Introduction Globalization is a top concern for many businesses today. According to interviews conducted by BMGI, “seven out of 10 Fortune 500 CEOs cite the challenges of globalization as their top concern” (Para, 3). Globalization is the crux of expansion and growth for a company looking to control their market. Although, the concept of globalization is one of many complex parts it is still a very necessary discussion any company looking to survive long-term should be having. I propose that companies include the idea of global expansion in their long-term goals and plans for the future.
My solution to globalization crux to anticipate it long in advance and face it head on. This approach does come with its risks and uncertainties but it is only by taking those risks that a company can really be successful. Globalization is about getting connected with people around the globe. It is through this connectedness that businesses are able to expand into new markets, introduce new product lines, and solicit new investors. Think about McDonalds expanding into Hong Kong. The menu is much different than in the U. S.
because with the expansion into Hong Kong there was also a new untapped market. Of course there were risks but McDonalds calculated these risks and found ways to break-down the barriers that could potentially hinder them in this new environment. One of the main barriers to globalization is culture. In order for a company to successfully break into any market and especially one in an entirely different country they must first be aware of the culture. Surprisingly, many companies fail at the attempt to globalize by simply not taking the time to understand the culture in their new market.
The Crux For the argument for globalization I would like to focus on General Motors (GM) and how globalization played a part in their comeback to American supremacy. Of course we all remember the near collapse of the auto industry in 2009. Due to failed performance and financial practices, GM lost control of the market and in 2009, with their financial problems casting a dark shadow on the U. S economy the Government stepped in. On May 31, 2009 the Government forced GM into a reorganization bankruptcy. GM was now under the control of the federal Government.
What many people don’t know is that GM controlled the market for almost a century (1931-2008) and led in innovative auto expansion as well as became the driving force behind many bureaucratic and multinational corporations that gave way to our post-war economic comeback. It was their willingness to expand globally and break into new markets that allowed GM to control the auto industry for so long. It wasn’t until 2008 that Toyota surpassed GM as the number 1 automaker in the U. S. This thanks to Toyota’s expansion into global markets.
General Motors has found both issues and opportunities abroad. In 2011 alone General Motors sold a total of $9,025,942 vehicles globally (International Trade Association, n. d, Para. 12). Part of GM’s global globalization strategy is selling and manufacturing cars in China, since they make up such a large portion of GM’s sales. In China alone, GM has 11 joint ventures and two wholly owned foreign enterprises with more than 35,000 employees. In 2011, these firms produced 2. 5 million vehicles and generated some $1. 5 billion in profits for GM in the U. S (Politifact.
com, 2012). GM’s success in China signals a brighter economic future for the company. The increased global profits have allowed GM to gain some control of the company after turning it over to the Government five years ago. However, GM is faced with issues concerning their Chinese exploits. While GM is bringing in quite a lot of money from its global markets, there are also a lot of issues in doing so. The White House estimates that up to 60% of China’s auto parts exporters’ benefit from subsidies, making it hard for American companies to compete (Riley, 2012).
As we heard during the second presidential debate exporting overseas appears to be more “attractive” because companies like GM are able to keep their overhead down and their profits up. However, even after considering the cons for GM in going global and especially in China no one can deny that globalization is partly the reason GM has come roaring back. The globalization crux is simply that companies do not want to take the risk because these risks seemingly overshadow the potential in these global markets.
The lack of knowledge about globalization and companies who participate in it such as GM is what fuels the globalization crux. BMGI explains that “Understanding foreign cultures is essential to everything from the ability to penetrate new markets with existing products and services, to designing new products and services for new customers, to recognizing emergent, disruptive competitors that only months earlier weren’t even known. The problem to be solved is to better understand international markets and cultures through better information gathering and better analysis of what it all means” (Para, 3).
Companies that become more aware of globalization and treat it as an opportunity instead of a problem to be solved theoretically have more success in their endeavors to do so. The Solution As stated early on the solution to globalization is not to avoid it but to conquer it. In conquering globalization just as with anything you must first understand it. According to BMGI, “…The problem to be solved is to better understand international markets and cultures through better information gathering and better analysis of what it all means” (Para, 3).
Even in understanding why globalization should work there has to some acknowledgement that it is not currently working. According to Joseph Stiglitz, “countries and regions of the world are becoming poorer, rather than benefiting from the removal of regulations and lowering of corporate taxation that make up key elements of the program of globalization” (Para, 3). I think the awareness of how influential global warming is on world issues is undervalued as companies are not aware of their roles in globalization.
This in part due to overanalyzing the risks of globalization instead of welcoming the challenge for a greater cause. According to Robert J. Samuelson, “the world’s greatest tragedy, as judged by its capacity to inflict human tragedy… is global poverty…” and “the solution to being poor is getting rich… it’s economic growth” (Para, 1,3). Everything in a solution to globalization is centered on awareness. The dilemma in this is that companies are aware mostly of their own tragedies and the concept of social responsibility is so farfetched that globalization in that way is not even a consideration.
So, there is an apparent problem with globalization and it is lack of awareness. The solution to which would be simple. Gain a greater awareness. However, companies are so consumed by the risk of globalization that their efforts to conquer it are flawed at the premise. I could propose that we hold seminars or week long conferences and political debates to beat the idea of globalization as world stabilization into the heads of the world’s largest companies but the real solution lies in their own awareness and their own willingness to contribute to social responsibility.
References bmgi. com. (2013). Top Ten Problems Faced By Businesses. Retrieved from http://www. bmgi. com/problem-solving/articles/top-ten-problems-faced-business International Trade Association (n. d). Growth Trends in U. S. Vehicle Exports. Retrieved from http://www. trade. gov/mas/manufacturing/oaii/build/groups/public/@tg_oaai/documents/ webcontent/tg_oaai_003833. pdf Ohmynews. com. (2006). How to Solve the Problems of Globalization. Retrieved from http://english. ohmynews. com/articleview/article_view. asp?
no=319668&rel_no=1 Politifact. com. (2012). Ad claims GM used bailout to boost china operations. Retrieved from http://www. politifact. com/truth-o-meter/statements/2012/0ct/25/let-freedom-ring/claimsgm-used-bailout-money-boost-china-operation/ Riley, C. (2012). Obama hits china with trade complaint. Retrieved from http://money. cnn. com/2012/09/17/news/economy/obama-china-trade-autos/index. html Robert J. Samuelson. (2008). Rx for Global Poverty. Retrieved from http://www. thedailybeast. com/newsweek/2008/05/27/rx-for-global-poverty. html