Globalization of Business

Question

What is the meaning of Globalization of Business and what is the reason many companies are in the process of expanding themselves?

Answer 1

Globalization of Business:

Many companies are in the process of expanding themselves by opening up their offices outside the domestic territories of the parent office. The reasons being so:-

• Overseas operations are often attractive to executives who wish to reduce their budgets in order to increase profit. For example- Chinese markets offer cheap production facilities.

• Availability of cheap workforce is another primary consideration. For example the labor force in India is available at cheap rates.

• When the company moves global it reduces its dependence on local or national markets. The downturns in consumer demand at home are offset by upturns in consumer demand in international markets.

• Larger markets offer bigger profit, therefore companies go global to seek new business opportunities and even to expand the range of goods and services that they offer

• At times businesses spread out to under-exploited regions to gain market dominance before an industry competitor expands into the region.