Expounding Globalization

What is Globalization? What are its components? What and how does it impact on developed nations? How does it benefit companies? These are the questions that I will try to answer with this blog post.

First of all, what is Globalization? Well, Globalization is defined as a process that, based on international strategies, aims to expand business operations on a worldwide level, and was precipitated by the facilitation of global communications due to technological advancements, and socioeconomic, political and environmental developments. According to Theodore Levitt’s ‘The Globalization of Markets’, “Almost everyone everywhere wants all the things they have heard about, seen, or experienced via the new technologies” which resulted into the new consumer reality – the emergence of global markets for standardized consumer products on previously unimagined scale of magnitude. Accustomed differences in national or regional preference are now gone, thus the Globalization of Markets is now at hand.

The goal of globalization is to provide organizations a superior competitive position with lower operating costs, to gain greater numbers of products, services and consumers. This approach to competition is gained through diversifying their resources, creating and developing new investment opportunities by opening up additional markets, and accessing new raw materials and resources. Diversifying their resources is a business strategy that increases the variety of business products and services within various organizations. Diversifying their resources strengthens institutions by lowering organizational risk factors, spreading interests in different areas, taking advantage of market opportunities, and acquiring companies both horizontal and vertical in nature. According to Porter’s Competitive Advantage of Nations, “A nation’s competitiveness depends on the capacity of its industry to innovate and upgrade” having said that, economic capabilities of nations is a key factor in order for companies to achieve their globalization goals.

The components of globalization include GDP, industrialization and the Human Development Index (HDI). The GDP is the market value of all finished goods and services produced within a country’s borders in a year, and serves as a measure of a country’s overall economic output. Industrialization is a process which, driven by technological innovation, effectuates social change and economic development by transforming a country into a modernized industrial, or developed nation. The degree to which an organization is globalized and diversified has bearing on the strategies that it uses to pursue greater development and investment opportunities.

Globalization forces businesses to adapt to different strategies based on new ideological trends that try to balance rights and interests of both the individual and the community as a whole. This change enables businesses to compete worldwide and also signifies a dramatic change for business leaders, labor and management by legitimately accepting the participation of workers and government in developing and implementing company policies and strategies. Globalization brings reorganization at the international, national and sub-national levels. Specifically, it brings the reorganization of production, international trade and the integration of financial markets.


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