Globalization and Innovation

Globalization has brought about integration and interaction among companies, the people, and governments of different nations. Globalization has been aided by the advances in technology. Since World War II, the barriers to international trade have been lowered considerably through international agreements. The explosion of globalization has been driven mainly by the policies that have opened the doors to economies both domestically and internationally. Some companies grapple with the issue of whether to move outside their home countries, the consequences of doing so and the challenges presented to management such as catering to diverse customers and managing an international workforce. Certainly, the management functions planning and organizing would play a significant role once a decision has been made to expand business operations into a new geography.

The Coca-Cola Company has been widely known as a standard-bearer of global business. In 1891, Asa Candler bought the Coca-Cola Company with the idea of expanding the company globally. Within four years, Coke was available in all 50 states, Mexico, and Canada. The company expanded again in 1929 and built 64 plants overseas. By 1999, Coca-Cola derived 67% of its revenue and 77% of its profits from outside North America (Ghemawat, 2003).

The Coca-Cola Company has had its doubts about the idea of globalization despite its success. By the end of 1999, when Douglas Daft took over the Coca-Cola Company, the earnings had slumped and Coca-Cola’s stock had lost one-third of its market value. Daft vowed, “The world in which we operate has changed dramatically and we must change to succeed” (Ghemawat, 2003). Daft took the Coca-Coca Company into an aggressive shift in the opposite direction.

The success of globalization for most companies is a strategic challenge of determining how much to adapt business operations against how much to standardize internationally versus how much to localize. The right...