Short Report on Globalization and Regionalization
Subject: Management
Topic: This is International Management
Table of Contents
Globalization and Regionalization
Globalization
Globalization is perhaps the buzzword for business organizations operating in the present business environment. It has dissolved geographical and political boundaries and has made the entire world resemble a boundary less global village. Globalization involves a phenomenon in which business organizations are breaching geographical and political boundaries to reach out to new and untapped markets in an attempt to leverage on the existing business opportunities. The birth of multinational and transnational organizations is direct fallout of the phenomenon of globalization. International expansion and outsourcing can be termed as the two main strategies undertaken by business organizations as a part of their globalised outlook. Emergence of economies like India and China that offer skilled labor at comparatively cheaper rates has led to business organizations relocating business units like back office operations to these nations where they can get the desired quality level at cheap rates. In addition to this firms have also been using international expansion to reach out to new and potential markets. The restriction of trade barriers has also made investments in overseas destinations easier for firms. Examples of firms pursuing international strategies include Lenovo Computers, Wal-Mart and others that have successfully entered into new markets and established a formidable foothold in those markets. International expansion strategy is recommended in circumstances where domestic markets for an organization starts getting saturated and the company has enough internal resources and expertise to manage business in an international level by being able to sustain its core competence areas in new foreign markets. It should also have sufficient financial resources to sustain the business in foreign locations. Favorable government regulations and a congenial political, economic, sociological environment are also essential pre requisites for a firm to enter into a foreign market (Organization for Economic Co-operation and Development, 2007, p.24-38).