The global business environment has evolved dramatically over the past several years. These changes come with both positive and negative aspects that companies now face within this global economy. The pros and cons of globalization provide businesses with a set of challenges as well as rewards for doing business on a global scale versus strictly domestic ventures. Some advantages of globalization are: access to global expertise, ease of entry into target markets, and the cost of business within the new market.
While some disadvantages of globalization are: costs of business within a new market, lack of comparable supplies abroad, and the added difficulty in managing diverse working groups. The ability to tap into the vast resources available to businesses on a global scale can prove to benefit the company in many ways. Having access to a talent pool of new individuals with specific strengths, technical, intellectual or both, allows a company to diversify its staff bringing forth a new set of possibilities in running the business.
This also allows for increased optimization of functions across a company by sharing resources throughout the globe within countries that may have more expertise or access to different technologies to best meet the business’ goals. By developing locations within foreign markets or partnering with foreign firms, this permits companies to develop a presence within the market which can in turn optimize the services and products offered by the company as a whole. For example, DHL offers global shipping options for businesses throughout the globe.
By understanding the needs and priority behind their services, the company has established a strong global presence to provide better services taking these concerns into account. “As a significant cross-border shipper, DHL is focused on meeting the supply chain demands created by globalization. DHL provides local logistics know-how and expertise in international supply chains. This has been to proven to assist customers in realizing their maximum sales opportunities in new markets, and to minimize their cost of business through global sourcing. ” (DHL, 2007).
This allows the company to provide to its clients an awareness of local obstacles of doing business both locally and globally by understanding the complexities of cross-border shipping. This can save a company both in time and money by understanding the local and global requirements. An addition advantage to globalization is that international labor can be cheaper in terms of cost versus domestically hired employees. Lowering operating costs to businesses is typically seen as a critical corporate goal. Globalization can aid in meeting this desire.
There are also disadvantages to globalization. Disadvantages to global business are: the cost of establishing a presence within the new market, the lack of comparable supplies within these new locations, the cultural differences, language barriers, and time zone differences all of which make managing a diverse global team challenging. Some supplies such as physical equipment (construction equipment, copiers, computers, raw materials, etc) may not be available within other markets. This can impact the quality of the products produced if these supplies are not able to be obtained.
The cost of obtaining supplies, appropriate staff, import and export costs, as well as the day-to-day costs of international business travel can become negatives for a company wanting to establish a new market presence. Once within the desired location, understanding both the culture and language throughout global business practices can become a negative for the business. It is critical to understand the cultures of the areas where business is performed. Failure to understand subtle exchanges, whether this is through conversation or body language, business dealings can be enhanced or terminated.
Managers in an international business are faced with these challenges and must be conscious of the manner in which they address these issues. Dealing with time zone issues in scheduling meetings, who to invite to meetings, and understanding how to work with staff throughout the world can effect a manager in how they run their departments and the company for that matter. While globalization of operations is inevitable, being aware of the pros and cons of international business can make the dealings much easier. Reference DHL:http://www. dhl. com/publish/etc/medialib/g0/downloads/general. Par. 0051. File. tmp/corporateflyer_desc. pdf