Why Do Companies Globalize?

Common reasons companies globalize include access to a larger customer base, new revenue sources, new capital and access to resources. Additionally, the synergy that results from globalization is often amplified when customers around the world discuss a brand.

When a company has reached maximum capacity in efforts to reach customers in its domestic market, the most viable opportunity for growth may be to expand business in foreign countries. China has the world's largest population, and the country has undergone significant industrialization as of 2014. Therefore, a company that expands into the Chinese market can attract a significant number new customers. Not only does an expanded customer base mean more revenue, it gives the company capital to further develop its business around the world. A company that doesn't globalize risks yielding such capital to competitors and losing ground at home.

Companies also globalize to gain more convenient or affordable access to certain resources, including talent. A company that wants to offer solutions to a diverse marketplace benefits from a workforce comprised of diverse employees. Manufacturers may also set up operations in a particular country to gain access to raw materials that are important to production. Direct access can save money on importing materials as well.