Management
Q 1: Globalization aspects and challenge
Globalization refers to connectivity and integration between nations, organizations and individuals. Through globalization, economic interdependence between countries has been enhanced. The capital flow amongst multinational corporations has facilitated their productivity because of the expanded market. Technological advancement and mobility of people and capital form the core aspects of globalization.
Technology has facilitated global connection through improving telecommunication and transport sector. People from all over the world can easily interact and trade via online platforms. For instance, video conferencing is common in organizations whereby an individual can connect and communicate with other people through forums such as Skype.
Connectivity and infrastructure development have influenced the mobility of people and capital. People can move around the world since there is the availability of efficient and fast means of transport such as flights. Trade has been enabled because resources can easily be channeled to investment opportunities arising in various parts of the world.
One of the challenges of the phenomenon is that it leads to dependency among countries. Developing countries tend to rely on the developed countries for the provision of consumer products (ABE, 2001). Globalization makes a country to rely on imports from other nations which can lead to a deficit in the country’s balance of payment.
As a company undertakes its operations, it faces political and economic risks. Political risks refer to the risk of losses either financial, market or personnel that can occur as a result of political interruptions or decisions. Decisions by the government on issues such as taxation, labor laws, and currency value among others tend to affect the firm’s profitability. On the other hand, economic risks refer to variations in macroeconomic conditions such as inflation, exchange rate, government policies among others and how they affect or influence the performance of the firm which tends to be foreign.
Q 3: Forces companies face when they enter the international market
The two opposing forces companies face when they globalize cost reduction and adaptation to the local market. The market for the firm’s product is expanded hence reducing cost. The theory is based on an assumption that the needs of the people worldwide are homogenous, and people prefer to pay lower prices for high-quality products. The assumptions are not always valid since markets and interests of the consumers vary from place to place.
Q 4: Strategies to manage the opposing forces firms face
Strategies to enhance the adaptation to local market and cost reduction include a global strategy, multi-domestic strategy, transnational approach and international strategy. In global strategy, the competitive plan is centralized and monitored by a corporate administration. The plan advocates for economies of scale and quality production. In the multi-national approach, the head company delegates’ production and sale of products to subsidiary firms in local markets. Through the plan, the business can serve the specific needs of consumers since the subsidiary has information on the locals’ taste and preferences. The transnational strategy focuses on optimizing the trade-off between the firm and the locals which increase the efficiency of the organization. In the plan, the company’s resources are invested in many regions to enable adaptation to the local market. International strategy tends to be open to political risks since the firms are global, and some areas face political wars and disruptions. The plan advocates for optimization of the resources by scheduling and situating the operations of the enterprise in locations that enhance the efficiency of the organization.
Q 5: Regionalization
Regionalization refers to the process of decentralization through the creation of smaller units which tend to improve the overall effectiveness in commodity or service delivery. The sections created are manageable, and the firm can access information of households. Hence, the company tends to understand the consumer needs, and it works to ensure those particular needs are met.
Q 6: Entrepreneurial opportunities
Entrepreneurial opportunities refer to situations where an investor identifies a gap in the market and bridges it through providing the consumers with the service or good. The investor the sells the product at a price higher than the cost incurred in the delivery of the commodity hence making a profit. Through exploitation of the market imperfections, an investor identifies the openings in the system and fills them through the provision of the service.
Q 7: Human capital and social capital
Human capital is the labor output from the workers of a firm. All employees of an organization have their respective skills and competencies. The skills possessed by the employees enable the company to produce quality products and deliver standard services. On the other hand, social capital refers to institutions, connections, and relationships that depict the quality of goods and services offered by an enterprise. An organization needs to interact with the society to get the information on specific consumer needs.
References
ABE, K. (2001). Internationalization and globalization. Journal of Information Processing And Management, 44(7), 514. http://dx.doi.org/10.1241/johokanri.44.514
