Benefits of Business Globalization (Globalized Business)
1. Economies of scale
By having one headquarters you achieve administrative economies of scale. By centralizing manufacturing activities of the same type you have additional economies of scale and lower costs of operations.
2. Strength in size
For many firms there are major benefits to increased size. Retailing is a good example. A WalMart or Carrefour can obtain goods at lower prices and then be more competitive.
3. Penetration of new markets and increased sales
The elapsed time to enter new markets has been dramatically reduced. In addition, a company can enter a market on a test basis and then later withdraw or retrench if the conditions are not favorable.
4. Access to human resources
Many firms are challenged with labor problems such as lack of personnel with specific skills or high labor costs. Operating internationally can help ease these problems.
5. Lower cost of operations
With economies of scale and flexibility in moving and locating operations to lower cost locales, the cost of doing business is reduced.
6. Maintenance and expansion of the firm’s competitive position
You often either grow or risk dying out. This has been the case in banking, insurance, and the automotive industry. When a competitor has success in expansion, you often have no choice but to follow the move.
