February 2020: Is De-Globalisation the new trend – Solution is to Internationalize?

Brexit is a victory for populism over “globalism”, the past decade has been increasingly tough for the global economy – Borders, nationalism, tariffs, and even trade wars are back in trend. The leading economists are more optimistic about the future of economic integration than others, but all agreed that if we see globalization re-emerge, it will not be the same as before.

World trade rose until the time of the financial crisis of 2007. The natural evolution is the desire for new products, financial diversification, foreign travel, and fragmented value chains. If globalization has peaked, this means fewer resources to address inequalities and higher risks. Hence, the problem is not too much globalization but too little. We need both to revive globalization and to deploy domestic policies to promote shared gains and resilience to downside risks.

De-Globalization and the breaking of global economic integration are the dominant themes for certainly this coming year and maybe for years to come. And it can have some pretty far-reaching repercussions, not least around price behaviour because, in a way—if you think about deglobalization—It’s an additional cost. The case for trade liberalization is harder today and the way the economy operates has significantly changed.

A complete collapse of economic globalization seems unlikely; however, we will have to settle for a thinner model of globalization that leaves nations room for rebuilding domestic social contracts.

It is impossible for a country to be self-sufficient in every product, industry or resource: it will need to join forces and exchange strengths to properly cover its needs. Opening and maintaining strategic alliances will result in the strength and competitiveness necessary should a country wish to be a strong player. While trade tariffs may boost national economies and employment in the short term, the potential long-term effects outweigh these benefits for anyone other than a select few.

Why can Internationalization be the solution?

Tacking Trade Protectionism will not be easy for businesses around the world, however, taking a proactive approach to Internationaliz­ation would make companies more robust and potentially more successful, with a far greater client base and more scope to e­xpand.

While internationali­zation typically denotes big busi­ness carried out on a global scale, even the smallest companies can in­ternationali­ze successfully with limited resources if they play their cards right.

There are proactive reasons for incorporating internationali­zation into the competitive strategy of a business including:

  1. Taking advantage of other markets growth and development
  2. Moving activities in the value chain to more competitive regions – Go Local
  3. Exploiting economies of scale and reach
  4. To gain knowledge about other clients and markets, the capacity of competitors at a global level in a particular industry or sector, and even the cul­tural diversity typical of teams in global companies.

Any business that wants to break into new markets must begin by asking itself what competitive advantage are we trying to gain? It then needs to dedicate time to producing answers to three big questions:

  • What markets to enter?
  • With what strategy?
  • With what type of structure?

Internationalisation processes represent an opportunity for rapid growth of businesses and are a phenomenon which affects big businesses, mid-sized businesses and small businesses alike.

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