GLOBALIZATION &

DRIVERS OF
GLOBALIZATION
NABILA SULTAN
KULTHUM AHMED
 GLOBALIZATION
We are moving towards a world in which barriers to cross border trade and investment are
declining; perceived distance is shrinking due to advances in transportation and
telecommunications technology, material culture is starting to look similar the world over; and
national economies are merging into an inter dependent, integrated global economy system.
The process by which this is occurring is commonly referred to as globalization. We are in the
world economy where business activities are being carried out with ease. People no longer
travel distances before carrying out their business activities. Goods and services of other
Nations are easily made available as demand. This is because there is a fundamental shift in
the world of economy trade. People are no longer threat by the four – walls of a nation policy.
Business activities and opportunities are widening as a result of globalization. This is the world
we live. It is a world where the volume of goods, services and investment crossing national
borders has expanded faster than world output consistently. For businesses, this process has
produced many opportunities. Firms can expand their revenues by selling around the world and
reduce their costs by producing in nations where key inputs, including labor are cheap. This unit
examined the benefits and shortcomings of globalization on business activities, world – over.
 THE GLOBALIZATION OF MARKETS
The globalization of markets refers to the merging of distinct and separate national markets into one
– huge global marketplace. In this situation, the tastes and preferences of consumers in different
nations are beginning to converge on some global norm. Therefore, it is no longer meaningful to talk
about the German market, the American market or the Japanese market. All these markets are
looked as a single market. For example, Coca Cola Company is most part of the world producing and
selling soft-drink as coke even the taste change from one country to another. It should however be
noted that a company does not have to be the size of these multinational giants such as coca- cola,
Sony, Kodak, etc. to facilitate, and benefit from the globalization of markets. The most global
markets currently are not markets for consumer products – where national differences in tastes and
preferences are still often important enough to act as a brake on globalization, but markets for
industrial goods and materials that serve a universal need the world over. In global markets, the
same firms frequently confront each other as competitors in nation after nation. For example, coca-
cola´s rivalry with Pepsi cola, just as Ford and Toyota. As firms follow each other around the world,
they bring with them many of the assets that served them well in other national markets – including
their products, operating strategies, marketing strategies and brand names-creating some
homogeneity across markets. Hence, greater uniformity replaces drivers.
 THE GLOBALIZATION OF PRODUCTION
The globalization of production refers to the sourcing of goods and services from
locations around the globe to take advantage of national differences in the cost and
quality of factors of production (Land, Labour, capital etc.). By so doing these
companies hope to lower their overall cost structure or improve the quality of
functionality of their product offering, thereby allowing them to compete more
effectively.
 DRIVERS OF GLOBALIZATION
Globalization does not just appear on its own there are some factors / innovations which
facilitated its application. This unit take a look at some of the innovations which took
place and which contributed towards globalization reality.
Globalization in contemporary business management is driven by several key factors that
have reshaped how organizations operate, compete, and strategize in the global
marketplace. Here are the main drivers:
1. Technological Advancements: Innovations in technology, such as the internet, cloud
computing, and artificial intelligence, have revolutionized communication, production, and
distribution processes. These advancements enable businesses to operate more efficiently
and reach global markets with ease.
2. Reduction of Trade and Investment Barriers: The establishment of international agreements
and organizations like the World Trade Organization (WTO) has led to the reduction of tariffs,
quotas, and other trade barriers. This has facilitated easier and more cost-effective cross-
border trade and investment.
3. Market Expansion: Companies seek to expand their markets beyond domestic borders to tap
into new customer bases. This drive for market expansion is often motivated by the saturation
of domestic markets and the potential for higher growth rates in emerging economies.
4. Cultural Integration: Globalization has led to increased cultural exchange and integration.
Businesses must navigate and manage cultural differences to foster collaboration and synergy
among diverse teams. Effective diversity management enhances creativity and decision-making
processes.
5. Economic Policies and Deregulation: Many countries have adopted economic policies that
promote free trade and investment. Deregulation in various sectors has also encouraged
foreign direct investment (FDI) and the entry of multinational corporations (MNCs) into new
markets.
6. Global Supply Chains: The globalization of supply chains allows companies to source materials
and components from different parts of the world, optimizing costs and efficiency. Efficient
logistics management is crucial for maintaining competitive advantage in a globalized market.
7. Corporate Social Responsibility (CSR) and Ethical Practices: There is growing scrutiny on
corporate behavior and ethical practices. Businesses are increasingly expected to demonstrate
commitment to CSR initiatives, environmental sustainability, and ethical supply chain
management. These considerations influence consumer perceptions and regulatory compliance.
8. Geopolitical Stability and Risk Management: Organizations must anticipate and mitigate
risks associated with geopolitical instability, economic fluctuations, and regulatory
changes across multiple jurisdictions. Effective risk management practices are essential
for maintaining resilience in a globalized business environment.

These drivers collectively shape the strategies and operations of contemporary businesses,
enabling them to thrive in an interconnected and dynamic global economy.