Globalization has occasioned significant evolution of the business world, making it imperative for corporate executives to develop strategies that focus international competitiveness. When a company is started in the contemporary business world, the aim is to globalize its operations. Expanding abroad has become the most effective business strategy for most corporate executives. Globalization promises to present a number of opportunities and challenges to business executives in the next five years. Moreover, the current United States businesses are greatly being impacted by globalization. It is also vital to take note of the major economic drivers, which impact globalization.
Opportunities and challenges to international business executives in the next 5 years
Opportunities
The first opportunity for the international business executive in the next five years is increase in the market share. The current high rate of population growth around the world indicates that international business executives will have to plan for a global market with increased number of consumers or simply buyers. The international business executive will, therefore, have a great opportunity to expand the market share for their corporations around the world (Cavusgil et al., 2014).
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The second opportunity is the enhanced chance to diversify a company’s customer base. In the next five years, international business executives will be facing a global market base made up of consumers who have very different tastes and preferences. Therefore, the chance for companies to diversify their businesses through market segmentation will be very high.
Finally, there will be the opportunity for a vast source of highly skilled and qualified labor force. The international business executive will have the opportunity of recruiting the best human resource from a rich global labor force market.
Challenges
In the next 5 years, globalization will bring about huge challenges for the international business executives. The first challenge will be the need to deal with a human resource made up of different cultures. The different cultures will imply employees have differing beliefs and ways of doing things (McFarlin & Sweeney, 2014). This factor will pose a real challenge for the international corporate executives.
The second challenge will be the issue of complex organizational structures. International business executives will have to grapple with huge staff located in different parts of the world hence a complicated structure of the organization. This development will mean increase in the level of bureaucracy and slowing down of the operations and processes of the companies.
Finally, executives will have to deal with the issue of keeping up with change in the business world and making the right decisions. There will a very huge need for collaboration in order to survive in the fast changing business world.
Solutions to challenges
The international business executives will have to undergo intensive training on the right cross-culture management skills. This training will impart them with skills to deal with the differing cultures of employees and even when engaging with business partners at the global level.
To manage the complex organizational structures, international business executives will have to decentralize the decision-making process. Decentralization will enable reduced bureaucracy and speedy process of making decisions.
Continuous training of the employees and clear communication practice will be needed for the international business executives to effectively keep up with change in the next five years. Embracing collaboration will also enable them to make the right business decisions hence enhance the competitive edge of their companies.
The impact of globalization on U.S. businesses
Globalization has significantly impacted on the United States businesses. The first impact is the opening up of world markets to the American companies. It is important to note that the American corporations are dominant in many places of the world. They now have access to a wide market of customers. This global market has increased revenues for these companies leading to their massive growth.
Globalization has also significantly reduced the operation costs for most businesses in the United States. A lot of the major U.S. companies have been able to relocate their manufacturing bases to overseas nations (Bremmer, 2014). Some of the common destinations where the electronic companies have moved their manufacturing plants include Japan and China. The purpose of this relocation is to cut on the cost of labor for the manufacturing of products. These United States companies, such as Apple Inc. now enjoy cheap labor as a result of globalization.
Four economic drivers that might impact globalization
The first economic driver that might impact globalization is technological advancement. The advancement in technology continues to specifically improve communication among people regardless of the distance separating them. Therefore, growth in technology is a major booster of globalization (Lane & Milesi-Ferretti, 2008).
The second economic driver that might impact on globalization is foreign direct investments. Through foreign direct investments multi-national corporations are speeding up the rate of globalization. FDI is opening is enhancing international business networks and interaction among various players.
There is also the issue of international trade among nations. Exports and imports are economic drivers that might impact globalization. Exports and imports increase the interaction among nations and accelerate the process of globalization.
Finally, there is also economic factor of business process outsourcing. It is an economic driver that might impact on globalization. The outsourcing of business services from one place to another is also enhancing international interaction among people.
Therefore, the greatest impact of globalization is on the business world. Moreover, the rate of globalization is determined by economic drivers as described above. Despite its vast opportunities to businesses, globalization is also presenting major challenges that have to be dealt with for maximum benefits from it.
References
Bremmer, I. (2014). The new rules of globalization. Harvard Business Review , 92 (1), 103-107.
Cavusgil, S. T., Knight, G., Riesenberger, J. R., Rammal, H. G., & Rose, E. L. (2014). International business . Melbourne VIC 3008: Pearson Australia.
Lane, P. R., & Milesi-Ferretti, G. M. (2008). The drivers of financial globalization. The American economic review , 98 (2), 327-332.
McFarlin, D., & Sweeney, P. D. (2014). International Management: Strategic Opportunities & Cultural Challenges . Abingdon-on-Thames: Routledge.
