Globalization
Globalization involves interdependence of economies, business organizations, and countries across the globe. Business entities grow to conduct operations across borders and internationally. It sees technology, information, commodities, cultures and employment spread across nations. Globalization influences social, cultural, legal, and political issues ( Hirst et al., 2015, 34 ). Through it, people are able to move and interact with others and those of different values.
Technology and Innovation
Technology and innovation have impacted on the modern-day businesses in the world. The nature of technology and innovation being dynamic and ever-changing has seen companies invest in the latest and relevant technologies that would ease operations. As much as technology is expensive, organizations have utilized it to minimize costs of production and gain competitive advantage in the market. It has enhanced efficiency in terms of costs, speed, quality, and quantity.
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Multinational Enterprises
Multinational enterprises are international organizations that operate in their mother country as well as in other nations across the globe. Most of these entities have one central office, headquarter, where activities are coordinated from. They enjoy economies of scale because of production of vast goods or services.
Foreign Direct Investment
Foreign Direct Investment (FDI) has impacted on the South East Asia industrial development. The impacts include rapid growth, structural transformation of the region, source of capital, and technological know-how. The industrial development has grown rapidly due to the presence of Multinational Enterprises and local entities ( Bartels & Freeman, 2000, 329 ). The level of unemployment has significantly reduced across the region.
Specific and Location Specific Assets
Firm specific assets are assets or resources that are more valuable to the firm in their current state and use as opposed to its next best alternative. Organizations would therefore, prefer utilizing such assets on the current state. Location specific assets are valuable assets that are located in certain areas, which are not easily movable. The firm utilizes such assets from their location and movement of the same can be facilitated, but a great cost.
Market Entry Modes
Through a purchase of foreign assets, a business can launch its operations on a foreign and new market. This mode falls under foreign direct investment as the company would not start from the scratch. Joint venture can be a good market entry mode in tightly controlled economies across the world. It entails combing resources with a foreign company that will see an organization sell products or services in the new market ( Morschett et al., 2010, 68 ). Licensing agreement are very common in the globalization era. Foreign companies are allowed to manufacture and sell commodities of another company after legally entering into contract with the company.
Environmental Regulations
Health and safety regulations as barriers
Governments all over the world have established health and safety regulations to protect their citizens. As much as these motives seem genuine, most countries have used them to protect their home companies and discriminate against foreign firms ( Cole & Elliott, 2003, 1165 ). For instance, due to public health concerns, the Family Smoking and Prevention and Tobacco Control was signed into law in 2009. This law saw the ban on all cigarettes that did not utilize menthol. As a result, Indonesia largest producer of cigarettes could not sell the products in the United States. This move protected the local companies and discriminated against foreign ones.
Environmental circumstances
Different environmental circumstances make one country’s regulation inefficient in another country. For instance, due to high plastic pollution in the country, a regulation to force companies to use recycle plastics might be passed to regulate pollution. This regulation can be inefficient to countries where plastics are imported to packaging.
Allowances for different countries
First, when countries have competitive companies that could lead to increased competition for domestic companies. Protecting domestic production is essential for the economy of any country. The government could also be controlling the levels of imports into the country. When levels of imports are higher than exports, a deficit arises signaling poor performance of the economy. Lastly, allowances are not entertained when other nations and their companies pose a detrimental effect on the environment.
References
Bartels, F.L. and Freeman, N.J., 2000. Multinational firms and FDI in Southeast Asia: post-crisis changes in the manufacturing sector. ASEAN Economic Bulletin , pp.324-341.
Cole, M.A. and Elliott, R.J., 2003. Do environmental regulations influence trade patterns? Testing old and new trade theories. World Economy , 26 (8), pp.1163-1186.
Hirst, P., Thompson, G. and Bromley, S., 2015. Globalization in question . John Wiley & Sons.
Morschett, D., Schramm-Klein, H. and Swoboda, B., 2010. Decades of research on market entry modes: What do we really know about external antecedents of entry mode choice?. Journal of international management , 16 (1), pp.60-77.
