Globalization involves a variety of links expanding and tightening a web of political, economic and cultural inter-connections. Most attention has been devoted to merchandise trade as it has had the most immediate (or most visible) consequences, but capital, in and of itself, has come to play an arguably even larger role than the trade in material goods. Human movements also link previously separate communities. Finally, there is the cultural connection. All the individual data would indicate that we are undergoing a process of compression of international time and space and an intensification of international relations. The separation of production and consumption that is the heart of modern capitalism appears to have reached its zenith. Globalization is not just another "buzz-word" (globaloney), but very much a real and significant phenomenon.
But, what does it mean? What does a globalized world look like? Despite the extensive discussion on globalization and international interdependence, we still have a relatively limited idea of what this new world looks like. We understand that there are more international connections taking place, that a wider variety of goods and services are being exchanged across boundaries, that more and more people live their professional, family, and intellectual lives in more than one country, and that cultural autarky is no longer possible.
At its most basic, there is nothing mysterious about globalization. The term has come into common usage since the 1980s, reflecting technological advances that have made it easier and quicker to complete international transactions—both trade and financial flows. It refers to an extension beyond national borders of the same market forces that have operated for centuries at all levels of human economic activity—village markets, urban industries, or financial centers.
Markets promote efficiency through competition and the division of labor, the specialization that allows people and economies to focus on what they do best. Global markets offer greater opportunity for people to tap into more and larger markets around the world. It means that they can have access to more capital flows, technology, cheaper imports, and larger export markets.
2. REASONS FOR GOING ABROAD
Generally, the reason for even considering an international expansion fall into four separate areas:
1. Market size (leading to product effectiveness and competitive advantage)
2. External influences (Economic healthiness or less intense competition than home markets)
3. Geographical diversification
4. Product longevity
(Paul Gibbs, 1992)
It is extremely important to understand the direction and the stability of the environment that we try to get in. This environment consists of socio-cultural, political, economical, legal and government traits.
Awareness of social and cultural norms has helped major multinational companies such as Coca-Cola, IBM, Marlboro and Pepsi succeed in being...