How Does Globalization Affect the Way a Company Does Business?

Globalization, or the expansion of business across domestic boundaries, has numerous effects on the way companies do business, including operations, marketing, distribution and partnerships. Careful strategy and effective planning are critical to strong global business.

One of the strongest effects of doing global business relates to basic operations. When U.S. companies do business around they world, they often have to set up offices in each country to manage operations, including management decision-making, warehousing, distribution, logistics, store operation and research and development. Managing these facets of operations requires employees in each country as well as investment in resources for interaction among the various locations.

Marketing practices are one of the most significant effects of doing business globally. Companies must decide whether to maintain a global marketing strategy, where they deliver a similar product and marketing message in each country, or an international approach, where marketing is unique to each market based on the country and culture's specific use of the product and acceptance of certain marketing messages. Global marketing typically costs less, but customized marketing by country can have more niche effects in each market.

Distribution is naturally impacted when a business operates globally because it has to consider how to move supplies and products. Distribution includes the movement of supplies and materials through the distribution process. It also relates to a company's order fulfillment process. This is especially important for online companies that offer products globally. Storing products and having a system to ship them to various countries is important for companies that want a global presence.

When companies operate globally, they tend to have greater need for reliance on business partners. Business partnerships help companies cover for gaps in their ability to do business. When a company establishes business in a foreign country, it often relies on local suppliers and business partners that help them adapt to the local markets and have a local presence. This is important in countries that may not want the presence of a foreign company that is solely dependent on home-country workers.