Global Business: Globalization Phase Model and Its Strategies

This essay provides a comprehensive analysis of global business, focusing on the process of globalization and its impact on various regions. It introduces the concept of global business, emphasizing its role in international trade, relocation of production, and market expansion. The essay delves into the phase model of globalization, outlining stages such as exporting, cooperative contracts, strategic alliances, and wholly owned affiliates. Each stage's strengths and weaknesses are thoroughly discussed, highlighting implications for companies. The essay examines the advantages of global business, including access to larger markets, enhanced competition, and job creation. It also explores the drawbacks, such as potential loss of focus and administrative costs. Overall, the essay underscores the significance of global business in integrating economies and fostering economic development.

Running head: GLOBALISATION
Globalisation
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1GLOBALISATION
Introduction
Globalization refers to the spatial-temporal process of the change that helps n
expanding the human activity across the various regions. Globalization have helped in
spreading the norms and the values that have been facilitated by the innovations in the realm
of the technology. It have swept away the cultural boundaries and brought together the people
from various parts of the world (Bidault et al. 2018). It has provided an incentive for the
countries that have helped them in benefitting from principle of the comparative advantage. It
have helped the firms in getting the access to the larger markets that have helped the firms in
experiencing the high demand for the products. Global business is indicative of the
international trade in which global business carries out business throughout the world. It have
helped in the relocation of the production or the service activities to the places which have the
lower labour cost (Knight and Liesch 2016). The global business are involved in diversifying
and expanding the activities that helps a company in earning the higher profits. This essay
elaborates on the concept of the global business that has risen to great prominence in the
present age. This essay elucidates on various stages of phase model of the globalisation and
strength and the weakness pertaining to each step of the model.
Discussion
Global business refers to buying and the selling of the goods and the services by the
people from the various countries of the world. The global business practices along with the
international business have evolved to become the common phenomena in the present age. It
have helped in the integration of the economies of the various countries which has a positive
influence on the growth of the countries in the world. The cross-border operation have
provided the business with the opportunity of earning the higher amount of the profits that
have proved to be advantageous for the companies (Amponsah and Ahmed 2017). It have

2GLOBALISATION
facilitated the optimum utilization of the resources that have ensured the smooth operation of
various countries in the world. It provides the opportunity to the companies of selling the
products to the larger consumer base coming from the multiple countries. The operation of
the business on the global level helps the enterprises in expanding the market share and in
becoming more competitive. The operation of the global business helps the business in
getting access to the new markets along with the customers. It can help a company in
increasing the market reach that can help a business in getting the higher returns from the
market. The global business have been found to enhance the business competition and it
compels the business to create the products of the higher quality which can help them in
surviving the competition of the present age (Peng 2016). Global business proves to be
advantageous for the customers and it helps the people in getting the wide access to various
kinds of the quality products at the lower prices. The developing economies can make the
benefits with the help of the global business. The foreign companies of the industrialized
nations enter the new markets which helps in the creation of the job opportunities for the
local people. The creation of the job opportunities helps in the stimulation of the economic
development of a particular region (Baldwin 2018). The industries expand in the international
realm that have helped the companies in expanding the assets. It have helped in protecting the
bottom line of the company against that of the unexpected events. The companies make use
of the international markets for the introduction of the distinctive products along with the
services which helps the companies in getting the positive returns.
There exist four stages pertaining to phase model of the globalization- exporting,
cooperative contracts, strategic alliances along with the wholly owned affiliates. The
exporting refers to the process of shipping of the goods along with the services outside of port
of a particular country. It is indicative of the selling of the domestically produced products to
the consumers of the foreign companies. Next phase is known as the cooperative contracts

3GLOBALISATION
and it consists of two types- licensing and the franchising. Licensing refers to the agreement
where the domestic company called licensor receives the royalty payments that helps the
other company in the production of the goods or the selling of the services (Siddharthan and
Narayanan 2018). Strategic alliance phase refers to the agreement where the companies
combines the resources, technology along with the people which helps a company in
providing the superior services to the people. They have emerged to become prominent in the
present global economy and it can help a company in getting the significant returns. There
exist four kinds of the strategic alliances- joint ventures, global strategic alliance, equity
strategic alliance along with the non-equity strategic alliance. The common kind of the
strategic alliance are the joint ventures that involves two or the more companies who are in a
partnership for a specific purpose. The wholly owned affiliates is indicative of final phase of
model and the companies are the foreign offices along with the facilities which are owned by
parent company (Rupert and Smith 2016). The parent company receives the profits and they
have complete control over the aspect of the foreign facilities.
There are strength and the weakness in relation to the various stages of the phase
model of the globalisation which have implications for the companies. Exporting helps the
companies in expanding the markets and it makes the companies less dependent on a single
country. The greater amount of the production paves the path for the larger economy of the
scale that helps a company in getting the better margins. The weakness of the exporting lies
in the fact that it can make the companies lose the focus on the home markets along with the
existing customer. It can create the way for a rise in the administrative costs that the
companies have to face in the event of dealing with the export regulations (Hanson et al.
2016). The advantage of the co-operative contract lies in the fact that it can lower the costs of
the operations that can prove to be of benefit for the small companies. It helps the companies
in splitting the costs that proves to be advantageous for the companies. The disadvantage of

4GLOBALISATION
the cooperative contract resides in the fact that group is responsible for setting prices of the
goods and the services of the members. The strength of global strategic alliance lies in the
fact that it can allow the parties in reaching the goals at a faster pace that can prove to be
profitable for the companies. It can help in expanding the consumer base that can help in
building the trust and the loyalty of the people. It helps in expanding the current demographic
base of a company that can help the company in getting a great deal of the return. It can help
in furthering the resources of a company that can provide them with a distinct competitive
advantage (Vercelli 2017). The disadvantage of the global strategic alliance is that it can
encourage the good employees of crossing over that can make a company lose the good
people. It can give rise to the conflicts within the framework of the ownership claims and it
can lead to a lawsuit and a litigation. The strength of the wholly owned affiliates resides in
the fact that it can help the companies in the area of the simpler reporting that can help in
strengthening the results of a company. It can help in the integration of the financial along
with the information technology system that can help in streamlining the business process of
a company. Parent along with the subsidiary can make use of the combined size that can help
in the negotiation of the better terms with the suppliers. It can help in the reduction of the
administrative overlap and in the integration of the new product development along with the
launch initiatives (Andersson and Andersson 2017). The disadvantage in relation to this stage
of phase model is that it can create the way for the concentration of the risk and loss of the
operational flexibility. The success is dependent on the factor of the execution of the
subsidiary.
Conclusion
Global business is indicative of buying and selling of goods to the people of different
countries of world. Global business practices have assumed immense importance in the
modern age and it have facilitated the process of integration of economy. It can create the job

5GLOBALISATION
opportunities that can stimulate economic development of a particular place. It can help the
companies in expanding themselves in the international sphere that can expand assets of
company. Exporting helps a company in shipping goods which is outside the port of a
country. Strategic alliance is indicative of the agreement where the companies makes use of
resources and technology that helps a company in providing the greater service to the people.
Wholly owned affiliates are instrumental in receiving profits and they have control over
various aspects of foreign facilities.

6GLOBALISATION
References
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Baldwin, C., 2018. International Journal on Global Business Management and Research.
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business collaborations: Context vs. demography. Journal of World Business, 53(3), pp.373-
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Hanson, D., Hitt, M.A., Ireland, R.D. and Hoskisson, R.E., 2016. Strategic management:
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Knight, G.A. and Liesch, P.W., 2016. Internationalization: From incremental to born
global. Journal of World Business, 51(1), pp.93-102.
Peng, M.W., 2016. Global business. Cengage Learning.
Rupert, M. and Smith, H. eds., 2016. Historical materialism and globalisation: Essays on
continuity and change. Routledge.
Siddharthan, N.S. and Narayanan, K. eds., 2018. Globalisation of Technology. Springer.
Vercelli, A., 2017. The Globalisation of Markets. In Crisis and Sustainability (pp. 63-87).
Palgrave Macmillan, London.
Reading Material
Chapter 8: What is Globalisation