What Are Five Major Kinds of Drivers for Globalization of Firms?
Drivers of the globalization of firms include government, competition, cost globalization and market drivers. Globalization has also been driven by technology, including use of the Internet, mobile phones and satellite-tracking technology.
Government globalization drivers include common product and technology standards, a benign regulatory climate and favorable trade policies. Government drivers are important in forming the competitive environment because of the presence or absence of favorable trade policies; government-operated competitors or customers; and technical standards.
The actions of competing firms define competitive globalization drivers and create interdependence between geographical markets. High levels of competitive diversity, industry change and trade increase the potential for globalization.
Differential costs and global scope economics are cost globalization drivers. The belief that a single market is no longer large enough to support a competitive strategy is at the heart of cost globalization drivers.
Market drivers define how customer distribution patterns evolve and focus on the steady convergence of customer needs. The marketing of standardized products and services as consumers in different regions demand similar products is a driver of globalization.
Changes in technology have made it easier to communicate around the world and have therefore driven globalization. However, there are major differences in technology between countries around the world.