Explain Some of The Key Drivers of Globalization - Research and Present Four Drivers - Report Writing Assessment Answer

Abstract

In the process of carrying out international operations, companies tend to opt to expand their operations thus going for the globalization process. In going for the globalization process, there are a number of factors that are considered before the organizations and people expand their operations internationally. As such, this report has defined the process by which people and organizations offer their products and services in international markets. Secondary sources were used to gather information relating to globalization and the key drivers of the whole process. The report has also highlighted on some of the key drivers behind the globalization process with the emphasis being put in advances in technology, political drivers, market drivers and cheap transport technologies.

Table of Contents

ABSTRACT

INTRODUCTION

DRIVERS OF GLOBALIZATION

Lower transport costs

Technological drivers

Political drivers

Market drivers

CONCLUSION

Introduction

By definition, globalization has been described as that particular process of international integration that comes up as a result of global exchange and interchange of world views, products, and ideas amongst other cultural aspects that make it simple for people to move from one region to the other globally (Schuh, 2007, p. 275). There are some factors that have made the globalization process easy, and to be achieved by most of the people in the globe includes advancement in the transport sector like the invention of the steam locomotive, the jet engines, container ships, steamships and advances in telecommunication infrastructure have made it very easy to move from one region to the other (Globerman, Roehl, and Standifird, 2001, p. 750). The term globalization can be said to have been first used in the 1980’s to mean the whole process of democratizing the access to the knowledge of local markets, different information that relates to the global customers, products, linguistic boundaries and services from one region to the other (Hulme, 2009, p. 15).

The rise in the use of telecommunication technologies like the development of telegraphs, the Internet, the mobile phones and the computer has also made it very easy for people to communicate while in different parts of the globe thus making the whole process of globalization a success. One of the benefits of globalization to the different economies of the world is the generation of the economic and cultural interdependence of various individuals and nations that engage in the whole process of globalization. Globally, multinationals tend to engage in the globalization process to increase their sales, profits and the value of shareholders (Hulme, 2009, p. 17).

Generally, globalization tends to provide the opportunity and remove most of the barriers to fair trade thus making it easy for companies to expand into new territories. Nations tend to encourage their domestically established companies to expand their operations for purposes of increasing their flow of profits and building their domestic economies, thus making the whole process of globalization very important (Schuh, 2007, p. 277). As such, this paper will discuss at most four drivers of globalization in different parts of the world. The first section of the report will discuss the drivers of globalization starting from lower transport cost to market-related drivers. The description of the drivers will be followed by a conclusion of the report.

Drivers of globalization

Different scholars have found out that the process of globalization happens to be a strong result of the new world system as it represents one of the very influential forces that determines the future course of global businesses. The whole process is said to have been initiated by various drivers that made it possible for information, services, and products to be easily moved from one point to the other in the same globe (Thiers, Sinskey, and Berndt, 2008, p. 14) . As such, this section will discuss the four key drivers of the globalization process across the whole world.

Lower transport costs

One of the factors that can be said to have a great impact on the process of globalization is the lower transport cost that has been achieved as a result of advances in the transport sector. Over time, the cost of transporting products from one point to the other has significantly reduced as more efficient transportation modes have emerged in the whole world. The advancement in the transportation sector has led to easy logistics for products being transported from one region to the other. Lower transport costs have led to an easy bulk shipping and easy movement of business people from one region to the other (Schuh, 2007, p. 276). The result of this is that the prices in the country where the goods being transported are made closer to the prices in the export market. Lower transportation costs have also made it easy for people to move to other countries where they learn their production modes, thus contributing greatly towards the whole process of globalization (Lane, and Ferretti, 2008, p. 335).

Technological drivers

The other important factor that has led to an acceleration in the process of globalization is the emergence of technological inventions and applications in almost all areas of the world. In the contemporary world, technology is seen to have shaped and set a strong basis for modern globalization. Technological innovations in the transport sector, for example, have significantly brought about a revolution in the transport sector (Lane, and Ferretti, 2008, p. 330). Additionally, the inventions that were done in the telecommunication process that brought about the establishment of the microprocessor led to the establishment of very high effective computing as well as communication practices at very low costs (Moncada, Vivarelli, and Voigt, 2011, p 588).

In an example, the emergence of the Internet and its applications has significantly lowered the real cost of transmitting and communicating information from one part of the world to the other.

The Internet has also made it very easy to share information as people can have real-time conversations that help them to make advances in various sectors of the economy based on the information that they get from the other side during their conversation (Ananthram, and Pearson, 2008, p. 16). Additionally, scholars have also found out that the application of digital communication all over the world has stimulated global trade regarding knowledge products like the application of various software, outsourced services, and various media content. The Internet has also led to the establishment of e-commerce, a practice that has boosted the globalization process significantly.

Easy and cheap transportations also make it very easy for raw materials of some products to be moved from one region to the other, thus leading to the process of globalization taking place with very little initial costs (Hulme, 2009, p. 12). The integration process is also made possible by the presence of cheap transportation network being available in different areas, thus making it very easy for people to communicate and organize physical meetings that lead to the establishment of strong ties that lead to the globalization process (Yeung, 2009, p. 30).

Political drivers

The other very important driver of the process of globalization has been categorized as political drivers. The presence of liberalized trade in the world has made it easy for people to trade from one region to the other as the set trade rules have been eased for trading purposes (Ananthram, and Pearson, 2008, p. 15). The lowering of trade tariffs also has made it easy to move products from one region to the other, thus making it very easy to carry trade and offer services to different parts of the world, making the globalization process very easy and simple for all those who are willing to engage in comfortably (Lane, and Ferretti, 2008, p. 333).

Market liberalization and the lowering of trade tariffs have also allowed foreign direct investment to be carried out in different parts of the world thus making the whole process easy and effective. Some of the recent developments that have made it easy to carry out businesses in different parts of the world without a lot of restrictions include the General Agreement on Tariffs and Trade that was established in the year 1947 and the World Trade Organization that was effected in the year 1995 (Meyfroidt, et al., 2013, p 343). The other important organizations that are concerned with how trade is carried out in different parts of the world include the privatization in the Eastern Europe that makes it very easy for developers to carry out their activities in different parts of the world with ease thus acting as a key driver of globalization.

The political status of most of the countries in the world usually plays important role in determining the process of globalization. If the political institutions of a country are stable, then there is a very high likelihood that a good number of multinationals will move to that country and make their investments there (Currit, and Easterling, 2009, p. 540). On the other hand, if the political status of a given country is wanting, then a good number of multinationals will shy away from investing in those countries, and this restricts the whole process of globalization (Meyfroidt, et al., 2013, p 341). Greatly, a big number of political institutions are controlled by politicians as well as their political ideologies. As a result, the relations that the politicians of a given country tend to have to the other politicians in the global arena dictates the way in which business is carried out in these countries. The result of this is either establishing strong business ties with the other countries or affecting the existing ties with the other countries, and this affects the process of globalization in a number of ways.

Market drivers

The other drivers that affect the globalization process are related to both domestic and international market drivers. As domestic markets in a given country get more and more saturated as a result of more products being offered by the increasing number of companies in the market, more growth opportunities tend to open for these companies to expand globally. As such, a great number of organizations tend to opt to invest in countries where their products are less concentrated thus leading to most of the companies globalizing its operations leading to globalization process being highly recommended. In doing this, the needs of customer’s of the organizations and the opportunity to use global marketing channels as well as transfer marketing to the extent their incentives to the international market. This thus acts as a key driver to the globalization.

The market drivers are also linked to factors that relate to cost efficiency in the regions where the trade happens. It is that particular urge of the organization that makes them outsource extra markets or their products that happen to have better costs compared to their local market, thus making them move to outside markets that are far from their domestic markets leading to the globalization process (Moncada, Vivarelli, and Voigt, 2011, p 587). The other factor that is linked to the cost of products in the global market includes the opportunity to come up with international scale economies as well as meeting the high product development costs that exist in the present day markets.

Additionally, as the markets of products expand globally, there happens to rise an inter-firm competition between both the local companies, thus making them opt for the expansion of the territories that they serve to make them go international and thus acting as a precursor to the process of globalization (Meyfroidt, et al., 2013, p 340). This is always boosted by the desire for companies to have strong interdependence in their operations, thus making the whole process one of the best to engage in and comfortably go for international trade that acts as a driver to initiating the globalization process.

Conclusion

The purpose of this report was to discuss four drivers of the globalization process. As such, the report has described the four main drivers of globalization that included political drivers, technological drivers, transport drivers and market drivers. The report discusses these drivers greatly with an example been given to some of the drivers discussed. The significance of the findings of this report is that organizations and people need to know these factors and consider them before going global and presenting their products and services on the international market. It is thus recommended that any person needs to familiarize with these drivers to make sure that they are not affected in anyway by factors that may arise as they carry out their international operations.