What Drives Globalization? Part 4/4

Globalization is driven by four factors:

  1. Cost
  2. Market
  3. Environment
  4. Competition

Competition:

To remain competitive, global rivals have to intensify their marketing everywhere by attempting to sustain advantages that, if weakened, could make them susceptible to market share erosion worldwide. Competitive companies introduce, upgrade, and distribute new products faster than ever before. A company that does not remain ahead of the competition risks seeing its carefully researched ideas picked off by other global players.

Leading companies drive the globalization process. There is no structural reason why soft drinks should be at a more advanced stage of globalization than beer and spirits, except for the opportunistic behavior of Coca-Cola. Similarly, German beauty products maker Nivea is driving its business in a global direction by creating global brands, a global demand for those brands, and a global supply chain that helps the company meet those demands.

Nonetheless, the four global drivers have affected countries and industrial sectors differently. While some industries, including paper and soft drinks, are truly globally contested, some others, such as government procurement, are still closed. Commodities and manufactured goods are already in a globalized state, while many consumer goods are accelerating toward more globalization. Similarly, the leading trading nations display far more openness than low-income countries and that openness is advancing the positive state of globalization in general.

This is an excerpt from Dr. Czinkota’s book Global Business: Positioning Ventures Ahead, co-authored by Dr. Ilkka Ronkainen.

Michael R Czinkota and Ilkka A Ronkainen, Global Business: Positioning Ventures Ahead (New York: Routledge, 2011), pg. 92.

 

Related posts: