With most major corporations, in order to get their products into your hands inexpensively, the work does not all happen in one place. More often than not, various aspects involved in the manufacturing process occur across more than one country. This would be very difficult to achieve if not for the advancement of globalization.Globalization plays a major role in the products we use, the food we eat, and even the media that we consume.

Overview: What is globalization?

Globalization can be defined as the minimization of barriers between countries in order to do business on a global scale.

4 benefits and 4 drawbacks of globalization

There are many benefits as well as drawbacks to globalization:

Benefit 1: Access to more markets

Globalization allows businesses to reach more markets, thereby increasing the potential for more buyers and revenue beyond the domestic market.

Benefit 2: Shared technology

With globalization, businesses receive the benefit of sharing technology with organizations overseas. This provides ample opportunity for technological innovation.

Benefit 3: Cultural awareness

Working with other countries provides the opportunity to heighten an organization’s cultural awareness. This increase in cultural awareness can then be funneled into targeting foreign customers.

Benefit 4: Promotes growth

Globalization can provide economic growth opportunities for all countries involved.

Drawback 1: Unfair competition

Globalization leads to local businesses having to compete with global organizations that can obtain goods at a significantly lower cost.

Drawback 2: Exploitation

Globalization can lead industrialized nations to have trade agreements with developing countries that then exploit workers and have negative environmental effects.

Drawback 3: Trade imbalances

Globalization can lead to trade imbalances when a country spends more on imports than it makes from exports.

Drawback 4: Domestic jobs

With globalization, industrialized countries outsource their labor in order to produce goods cheaper, which leads to fewer jobs being available domestically.

Why is globalization important to understand?

Globalization is important to understand for the following reasons:


It is important to understand globalization so that you are fully aware of the impact of the choices your organization makes in its entry into the international market.

Reaching new customers

Understanding globalization is important when it comes time to reach beyond your current customer base.

Offering better value

Having an understanding of how globalization works is important because the opportunities it provides can offer better value for your customers.

An industry example of globalization

An instrument manufacturer is able to offer quality guitars at a rate significantly lower than its competitors. In order to achieve this, the parts for the guitar are made in China, and the instruments are assembled in Mexico before being prepared for shipment in their United States factory. Globalization has created the opportunity for this manufacturer to provide quality instruments to the public at a much lower rate than if every aspect of the production and manufacturing of the instruments were done in the United States.

3 best practices when thinking about globalization

Here are some best practices to consider when globalizing your organization:

1. Localization

If you are introducing your product into an overseas market, localization will be an important factor. This may involve having your product manufactured in more than one language, using different marketing techniques, and accounting for differences in how shipping is done.

2. Account for time

When sending goods overseas, it is important to account for the time required to reach the intended recipient. This includes longer shipping times as well as getting through customs. This should be worked into the project planning.

3. Keep an eye on quality

There is a chance that quality will be a concern if you are not having your goods produced in-house. By having the work done overseas, it can be harder to keep on top of processes and quality control. Be sure to secure methods for being able to maintain your level of quality when embracing globalization as part of your operations.

Frequently Asked Questions (FAQ) about globalization

What are the three types of globalization?

The three types of globalization are economic, political, and cultural.

Is globalization good or bad?

There are both positive and negative aspects to globalization, so it is not inherently good or bad. It is important for an organization to consider both sides of the globalization issue in its practices.

What has had the biggest effect on the advancement of globalization?

Advances in telecommunications and transportation technologies have had the biggest effects on the increase in globalization.

Globalization and your business

If you have exhausted the domestic market for your goods or are looking to be able to offer your product at a lower rate, looking at the possibilities that globalization provides could be worthwhile.
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