Mob Global Business

Global business is defined as conducting business transactions for example the buying and selling of goods and services to the entire globe rather than a particular region or country (Akrani 2011). Today’s international marketplace which is fuelled by rising incomes, population growth and liberalized trade rules provides a great chance for domestic firms to think and act “globally”. So, a company has to decide the way to go global once it has decided to do so. Normally, a domestic company follows the phase model of globalization in order to grow and transit into an international company. These phases are exporting, cooperative contracts, strategic alliances and wholly owned affiliates (Williams & McWilliams 2010, p.160). The purpose of this essay is to outline the level of risk inherent in each phase model of globalisation.

Exporting is the primary phase model of globalization which means products or services made locally are sold in foreign countries (Williams & McWilliams 2010, p.161). Exporting has its own level of risk. Apart from high transportation costs (Schultz and Speiser 2003), factors such as trade barriers, for example import bans, corrupt customs procedures; restrictive licenses and additional trade documents like Certificate of Authenticity have also made the importation and exportation of products difficult and also increase the final costs to customers (Trade Barriers 2014). In year 2013, a study showed that domestic prices had increased by approximately 30% due to the application of sanitary registration requirement in Central America because firms passed the additional costs needed to comply with these regulations to final customers (The World Bank Group 2013). Besides, different conditions such as geography, administrative barriers, infrastructure, and how goods are carried can affect transportation costs and add on the final costs to customers (Dr. Rodrigue and Dr. Notteboom 2013). In addition, firms face problem with local marketing...