Major Drivers of Globalization
Meat Queen's globalization success can be linked to numerous key drivers of the overall process. The first factor is the benefit of technological innovation, which has allowed Meat Queen to rapidly globalize their restaurants. The company has been able to manage, reproduce, and standardize their food across the world with local sourcing of ingredients coordinated by technology, such as video conferencing and emailing with suppliers. It is also easy to communicate with employees worldwide to ensure coordinated global efforts for topics such as training.
Another major driver of globalization for Meat Queen has been the development of their transportation systems, which allow quick, affordable migration of their products across the globe. The company utilizes freight trains, ships, and even planes to transfer products to their restaurants. For example, new roads in India have allowed the company to open restaurants in that country. Previously, Meat Queen was limited by small dirt roads that did not support their trucks.
Social and political reforms have also affected the globalization of Meat Queen's business. The enormous growth in population and consumerism of countries, such as China, Japan, and India, has created opportunities for new customers globally. And the collapse of communism in Central and Eastern Europe has created even more new markets and business partnerships for Meat Queen to establish their restaurant business.
All of these drivers have allowed Meat Queen to quickly establish restaurants globally with minimal effort. Many institutions have also been responsible for corporate globalization. Let's take a look.
International Financial and Trade Institutions
International commerce, a key part of globalization, requires extensive support. The World Bank (WB), International Monetary Fund (or IMF), and World Trade Organization (or WTO) are the three institutions that establish the boundaries by which international commerce is transacted.
Meat Queen has to follow the rules of international commerce established by the World Trade Organization. The WTO was established in 1995 and created the rules for international trade. The purpose of the WTO is to develop free trade and squash any potential barriers to trade, such as quotas. For example, if one country wanted to limit the importing of U.S. potatoes for Meat Queen's restaurants, the end result could be a higher price overall for the consumer.
The World Bank is also a central factor in the growth of globalization. It was established in 1944 for the purpose of providing business loans to its member nations that help build infrastructure such as roads. Without the loans from the World Bank, Meat Queen might have been unable to establish their restaurants due to poor infrastructure.
The last institution that has helped globalization flourish is the International Monetary Fund (IMF), which is also referred to as the 'sister' organization to the World Bank. The institution's purpose is to encourage currency exchange with member countries in order for them to orchestrate global trade. It also provides loans to governments and debt relief. This institution has helped developing nations grow so that companies, like Meat Queen, will be interested in establishing businesses there due to customer potential.
Lesson Summary
Globalization is the integrating of economies across the globe through the process of procuring goods, services, and capital across the world. There are key drivers of the proliferation of globalization. They are:
- Technological innovations
- Transportation systems
- Social and political reforms
There are also many international financial and trade institutions that have allowed globalization to flourish. They are the:
- World Trade Organization (or WTO), which was established in 1995 and created the rules for international trade.
- The World Bank, which was established in 1944 for the purpose of providing business loans to its member nations that helped build infrastructure such as roads.
- International Monetary Fund (or IMF), which encourages currency exchange with member countries in order for them to orchestrate global trade.
Learning Outcomes
After this lesson, you should have the ability to:
- Define globalization
- Describe the key factors in the proliferation of globalization
- Identify three international institutions that impact globalization and the roles of each
