Aspects of Globalization Concept Report (Assessment)

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Globalization is the extent to which information, investments, trade, political cooperation, cultural values, and social ideas flow among different countries. It is creating a borderless world for managers by allowing them to conduct their operations internationally rather than locally, hire employees from different countries, buy raw materials from the best sources, and sell goods in various markets (Samson et al., 2020). Although the borderless world presents many opportunities to managers, it also entails risks, such as information security and cultural differences.

A global mindset is a manager’s ability to recognize and influence people or organizations that have different cultural, social, political, and psychological backgrounds (Samson et al., 2020). It has become imperative for international companies because managers constantly interact with individuals with different perspectives. To ensure effective operations and collaboration, managers should be able to understand these perspectives instead of sticking to a worldview prevalent in their home country.

The international landscape is changing since China, India, and Brazil demonstrate economic growth and play an important role in global business. For example, China has received more foreign investments than any other place and has increased its number of Fortune Global 500 companies from 16 in 2005 to 98 in 2015 (Samson et al., 2020). While China is growing through manufacturing, India develops economically through services, software design, and precision engineering.

A multinational corporation (MNC) is a company, with more than 25% of revenues which come from operations in countries other than the home country of the parent organization (Samson et al., 2020). MNCs are characterized by close cooperation among affiliates in different countries and a single management authority making key decisions for the parent company and all affiliates (Samson et al., 2020). Additionally, MNC managers have a global perspective, viewing the whole world as one market.

Outsourcing refers to participating in a global division of labor that enables companies to complete certain activities in locations with the cheapest raw materials and labor (Samson et al., 2020). Exporting is an entry strategy in which the company’s production facilities remain in the home country, while produced goods are transferred to other countries for sale. Licensing is an entry strategy in which the company in one country gives firms in other countries access to specific resources, such as technology or trademark rights, to produce and sell its products abroad (Samson et al., 2020). Direct investing is an entry strategy where the company manages its production facilities in another country.

Reference

Samson, D., Donnet, T., & Daft, R. L. (2020). Management (7th ed.). Cengage Learning Australia.

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