Forces companies to be closely tied to technological


Forces that increased global integration

The
significant growth of the world economy over the last few decades has changed
with dynamic interaction between different driving forces. In the last decades,
companies across the globe in various industries have achieved significant
success by following international, multinational or global strategies.

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Regional
economic agreements, converging market needs and wants, technology advances,
the pressure to cut costs, the pressure to improve quality, improvements in
communication and transportation technology, global economic growth, and
opportunities for leverage all represent important driving forces; any industry
subject to these forces is a candidate for globalization.

Multilateral trade agreements

Multilateral,
regional and bilateral trade agreements are all agreements between two or more
countries for the mutual exchange of goods and services for the mutual benefit
of all countries. In accordance with these trade agreements; agreements have
been exchanged in trade relations, trade promotion, financial investment, etc.
So trade between countries facilitates simple import and export procedures, and
reduced limitation of foreign trade exchange, eased and reduced transportation
costs, and also reduced taxes rates. The ultimate goal of any trade agreement between
countries is to improve the economic situation. Some of the world and regional
trade agreements are:

SAARC
(South Asian Association for Regional Cooperation), NAFTA (North American Free
Trade Agreement), Common Market for Eastern and Southern Africa (COMESA),
Economic Community of West Africa States (ECOWAS), and Southern Africa
Development Community (SADC) etc.

Technological advancement

The
effects of technological development on the global economic structure are
undergoing dramatic transformations in the way companies and countries regulate
production, commercial goods, capital investment and the development of new
products and processes. Advanced information technologies allow for instant
communication between remote operations of global institutions. This caused the
expansion of transnational companies to be closely tied to technological
advancement.

The
rate of fast innovation and the technological flows dynamics mean comparative
advantage. All this have led to design greater interdependence between
companies and nations. So technology is one of the most influencers to
globalization.

Communication

The
proliferation and technological revolution in many aspects, such as modern
communications technology; has enabled companies and their employees transform
the ways they interact with customers and colleagues in distant locations.
Regardless of the physical distance, instant communication and access to
relevant information have become readily available and have encouraged greater
collaboration across borders. Therefore, technology is one of the driving
forces for globalization.

Global economic growth

The
global economic situation is changing rapidly. There is a big difference in the
growth rates of economies in the developing and developed countries. Developed
countries economies have become inactive and stationery, because of the
saturation of the market, on the other hand, developing countries are
experiencing a huge growth rate in various business sectors. Technology
improvements, cheap skilled labor, highly invested in (R&D) research and
development, are some of the factors that have motivated on developing
countries to achieve a high rate of business growth. It is therefore very
important for developing countries to have strong international trade links
with developed countries.

 

Product development efforts

The
immediate effect of technological growth is the growth of new products. Fast
technology accelerates obsolesce of product. Many
companies were encouraged to invest in research and development with
cross-border partners. These companies need to continue to operate and overcome
competition. Many companies have crossed their borders and need to update their
products through research and development with foreign companies. This
leads to globalization.

Leverage

The
leverage is simply the kind of business that a company enjoys when it comes to
business in more than one country. The most three important types of leverage.

a. Experience transfer: The experience
that an enterprise gains from doing business in one country can be effectively
transferred to another country. This is called the transfer of experience

b. Large-scale economy: The art of
reducing production costs is known as a large-scale economy. One of the main
reasons for a large-scale economy is technological advancement. Many companies
are now actively investing in R & D in an effort to reduce production
costs. They are trying to produce cheaper and more reliable products.

c. Resource Utilization:  Strength of global company is its resource
utilization. It can now successfully outsource its resources globally thereby
making better utilization of resources.

Pressure cost reduction

The
production of goods and services involves the transformation of resources –
such as labor, natural resources, technology and logistics to finished
products. All factors having a significant effect on production costs can be
expected to affect a company’s competitive position in world markets, so this
caused to Global Companies to reorganize their manufacturing and distribution
operations to be more efficient and productive. In order to increase
productivity, companies should invest in the transfer of new and efficient
technology and TQM systems. This increases investment costs first, but
Resulting in a clear improvement in quality, reduces rework, human errors,
rejection, customer complaints, compensation, etc. (Beaumont & Schroeder,
1997).

 

Advanced Transportations

Transport
has become a very powerful organ for international trade; companies are always
shipping goods long distances using different transportation modes, success
depends on safety and fast delivery. This depends largely on the quality of
transport and infrastructure. That is why international trade development has
been affected by transport, and the development of transport and infrastructure
is largely influenced by the demand for international delivery of commodities.

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