What Are the Benefits of Globalization and its Challenges?


Globalization is the process businesses and other organizations use to become international influencers or to expand their business on an international scale. Many businesses and countries support globalization, but some are opposed to it. 

Globalization can bring about many benefits, as well as some challenges. By utilizing best practices, businesses can maximize the benefits of globalization while minimizing any risks associated with globalization. 

What Are the Benefits of Globalization? 

Globalization helps businesses tap into new markets and expand their business across their geographic borders. By having access to a diverse workforce, the business benefits from a variety of cultural viewpoints and value systems. Additionally, globalization improves the local economies and standard of living of workers. 

Some of the key benefits of globalization include:

Lower Cost of Goods and Services

Businesses that take advantage of globalization can complete work in regions where goods and services are more affordable. This can result in lower costs and higher profits for the business. 

Greater Innovation

When the global market is tapped into, businesses can benefit from the creativity and innovation of a diverse workforce. Businesses that stay within a certain geographic area may not open themselves up to ideas generated by people with different backgrounds, value systems and ideas. Globalization encourages more connectedness and an appreciation for other cultures and viewpoints. 

Opening a product or service to a new market can help a business see how others around the world perceive their offering. This ultimately helps improve the quality of products and the marketing message. Innovative ideas may help keep the cost of the product low. 

Innovation helps businesses stay competitive in the global market. Free access to labor and capital around the world helps drive innovation across the globe.

Improved Standard of Living 

Businesses that are interested in globalization often take advantage of developing nations where production costs less. When they invest in these regions, the standard of living in these areas often dramatically improve. Additionally, these people may have access to improved technology and innovation that was not previously available. 

Access to New Cultures

Globalization makes it easier for businesses to tap into and understand foreign cultures. A foreign workforce can give insight into how people in that culture perceive the product, service or marketing message. Businesses can then adapt their strategy to the local market.  

What Are the Challenges of Globalization?

Globalization is not without its challenges. There are also several disadvantages to globalization that prudent businesses must be aware of and adapt to in order to minimize the negative effects of globalization. 

Loss of Jobs 

Many critics of globalization cite job mobility as a drawback to globalization. They argue that globalization results in taking jobs away from the native country in favor of countries with cheaper workforces. Much of the time, this critique involves manufacturing jobs. When manufacturing jobs are stripped from workers in developed countries, they may have difficulty finding alternative work, especially if they are lower skilled. This can ultimately result in a greater need for these workers to rely on the social welfare system in their country. 

Businesses that want to minimize this potential disadvantage to globalization should be prudent about how they structure jobs as part of their expansion efforts. They may wish to retain a key team in their home country while expanding to new markets with the help of a PEO or subsidiary business. Alternatively, they may use the visa process to have their existing staff move to the new work location.

Western Power 

Although there has been tremendous growth in non-Western countries in the last few years, developed Western countries still have a dominant role in the business world. Additionally, many Western countries have investors that control the capital that flows into other countries. 

However, not all countries share the same values as Western investors. Attempting to launch a business that is married to Western values may not appeal to the local market

Businesses can deal with this potential issue by taking advantage of market research so that they can adapt their product, service or marketing to local value systems and cultures.

Loss of Individuality

Another possible challenge to globalization is the potential loss of individuality. While globalization makes other cultures more accessible, those concerned with globalization worry that individuality will be lost in the process. Cultures may meld together and ultimately become unrecognizable. When certain cultures have realized success, others have mimicked them. Businesses who are committed to diversity can ensure that the individual attributes of different cultures are recognized and appreciated.

Conscientious businesses can minimize the potential disadvantages of globalization by prudently expanding their business. This careful approach will allow them to maximize the benefits of globalization while mitigating the risk of global expansion.

How useful was this post?

Click on a star to rate it!

Average rating 4.4 / 5. Vote count: 17

No votes so far! Be the first to rate this post.


As a specialist in the area of overseas business expansion, Alan covers global business topics with a focus on identifying emerging markets and helping companies expand globally.

Related Posts

Request a peo proposal