Globalization

In the previous blog, I have talked about the globalization; and this blog will discuss about its advantages and disadvantages. Globalization made our life more and more convenience, and we can easily collect information about the other countries. In my opinion, globalization is good to company and customer, but it also has some drawbacks.

About advantage of globalization, it globalizes the human resource. If a company hire different nation employee, it can increase the creativity, because different culture have different idea. Moreover, those employee can provide the information about his or her country, if the company willing to access that market. Know well about the background and culture in target countries helps company easily enter into the market and being success, because the company already has some general idea of that market, they can nearly meet the customer needs. For example, McDonald has located in more than 1000 countries. Although McDonald has a standard menu, the price in each country is different. Also, each country has different eating culture and habit, McDonald should made little change in each country, such as ‘Dinner Rice’ is a products in Hong Kong McDonald. Furthermore, hire local employee to work and manage overseas business can easily to communication with supplier and customers, using the local language to serve customer can decrease the gap between customers and the company and become closer. https://www.youtube.com/watch?v=h-HZINQ_I9E

The other advantage of globalization is the international trade, free trade is exchanging goods and service across international borders or territories, and it increases the company market share and profit. Samsung are the good example, it is a Korean company, but we can buy their phone in our countries. Samsung have well known the needs in the world and expand the market to the world. At the result, Samsung has gain a lot of market share and being the biggest competitor in Apple. Also, international trade enable customers buy many products which are global brand in their country and it is more convenience to customers. The global brand enter the market will increase competitiveness; therefore, companies will enhance their product to compete with international brand. For example, Zara is a clothing store; it is a big competitor to the small independent clothing store, so the small store will focus on the quality of cloth and service to protect their market share. https://www.youtube.com/watch?v=XIGpuL-Kkyk

The disadvantage of the globalization is loss of culture. Nowadays, we can receive any information in the world; we can collect it through internet and media. These all information will affect to our knowledge and culture, decrease the uniqueness of each country. Some traditional and local culture is losing, such as Hong Kong people are supporting overseas music but scorn local music. Globalization increase the music culture competitive, there are huge amount of different nation music compete to local music, and people will separately focus on other countries music culture and ignore theirs. I think culture is the soul of a country and it represents the country, so we should protect and develop our country culture.

In conclusion, globalization can be positive or negative, it makes company more profitable and encourages the global economy, but it influences our country soul. We should balance both side and not intensify the loss of culture.

Business methods - external strategies

In this blog, I will talk about the external strategies, which are the company should concern to being global success. In external strategies, there are five methods which are joint venture, strategic alliance, franchise, merger and acquisition.

Joint venture is two or more company sharing the investment risk and cost by creating a new company in another country. Sony Ericsson is an example of joint venture. Sony is a Japanese electronics company and Ericsson is a Swedish telecommunication company, they built a new company called ’Sony Ericsson’ and focus on mobile phone industry. Although both companies should share the profit in ’Sony Ericsson’, it decrease the risk and cost in both company. It is the advantage of joint venture for the companies. https://www.youtube.com/watch?v=uIlSPyZt3hM

Strategic alliance is sharing human resource and financial resource on a project. For example, Hong Kong Disneyland has strategies alliance with Honda. Honda sponsors the cars for the new attraction in Disneyland, and Honda can use the image in Disneyland to promote their cars, motorbike or other products. In this example, Hong Kong Disneyland provide their brand image to Honda for promotion, and Honda provide their product to Disneyland for their new attraction. https://www.youtube.com/watch?v=HgfwzPRyVvw

Franchise is selling the brand, name, image and product to others to run their business. McDonald is a franchisor, and everyone can become a franchisee to run the McDonald for his or her own business. McDonald will provide training, equipment, food material or other things are related to the operation. It is a good strategy to develop the business globally, but the company should focus on quality control on each franchisee to ensure they provide the product or service are consist with your business, because their business are related to your company image. https://www.youtube.com/watch?v=EmjA6O2HIus

Merger is combine two or more company into a single company. If you would like to develop your business in other countries, merger a local company helps you look inside the local market and gain more knowledge in the market, at the result, you can enter the market more successfully. Tesco have decided enter the China market, but it fail to enter, because the company did not recognize the market and cannot meet the customer needs. Then, Tesco merger a Chinese company and being more successful, because the Chinese company provide the knowledge in the China Market, thus, Tesco can provide the services and goods, which are customer needs. https://www.youtube.com/watch?v=J-t6zD5G4bk

Acquisition has the same advantage as merger, but the firm will purchases the major equity interest of the other company. The Heng Seng Bank in Hong Kong and HSBC are an example of acquisition. Heng Seng Bank is a biggest bank in Hong Kong and it is the biggest competitor for HSBC. However, Heng Seng Bank is facing the financial problem, and they sold 62.14% of shares to HSBC to solve the issue. Heng Seng Bank is success, because the management level is Chinese people and they know the need of Hong Kong citizen, so HSBC did not change their management team. At the end, HSBC gain the market share of Heng Seng Bank and deduct one biggest competitor.

In conclusion, There are no strategies ensure the company must be successful in global by using this strategy, it is depend on which business are you in and based on your business needs.

Business method - internal strategies

Globalization may affect many aspects, which include economy, environment, culture and politics. Economic globalization is the international integration of goods, technology, labour, information, capital or other process of making this happen. It encourage many companies expand their business to other countries, because it can increase their market share and decrease some material cost or labour cost, at the result, the company can gains more profit. Company should consider the internal strategies and external strategies to become global business successfully. Below I will discuss about the internal strategies. In internal strategies, Company can choose exporting, direct investment and e-commerce to develop their business to overseas.

Exporting is selling the products to another country. Some business will choose this method because it is low cost and they do not need to set up an operation in that country. E-bay is an example about exporting, people can sell their good to overseas countries, such as a seller in UK can sell his or her products to Hong Kong. The seller does not set up a business in Hong Kong, but he or she can sell the products to Hong Kong. https://www.youtube.com/watch?v=YyW4pvYYjV4

Direct investment is established an operation in another country and manage by themselves, this is a high risk and high cost method. A German luxury car brand BMW has established a manufacture in India and China. Although the labor cost in those countries are low, company should invests on land cost, material cost, quality control and equipment, and it totally cost BMW about £18,624,000. https://www.youtube.com/watch?v=6l1S1LXC9aE

E-commerce is selling or buying goods through the internet, it has same advantage as exporting, which is cheaper way to build up the business in other countries without operate a business in overseas. Amazon and E-bay are the good example for e-commerce, it is convenience to the buyer to buy good from other country and seller can sell products to another country. https://www.youtube.com/watch?v=AhgtoQIfuQ4

In conclusion, these three methods are the internal strategies for company, it has advantage and disadvantage of the business, therefore, company should choose the based on their situation to find the suitable one. About the external strategies, I will talk about it in the next blog.