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Four Drivers Of Globalization
5 Major Drivers Of Globalization Examples
5 Major Drivers Of Globalization Theory

According to the standard theory, international trade theory leads to the share of resources being consistent with the corporate advantage. This further leads to specialization thereby enhancing the output. The quick progress in the capital market is because of the globalization. Along with the benefits offered by globalization, there are major concerns related to it. The first concern is related to the fact that globalization leads to a more immoral dispersion of income among the countries and within the countries.

The second concern is related to loss of national autonomy and the countries are finding it highly complex to pursue independent domestic policies (Rangarajan, 2006). Dell Corporation has been analyzed for the purpose of this study. Since last 26 years, Dell has been capable of authorizing countries, communities, customers as well as people all over the globe to make use of the technology so that they can realize their dreams. The company tends to value its customers and thus aims at delivering the products and the services according to the needs and the wants of the customers (Dell, 2012).

Drivers of the globalization of firms include government, competition, cost globalization and market drivers. Globalization has also been driven.THE CAUSES OF GLOBALIZATION have been the major motivation for liberalization in the area of foreign direct critical drivers of technological innovation.a list of the globalization top five from an American the fact that the American economy is the. One of the five major kinds of drivers of globalization; two aspects of this trend are contributing to the globalization of business operations: (1) the progressive reduction of barriers to trade and foreign investment by most governments, which is hastening the opening of new markets by international firms that are both exporting to them and building production facilities in them, and (2) the. We may call the resulting driver the ‘propensity for globalization’ (Fig. The higher the difference is, the higher the material flows of these products from countries of emerging economies to countries of advanced economies, although – from the intrinsic nature of the business – it would follow the Type 2 globalization.

The five main kinds of drivers that are forcing international firms to the globalization of operations are political, technological, market, cost, and competition (Indian Institute of Material Management, 2012). Political Forces There is a trend towards the association and socialization of the global community. Both North American Free Trade Agreement (NAFTA) and the European Union present major marketing opportunities for the companies. If the government can reduce barriers to trade as well as foreign investment and can privatize most of the industries in formerly communist nations then globalization can be fostered (Acemoglu & Yared, 2010).

Technological Forces With the progress in computers as well as communication technology ideas information can flow across borders. The small companies are capable of competing all over the globe because of the internet as well as communication technology. By making use of the internet for the purpose of business exchanges, Business-to-Business (B2B) transaction is providing major savings. Market Forces When the companies tend to globalize, they become global customers. In order to retain their presence in the global markets and expand the consumer base, organizations endeavor to set their trail towards global shores.

When the home market saturates, companies seek to operate globally. Cost Forces The management goal is to make use of the economies of scale so that it can reduce unit cost. It is vital for the companies to globalize the product lines so that it can successively attain economies of scale. Production houses can be located in those countries where the cost of production is observed to be less.

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Supply chain capabilities are guided by the decisions you make regarding the five supply chain drivers. Each of these drivers can be developed and managed to emphasize responsiveness or efficiency depending on changing business requirements. As you investigate how a supply chain works, you learn about the demands it faces and the capabilities it needs to be successful. Adjust the supply chain drivers as needed to get those capabilities.

The five drivers provide a useful framework for thinking about supply chain capabilities. Decisions made about how each driver operates will determine the blend of responsiveness and efficiency a supply chain is capable of achieving. The five drivers are illustrated in the diagram below:

1. PRODUCTION – This driver can be made very responsive by building factories that have a lot of excess capacity and use flexible manufacturing techniques to produce a wide range of items. To be even more responsive, a company could do their production in many smaller plants that are close to major groups of customers so delivery times would be shorter. If efficiency is desirable, then a company can build factories with very little excess capacity and have those factories optimized for producing a limited range of items. Further efficiency can also be gained by centralizing production in large central plants to get better economies of scale, even though delivery times might be longer.

[Simulate decisions about production in SCM Globe by defining different products and facilities in the supply chain, and select locations for the facilities that make those products.]

2. INVENTORY – Responsiveness can be had by stocking high levels of inventory for a wide range of products. Additional responsiveness can be gained by stocking products at many locations so as to have the inventory close to customers and available to them immediately. Efficiency in inventory management would call for reducing inventory levels of all items and especially of items that do not sell as frequently. Also, economies of scale and cost savings can be gotten by stocking inventory in only a few central locations such as regional distribution centers (DCs).

[Decisions about inventory are simulated by setting production rates and delivery schedules for products, and by defining on-hand amounts for different products at facilities throughout the supply chain.]

3. LOCATION – A location decision that emphasizes responsiveness would be one where a company establishes many locations that are close to its customer base. For example, fast-food chains use location to be very responsive to their customers by opening up lots of stores in high volume markets. Efficiency can be achieved by operating from only a few locations and centralizing activities in common locations. An example of this is the way e-commerce retailers serve large geographical markets from only a few central locations that perform a wide range of activities.

[Simulate this decision by placing your facilities (factories, warehouses, stores) in selected locations, and then define the storage capacities and operating expenses for those facilities. The screenshot below shows an example of this.]

(click on screenshot to see larger image — from Cincinnati Seasonings case study)

4. TRANSPORTATION – Responsiveness can be achieved by a transportation mode that is fast and flexible such as trucks and airplanes. Many companies that sell products through catalogs or on the Internet are able to provide high levels of responsiveness by using transportation to deliver their products often within 48 hours or less. FedEx and UPS are two companies that can provide very responsive transportation services. And now Amazon is expanding and operating its own transportation services in high volume markets to be more responsive to customer desires. Efficiency can be emphasized by transporting products in larger batches and doing it less often. The use of transportation modes such as ship, railroad, and pipelines can be very efficient. Transportation can also be made more efficient if it is originated out of a central hub facility or distribution center (DC) instead of from many separate branch locations.

[Simulate transportation decisions in SCM Globe by the modes of transport