Globalization has allowed businesses to operate at a global level due to technological advancements. Globalization presents tremendous opportunities for companies to grow economically such as the expansion of a company’s market base. Geographical boundaries that existed before are no longer a hindrance to trade, and, as such, the volume of sales grows due to the open access to new markets. Organizations can access human and natural resources in other countries at lower costs, thus, reducing the cost of operations. In this regard, a company can enjoy economies of scale by practicing mass production for a large customer base.
Nonetheless, a company expanding into international markets can face various challenges. Global companies struggle to optimize their supply chains by making them lean, responsive, cost-effective and flexible. An optimized global supply chain offers a company a competitive advantage because products can reach customers at the right time, place and in the right quantity (Milovanović, Milovanović & Radisavljević, 2017). This task can be challenging, and, therefore, a business should consider the different currencies, cultures, languages, trade regulations, tax laws, and business practices before venturing into new markets. Therefore, supply chain operations in each country have to be tailored to match the needs of the particular market.
chains are exposed to risks that can
interrupt the smooth flow of operations. A global supply chain faces a higher
level of risks due to factors in the new environment that cannot be forecast with certainty.
Global supply chains face risks ranging from disruptions due to national
disasters, financial risks that can lead to bankruptcies, and changing
political atmosphere in different countries that can lead to macroeconomic changes (Manuj & Mentzer, 2008). In this regard,
a business ought to strategies for effective risk management plans to overcome
the risks associated with poor visibility and increased uncertainty in global
The company can enlist the services of a third-party logistics service (3PLs) provider. This decision should lower the cost of transportation that could arise by running a shipping department. By outsourcing the logistics department, the company can focus on production and market penetration. 3PLs have experience in global logistics, and, therefore, create more efficient logistics plan for all the countries the company intends to expand into. Further, a 3PL company can handle logistical concerns related to expanding into international markets which prevents a business from investing heavily in a logistics department.
Ethical sourcing ensures an organization respects the international standards of procurement and protects a company from risks arising from criminal conduct and violation of human rights. Sourcing for products ethically improves a company’s image and creates a competitive advantage as a business ventures into new markets. Consumers demand sustainable products that are safe for their health and the environment. More so, employees are happy to work for an organization that ensures ethical practices guide their health and safety at the workplace. Therefore, a firm with a record of ethical practices finds it easier to source for human resources. To ensure diversity in the sourcing, a multicultural approach should be adopted in every country the business expands into (Harvey & Richey, 2001). A culturally diverse workforce offers access to a pool of skills and information that is vital for successful entry into new markets.
Globalization provides a wealth of opportunities for economic growth for organizations. However, the economic benefits are accompanied by risks that make the process challenging. For a company to focus on production and market penetration, it should outsource its logistics department to a third-party logistics service provider. Further, business practices should be guided by ethical sourcing, and a company should adopt a multicultural approach to ensure diversity in the workforce.
Harvey, M. G., & Richey, R. G. (2001). Global supply chain management: The selection of globally competent managers. Journal of International Management, 7(2), 105-128.
Manuj, I., & Mentzer, J. T. (2008). Global supply chain risk management strategies. International Journal of Physical Distribution & Logistics Management, 38(3), 192-223.
Milovanović, G., Milovanović, S., & Radisavljević, G. (2017). Globalization: The key challenge of modern supply chains. Ekonomika, 63(1), 31-40.