December 16, 2009

Drivers of Globalization

Globalization drivers determine the potential of global business in the industry. These drivers are uncontrollable and each has a level of globalization potential. Here are the four external drivers which affect the potential of globalization:

a. Market drivers

This refers to the degree of homogeneity of customer needs. It also speaks about the existence global distribution networks and transferable marketing.

b. Cost drivers

It determines the potential for economies of scale. Determining factors of this driver are transportation cost, product development costs and economies of scope

c. Government drivers

The government drivers include the following factors: favour trade policies, example of this is market liberalization. It also include compatible technical standards and common marketing regulations, and privatization

d. Competitive drivers

The globalization is also affected by the competition. There are various forms of competitive drivers. If there is a strong competition in the industry, the greater is the possibility of the industry to globalize.

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