Reasons for Globalization

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Most associates move their firm operations to foreign countries by going global. They take their firm overseas for different reasons. These associates adopt the reactive or defensive arrival to stay ahead of the competition. A few of them take the proactive or aggressive arrival to achieve the same purpose. A majority of them select to adopt both approaches to avoid a decrease in their competition. In order to remain competitive, associates move as swiftly as inherent to regain a strong position in some of the key world or emerging markets with products customized for the need of the citizen in such areas in which they plan to establish. Most of these world markets are attracting associates with new capital investments with very good incentives. Some of the reactive or defensive reasons for going global are:

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(1) Trade Barriers

(2) customer Demands

(3) Globalization of Competitors

(4) Regulations and Restrictions

In the case of trade barriers, associates move from exporting their products to manufacturing them overseas in order to avoid the burden of tariffs, quotas, the policy of buy-local and other restrictions that make export too expensive to foreign markets. associates retort to customer demands for effective operations and product assurance and reliability, or/and logistical qoute solutions. Most foreign customers, who seek accessibility to suppliers may invite that supply stay local in order to improve the flow of production. associates normally succeed that invite to avoid losing the business. For the globalization of competitors, associates are aware that if they leave associates overseas too long without challenge or competition, their investments or foreign operations in the world market may be so solid that competition will be difficult. Therefore, they try to act quickly. Most companies' home government may have regulations and restrictions that are so inconvenient and expensive, thus limiting the expansion, encroaching in the companies' profits, and making their costs uncontrollable. Hence the presuppose for the associates arresting to different market environment with few foreign restrictive operations. The proactive or aggressive reasons for going global are:

(a) increase opportunities

(b) Economies of Scale

(c) Incentives

(d) resource correlate and Cost Savings

Many associates will prefer to invest their excess profits in order to expand, but sometimes they are tiny because of the maturity of the markets in their area. Therefore, they seek the overseas new markets to supply such increase opportunities. So, these companies, in addition to investing their excess profits, also try to maximize efficiency by employing their underutilized resources in human and capital assets such as management, machinery, and technology. associates seek economies of scale in order to achieve a higher level of production spread over large fixed costs to lower the per-unit cost. They also, want to maximize the use of their manufacturing equipment and spread the high costs of explore and development over the product life cycle. Some of the developing countries that need revision and development through capital infusion, skills, and technology voluntarily supply incentives such as fixed assets, tax exemptions, subsidies, tax holidays, human capital, and low wages. These incentives seem arresting to these associates due to their increase in profits and allowance of risks. Caution: The repatriation of profits and foreign transfer risks due to instability in leadership of these developing countries should be put into notice in negotiation. Way to raw materials and low operational costs in financing, transportation, low wages, lower unit costs, and power are arresting in terms of resource Way and cost savings. Most associates move their headquarters to overseas to avoid their respective home countries' high taxes and other costs related in firm doing in those countries.

Companies need to establish strategies, establish and operate systems, and also work with people, different companies, and countries around the world in the form of strategic alliance to ensure sustained competing advantage. Global management and management functions are normally formed by the prevailing conditions and ongoing garage and unstable developments in the world. A few countries take benefit of these companies, but when associates come to be aware that they are being used, they should then learn how they can be beneficial in that different cultural environment in order to make a lot of profits.

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