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3. Summarize how globalization is impacting on organizations generally.

3. Summarize how globalization is impacting on organizations generally.

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Globalization can be said to be the process of integration and interaction between business organizations, governments, people, and communities worldwide. In the economic sense, globalization is the integration of the national and local economies into the global market economy, and the trend emerged in the 1970s. Improvements in spheres including communication and transportation aid globalization and the new way of affairs also provide for growth in ideas, international trade, and cultural integration. Globalization results in the formation of global markets because of the liberalization of economic policies and activities of the nation. Globalization impacts the business organizations in the following ways.

Creates New Markets

Business organizations can now easily assess the new and global markets because the cross-border trade and business barriers and hurdles are removed. Nations become more welcoming to foreign businesses and in the process generate more investments, jobs, and better living and technological standards for their society and economy as well. Businesses can now easily enter into joint ventures and mergers and reap the benefits of cost advantages and bigger markets.

Increases Competition

In the globalized and liberalized markets, even the small and homegrown industries also become exposed to international competition. The competition can be in areas including technology, cost, price, production rate, technology adaption, and others. In a globalized world, only the most innovative organizations may survive in the long-term. While competition has immense benefits for the end-customers and the economy, it may limit the profit potential for certain businesses.

Eases Technology Exchange

Businesses from the developing nations and even the third world countries have now got access to most modern technologies in ICT, production, service delivery, and other areas. This may improve the profit potential of these businesses.

Economies of Scale

Businesses can now sell the same products to customers in many different nations. Therefore they can now achieve more profits through the economies of scale.

Location Flexibility

Companies are no longer required to have their production and assembly lines in places where the target customer base is located. They can easily set up their production plants in countries where the cost of labor and other essentials like electricity and land is cheaper and can lower their cost towards production. Countries like China and India are now hosting the production plants of many different and important American business organizations including Apple. Also, companies can set up the production/service plants in other nations as well and can be quite close to the customer bases. This may help them improve delivery, and serve well to customer aspirations.

Helps in Acquiring Best Talent

Businesses can now hope to hire the best talent, no matter what its country of origin is. Movement of people for jobs across the borders is now more common than ever.

Improves Business Sustainability

An organization may not turn to be a multinational solely because it needs to satisfy its operational needs like a release of the surplus production, acquiring cheaper technology, equipment, and materials, and/or upgrading to new technology. Globalization also helps organizations satisfy their strategic needs. International operations help companies ensure that there is inviolability towards the adverse future changes and a more steadier growth is achieved. Companies can easily overcome the stagnation that may be caused because of saturation in the market and ensure better profitability by operating in new markets.

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