Two vectors shape the world: technology and economic realities. The first helps people and nations evolve their preferences; the second progressively pushes them toward global commonality.
Corporations geared to this new reality benefit from enormous economies of scale and lower world prices. They decimate competitors that cling to old assumptions about how the world works.
The definition of a global market
Trade is a way for people and nations to optimize their conditions by exchanging goods and services. This is done through the medium of money, which is valuable because it has special characteristics that make it suited for trading: scarcity, difficulty in acquiring and transience.
The differences that persist in world market segments affirm an ancient dictum of economics: What counts in commercial affairs is what happens at the margin. The aggressive low pricing of a technological juggernaut taps into an ancient motivation: to make one’s money go as far as possible.
Global marketing tries to reduce the costs of producing and selling products by treating the world as a single market. This is contrasted with international marketing, which tailors a company’s product offering to the specific demands of different markets. Choosing which strategy to use depends on the nature of your business. It is also influenced by the political and economic stability of the countries where you want to operate.
Imports and exports
The trade of goods and services is the fundamental engine driving the financial growth of nations and corporations. Countries and firms export the goods they produce, while importing the inputs that go into those products. This makes up a world-wide network of interconnected economic interactions, which is often referred to as ‘globalization’.
In the past countries tended to export products that were very different from what they imported – England exchanged machines for wool and tea, for example. However, as transaction costs fell, the extent of intra-industry trade grew. Firms around the world now import inputs and export final products that are broadly similar.
The global openness index combines data on the total value of exports and imports, with data broken down by economies and regional/commodity groups. It is adjusted for several large problems known to drive asymmetries, including reclassifications of goods; and for exports by Hong Kong and China (as well as Swiss non-monetary gold). The index also incorporates data on services trade.
The impact of global businesses
The global market is the engine that drives business and economies. It connects people, businesses and countries, and provides a way for individuals to make their money go further by spending it in other places. It also helps set basic industry standards and facilitates communication between governments.
Companies that operate in the global marketplace are shaped by two vectors-technology and economic reality. The former shapes human preferences; the latter pushes those preferences toward convergence and global markets that allow for economies of scale.
For this reason, many brands and small businesses choose to sell their products worldwide. This allows them to diversify their risks and not be as dependent on local crises. It also reduces their advertising costs and gives them access to a much larger customer base. It is important to understand the pros and cons of working in the global marketplace before making a decision. However, it is a great opportunity for business owners to expand their business and increase their income.
Engaging the global marketplace
Taking a business into global markets is one of the most significant growth moves a company can make. It can provide many benefits, including increased revenue potential, greater market reach, and access to new partners, employees, and resources.
Global expansion requires companies to think and act globally, but also to be flexible enough to adapt to local markets. For example, Coca-Cola tastes the same everywhere, but the brand’s marketing and packaging is adapted to each country’s culture.
Global marketplace participation can also protect businesses from major economic shocks or downturns in particular countries. This can be a result of external factors like a currency crash, or internal events such as a regulatory change or political crisis. This level of protection may help to mitigate the risk of financial impact on a company’s bottom line. This can be important for companies with a high dependency on international revenue.