Political Science

Organizations today have gone global theyre neither national nor international. International trade is increasing at an exponential rate and companies are trying to gain competitive advantage by entering into the global trade scenario. Long term strategic planning of almost all the companies operating in the world includes global expansion. So what drives these organizations to globalize What are the factors that force entities to grow globally and be a part of the wider world Before we address those factors and reasons lets look at what globalization actually is.

Globalization
In a live question and answer session conducted by The Washington Post (2006), Noam Chomsky defined globalization literally as international integration, and more technically it is anything that goes in the interest of people at large and not in favor of financial corporations or other power houses. More simply globalization is the integration of the world along with shrinking of international boundaries for purposes such a trade, businesses, sharing of ideas and other activities.

Forces That Drive Organizations to Globalize
There are a number of factors that drive organizations. One major factor is to expand their current market (Thinking Made Easy, 2009). Companies sole motive is to generate more and more revenue and eventually make more profit. One way to do this is to enter the untapped market. Global expansion increases sales and market share driving up profit margins. Global markets give firms an opportunity to make use of new markets and increase their target base. All this will help organizations strengthen their position in their respective industries and make use of their resources in other areas.
Another driving factor for companies to globalize is resource building. Firms of developed countries easily generate resources to enter global markets where operations are cheaper in terms of factors of production. Cheaper labor, cheaper land, cheaper energy and other cheap production factors are easily available in developing countries. Their resources are utilized which decreases the cost of production and consequently increases profit margins.

Furthermore companies get an opportunity to build brand equity and value for its shareholders (Edwards, 2006). Expanding company operations globally give a huge opportunity to organizations that are trying to increase shareholder value. The company gets identified by people all over the world whether they are end consumers, customers, or investors. Global investors help further in building more value for the company. All this builds goodwill for firms and increases credibility which eventually builds brand equity.

An additional factor that drives firms to globalize is perhaps the human capital. India, Korea, and many other eastern countries are producing perhaps the best talent pool in the world. it is all about gaining a competitive edge over your competitor, and one major differentiating factor amongst companies is the talent pool they have. Acquiring cheap and more skilled labor from other countries than the parent one can make companies successful. And this is one of the reasons that drive firms to globalize. This process can also become a mutually beneficial process whereby the talented individuals offer their skills and intellectual expertise giving the company more revenue, and the company in turn offers its technical and technological expertise that hone the individuals skills and gives him or her a more enriching experience.

Can Organizations Ignore These Factors
In my humble opinion I do not think that the above mentioned factors amongst others can be ignored by organizations operating today. The world is shrinking at an unprecedented rate where by companies cannot choose to operate in isolation. Any firm that is operating with the objectives of profit and equity building can certainly not afford to ignore these factors. Obviously all firms save non-governmental organizations have profit as their sole motive.

The Role of the Internet
The internet has played an extremely important role in breaking international boundaries and shirking distances. Communication gaps have been filled via the internet which has helped business operation in particular to a great extent. Firms have been able to globalize largely due to the internet technology. Today businesses can operate across countries. A number of hospitals and other organizations in USA have call centers in India and other developing countries. Such examples illustrate the role of internet in aiding firms to globalize.

Conclusion
At one point or another in the business lifecycle, firms will have no choice but to globalize if they want to keep running in the race for success. Be it at a small level of export or a big level of franchising or becoming a multinational company, organizations will have to consider global expansion. They can either do this or think of options such as divestment or shutting down. Firms that do not globalize will at some point shut down or be taken over by other big companies that have already expanded globally. It will be very difficult for small local companies to continue operating and survive in such a globally competitive market place.