Globalizing company operations involves modification of a company’s operation to suit different countries. This is essential since countries differ in form of social, political, cultural and legal aspects. It is therefore necessary for any company that intends to globalize operations to make deliberations in the level of associated risks, and the probable benefits to globalization. Some of the benefits that can be realized through globalized operations include increased revenue due to access to a wider customer base.
The increase in customer base comes about as a result of multi-national operations as well as due to accumulation of foreign reserves. Apart from increased revenue, a globalized company also gains in terms of increased efficiency due to the resulting customer awareness, and economies of scale. The economies of scale realized due to globalization come about due to increased production volumes, reduced advertisement costs and strong business relationships.
Through globalization, companies manage to create relationships that are greater than political affiliations. The company also acquires great power as a result of investing in varied markets. Globalization also helps companies to achieve business risk diversification. This is through risk management which aids companies in the prevention of unprecedented business risks. Various risks are experienced through globalization of operations.
For instance, there is risk of exposure to varied infrastructural and legal conditions in different countries. This can cripple global operations at times. In addition to this, globalization requires financial, labor and technology resources which may be challenging to access. Globalization also exposes businesses to currency differences and the need for divergence in adverts due to cultural differences. In addition to this, delegation of duties may be difficult with globalization although this may be difficult. The key elements of successful globalization include tactful planning and operation monitoring.
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