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Technological advancements have made it possible for the world to be closely connected. Many business organizations have opted to widen the scope of their markets from just being localized to serving the world wide market.
In as much as this is a good step to take, there are considerations which need to be taken seriously before a business can embark on this journey. This article is a brief review of what it takes to globalize business activities.
Going Global is a Long Term Project
It is very significant to acknowledge that going global is a long term project. Being a long term project therefore implies that the benefits may not be enjoyed in the short run and thus the need to have some funds set aside for this process. This might not be welcome for companies seeking profits in the short run.
When venturing into different markets, one needs to carry out an extensive research as in most cases there are many factors that differ among different regions which need to be taken care of.
Such factors may include issues such as customer preferences, legal considerations, and other logistics. These factors can not be taken care of at once; they have to be considered in a step wise manner hence making the whole process a long term one.
The Need for Research
Going global means venturing into new markets around the world; markets constitute of people with different values which in most cases become determinants of what they consume. Going global has to be preceded by a market research (Lamb, Hair & McDaniel, 2010).
An effective market research will take time and funds. Carrying out a market research is extremely important if the process of going global has to be successfully carried out.
By carrying out a market research various significant aspects will be brought into light making it possible for a business to engage in strategic modification of its goods to fit the new markets – it is worth noting that it is the goods to fit the markets and not markets to fit the goods.
Some of the significant aspects which need to be researched on include legal issues, cultural factors, competition, and presence of strategic partners among other factors. All these factors have to be examined carefully to retrieve accurate information because any assumptions made may likely make a huge contribution to failure of a company in its globalization process (Levi, 2007).
It is quite unfortunate that in most cases, a primary research has to be carried out to find out how best goods can be adapted to fit in a new market. This is especially the case when the goods are unique in the market. New kinds of goods are often confronted with cultural challenges in new markets and in some cases they may even be rejected in some areas depending on cultural backgrounds of such areas.
If an organization decides to bring in goods whose substitutes are already in the market then still research has to be carried out to identify how such goods can be modified to compete well with the other substitutes already established in the market.
Other logistics such as getting a license in venturing into new markets have to be considered before even the market research because some countries may have restrictions on importation of goods. It should also be noted that globalizing of a company activities and operations will lead to extra administrative costs (Audretsch & Bonser, 2002).
International markets have some uncertainties some of which may be out of control of a foreign company: for instance, there might be constant change of laws regulating taxes, the volume of commodities which can brought into a country among other legislation which may act to the benefit of the foreign country but at the expense of the company (Dahl, 2004).
As seen above, the process of globalizing business operations is time and money consuming especially at the initial stages of getting to know new markets. This challenge should however not be viewed in a negative manner because there are ways that can be used to cut down costs.
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One of the ways is by engaging in partnership with a company already operating in the new markets and use the knowledge of such a company on various aspects of the new market (Delaney, 2011).
The advantage that comes with the process of globalizing business activities is that of increased sales thus increased profits. By venturing into new markets, a business creates more room for expansion and reduces the risk of local market uncertainties. New markets also make it possible for a business to come up with strategies which might even be imported to the local market.
Globalizing business activities requires advanced planning as there are many aspects which have to be considered. Due to the detailed planning especially at the initial stages, the process becomes costly and consumes a lot of time.
In the long run, however, the process is beneficial to a business seeking this kind of expansion. By globalizing business activities a business benefits from increased sales and diversifies the risks associated with the local market.
Audretsch, D.B. & Bonser, F.C. (2002). Globalization and regionalization: challenges for public policy. New York, NY: Springer.
Dahl, C.A. (2004). International energy markets: understanding pricing, policies, and profits. New York, NY: PennWell.
Delaney, L. (2011). Global Strategic Alliances: Advantages and Disadvantages. Web.
Lamb, C.W., Hair, J.F. & McDaniel, C. (2010). MKTG4 2010. New York, NY: Cengage Learning.
Levi, K.J. (2007). Market Entry Strategies of Foreign Telecom Companies in India. New York, NY: DUV.