help in meeting the demands of the consumers. On the other hand, it is possible that when going global, the company will acquire diversification. In this context, the firm should manage its complexity by consumer, product, demand, component, sourcing and assembly.
Effective Global Partnerships
One of the aspects that enhance global business is effective global partnerships between the company and other stakeholders such as distributors, customers, suppliers. In so doing, the company will be in a position to survive in the international market. In addition, effective global partnerships help the company in making continuous improvements. Trust in partnerships is essential between the company and the partners. With trust, the company, together with the other teams can share their knowledge to enhance their business. In addition, it will lead to the creation of strategic alliances, which will enable the firm to gain competitive advantage.
When going global, companies should aim at showing responsibility. In this manner, the distributor will have assurance of accessing goods. This will contribute in the creation of effective partnerships. The company should also seek to be in good working relationships with their partners(Chu, Girdhar and Sood, 2013). This means that the involved parties respect each other’s rules of business. Employees also qualify as potential partners to the company. Therefore, firms should give their international employees with incentives; treat them well, and other good things, which will support in developing good correlations. This will contribute to effective global partnerships.
Export Business Planning
When going global, it is important to have a sound export plan. The purpose is to prepare the business to gain entry into the international market. This is vitalfor the reason that it will benefit the company export products to the global market. The company must consider some of the products it distributes successfully in the local market. In the global market, this product will need to have different targets to serve the needs of consumers in the global market. This will include different prices, which should consider the market globally, and the demand of the merchandise in the global market. The firm can decide to hire an expert to help in exporting, especially because it is a new company seeking global markets. Moreover, the firm should be sensitive, and aware of the cultural implications. The firm should be successful in its local market because this will influence its exporting activities in the global market. It is also essential to set goals, which should be central to long-term and short-term goals (Chu, Girdhar and Sood, 2013).
Six Smart Strategies
Free Trade Agreements
Free Trade Agreements have proved to be effective for businesses opt to go global. In this context, companies seeking to go international should set up their branches in nations that allow for FTA. For instance, the US allows free Trade Agreements, which reduces trade barriers, and this opens up foreign markets.
State Assistance
Owing to the challenges, which companies may face when going global, it is imperative for firms to seek state assistance. The home country can facilitate the company in finding or gaining financial aid ...