Is globalization the only option for international business?

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coachingcorner | High School Teacher | (Level 1) Senior Educator

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It is true that globalisation is helping to create more wealth in developing countries - but this is not the only issue in determining whether it is beneficial to the world as a whole. It seems that countries which are already rich do well, but that it has not been successful in raising the world's poorest countries from poverty. Many economists believe that globalisation has failed to assist in closing the gap between the poorest countries and the richest. For many of these poor developing countries there are other options. It may be more beneficial to cut costs and increase profits by being more local. For example businesses could employ local workers, attempt to meet locally specific needs according to local income levels and to expand very slowly from a tight local base.

However the reach of globalisation is now so profound and widespread that even the poorest developing countries have globally recognisable brands in their cities. For example McDonald's and Starbucks are almost universally recognised. These companies would argue that the benefits of globalisation far outweigh the disadvantages, even for poorer countries. For example there are positives such as increased international trade,companies having the chance to trade in more than one territory, increased security through confident dependence on the global economy, and also free movement of capital, services and goods. 

Globalisation is the trade and communication development through which the whole world is getting more interconnected as a result of hugely increased business and cultural exchange. It has been credited with increasing the production of products, goods and services. Many of our largest firms are no longer national companies but multinational global corporations with subsidiaries in several countries. 

Globalisation is not a new development. It has been happening for hundreds of years, but due to improved communication it has fast tracked greatly over the last century. There are alternatives to globalisation but many of the same business requisites still apply. For example small businesses can set up with the intention of trading locally but still need cheap raw materials and a cheap labour supply. If these can be found locally then small firms can thrive. However, goods need to be moved and small countries often have rough unreliable roads. A global multinational company can put inward investment into a developing country to provide good road systems so may be more likely to do well. Companies also need access to lucrative markets to sell their goods so if a small firm is offering to meet a local need they can be competitive. However this market is unlikely to grow significantly if the demand is only local. Governments also need to be business friendly and this can vary from country to country in the developing world. So there are alternatives to globalisation, but the benefits of the latter are hard to outdo.

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