Impact of Globalization on Agrifresh: Comparative Advantage, Technological Advancements, and Country Risk

This report explores the impact of globalization on the international operations of Agrifresh, a citrus fruit manufacturer. It discusses the comparative advantage of Agrifresh, government policies, technological advancements, and the consequences of country risk. The report emphasizes the importance of considering political and legal systems when expanding into international markets and highlights the role of technology in enhancing production and achieving international standards. The analysis provides insights into the opportunities and challenges faced by Agrifresh in the global marketplace.

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Today, the world economy is fully globalized and it operates almost like a single market with
diversity and similarity altogether. As per report from Statista, there have been huge
increase in volume of export trade from 61.81 billion US dollars in 1950 to approximately
17.7 trillion US dollars in 2017 (Statista, 2017). This figure is due to huge impact of
globalization. Agrifresh is in the business of manufacturing citrus fruits. Due to globalization,
it is possible to even export fruits to different countries.
GLOBALIZATION IMPACT ON INTERNATIONAL OPERATION
Agrifresh has a comparative advantage in globalization due to the climate and national
policies. Comparative advantage is defined as the ability of a company or a country in
carrying out specific economic activity better than others (Thies, 2018). There is a very clear
export policy provided by Australian government for fresh fruits and vegetables in three
parts; preparation, shipping and in Market. However, Agrifresh has also to see the
government policies of country it is exporting. International trade type is also very
important. For AgriFresh, Factor endowment theory or Heckscher-Ohlin theory implies that
the country should be involved in export of goods that use locally abundant factors and
import goods that has scarcity of local resources (Magdy-El-Shourbagui, 2017).
For AgriFresh, considering the products it sells and exports, it has internationalized through
non FDI way; that is international collaborative ventures. AgriFresh has knowhow of
growing, packing and marketing of its fruits in addition to having HACCP international food
certification for food safety (AGRIFRESH, 2019). Due to this, the driver that affects the
international operation of AgriFresh is Technological advancement and the consequence
that can affect it is country risk.

IMPACT OF DRIVER ON AGRIFRESH INTERNATIONAL OPERATIONS
Today’s globalization is set majorly on the foundation of technology. Transportation has
gone to high level of technological advancement revolutionizing the entire transport
industry. The cost of transporting goods, travelling by an individual and communicating in
various parts of the world has reduced a lot (Schroeder, 2018). Due to this AgriFresh
transports its citrus product to various parts of the world healthy and fresh. In addition,
internet has grown rapidly; adding technological advancement as high level of driver for
international operations of AgriFresh. This technological advancement allows AgriFresh to
have network linkages for international operation as it can communicate and keep track of
its products till they reach the market and can develop new market. An example of this is
application of modern management and technology by AgriFresh to enhance its production
and achieve international standards. For entering international market, AgriFresh has to
look on internet for major suppliers of importing countries and contact them to grow its
international operations.
IMPACT OF CONEQUENCE ON AGRIFRESH INTERNATIONAL OPERATIONS
The major consequence of globalization on international operations of AgriFresh is the
country risk. This is also known as political risk where due to change or difference in the
political and legal system of a country, the exporting company is at risk that leads to adverse
effects on its operations which can result in losses (Bouchet, et al., 2018). AgriFresh needs to
be very alert while deciding on countries it exports its citrus products. It has to consider the
political and legal system of that country. An example is that AgriFresh decides to export to
country with Totalitarianism like Noth Korea. Though the order will be huge, the

government interference will be high resulting into rejection of the products thereby
resulting into huge losses. In addition, even in socialism political systems government are
focused on group welfare and make sudden decisions to curb the export of citrus products
to promote local produce. Such conditions do affect international operations of AgriFresh.
This has impacted the international operations of company in choosing which market to
enter and whether to enter directly or should appoint a local distributor in order to handle
political risk.

References
AGRIFRESH, 2019. About us. [Online]
Available at: http://agrifresh.com.au/about-us
[Accessed 5 4 2019].
Bouchet, M. H., Fishkin, C. A. & Goguel, A., 2018. Managing Country Risk in an Age of
Globalization: A Practical Guide to Overcoming Challenges in a Complex World. 1 ed.
s.l.:Palgrave Macmillan.
Magdy-El-Shourbagui, 2017. Modern Theories of International Trade: Fundamentals and
Over 100 Study Questions With and Without Answers. 1 ed. Kairo: Magdy-El-Shourbagui.
Schroeder, R., 2018. Social Theory after the Internet: Media, Technology, and Globalization.
1 ed. London: UCL Press.
Statista, 2017. Trends in global export volume of trade in goods from 1950 to 2017. [Online]
Available at: https://www.statista.com/statistics/264682/worldwide-export-volume-in-the-
trade-since-1950/
[Accessed 4 4 2019].
Thies, C. F., 2018. Global Economics: A Holistic Approach. 1 ed. s.l.:Lexington Books .