A critical analysis of the following statement "Globalisation is not important as in reality most international firms operate on regional or local basis"
Essay 2010 10 Pages
Considering the given statement, we have to consider, if it is true, that globalisation is not important, then why should we look at globalization? The statement includes truth since actually most of them seem to operate in a region, but is this really the sole answer?
First of all, one statement has to be made to clarify the issue: Globalisation is important as it is a trend that is characterised by denationalisation in which national boundaries are becoming less relevant. But on the other hand there is not such a thing as a global strategy that never has to be adapted to several or even all of the markets MNCs operate in. That is why in this essay the argument is put forward, that Globalisation is not vitally important to international firms.
The essay concludes that globalisation for international firms is important, but that there is still the urgent need to redefine their global strategy, as they have to differ from country to country and adapt to local needs and practices.
When an Australian purchases a Dell notebook PC, a Porsche or a bottle of Beck’s beer, a Fendi handbag or a Camus cognac, he or she is obviously buying a foreign product. These are only a few examples of the products that are clearly made in and imported from other continents.
If you ask yourself the question: „What is an “American” car?” (Salvatore) you could come up with an answer like: „any vehicle assembled in North America (the United States, Canada and Mexico) should be considered American because these vehicles use U.S.-made parts. But the United Auto Workers union views cars built in Canada and Mexico as taking away U.S. jobs. Some regard automobiles produced by Japanese-owned plants in the United States as American because they provide jobs for Americans.” or any other answer. The point is, that Globalisation is practically everywhere, in every industry and nearly every product that is being sold over the world. This essay is going to elaborate the importance of Globalisation considering that international firms operate on a global and local scale.
Topic definition for this essay
When analysing the statement “Globalisation is not important as in reality most international firms operate on a regional or local basis.” you first have to have an idea about what Globalisation broadly means.
Definition of Globalisation
Singh proposes the following definition of Globalisation: “Globalisation refers to a world in which complex economic, political, social and cultural processes operate and interact without any influence of national boundaries and distance. It also implies that a development in any part of the world can create far-reaching consequences.” (Singh, 2005, p.13).
As there is a need to make further definitions concerning the elaboration of the given statement, this essay will focus on economic globalisation. The reason for this is that globalisation is the growing interdependence among national economies and the emergence of an integrated global economy.
Economic Globalisation is “the integration of national economies into the international economy through trade, foreign direct investment, capital flows, migration, and the spread of technology.” (Salvatore)
International firms definition:
An international firm could be a global company (GC), which is an organisation that attempts to standardise and integrate operations worldwide in all functional areas, or a Multinational Company (MNC), which is a firm that engages in a foreign direct investment and owns or controls value-adding activities in more than one country.
After the introduction into the topic with the definitions of globalisation and international firms, you still have to define from which perspective we are looking at the topic. One could look at the topic from the host country’s, the international firm’s or the consumer’s perspective.
This essay will only consider the global or international firm’s perspective considering mainly Marketing, Manufacturing or Logistics.
In the provided table you can see the largest companies in the world in 2009. Those companies but also smaller ones will be a reference in this essay.
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- La Trobe University Melbourne