Globalization has become a way of life in 21st-century business, as transportation, communication and technology have decreased distances and have increased the speed of transactions across broad geographic areas. There are many types of market drivers, but they all hold in common a convergence of global trends and economic ecosystems. As with small-business operations, understanding the landscape and being ready to act on opportunities are key to success.
The market drivers definition encompasses forces that influence consumer purchasing decisions. In global markets, they tend to reflect global rather than regional trends as well as macroeconomic conditions.
Although price isn't the only factor at play when consumers make purchasing decisions, it certainly plays a critical role. When companies compete on a global playing field, cost drivers are considerably more complex than in smaller, simpler markets. Businesses are influenced by broad considerations such as currency values, exchange rates and the cost of labor and materials in different locations.
The value of currency affects how much your business pays for raw materials and also how much customers abroad pay for your products. If you're purchasing from a country whose currency has a low value relative to your own, you'll be able to buy more with less money, lowering your operating costs. However, if you try to sell your finished products in countries whose currency values have dipped, potential customers may have trouble paying for your products and may opt for cheaper domestic alternatives.
If you choose to manufacture abroad, your costs will rely heavily on local prices for rent and labor. If you can operate a plant for considerably less than you would spend at home, these savings can outweigh the added expenses you will incur in travel and logistics from trying to run your operation remotely. Areas where prices and currency values stay relatively stable are safer bets for establishing business infrastructure than places with sudden or dramatic fluctuations.
Globalization takes place across far-flung domains that are governed by different laws and policies. Governments can implement strategies that leverage and encourage market drivers, such as adjusting interest rates and the availability of capital to encourage investment and spending. Readily available capital is beneficial to global markets because it puts more money in the hands of consumers and gives businesses easier access to credit for cash flow and growth.
Governments can also restrict the availability of foreign goods, giving their own domestic companies competitive market advantages. Tariffs affect markets by adding to the price of imported products and making locally sourced products more affordable in comparison. Governments can also influence the performance of domestic companies in global markets by providing business support in the form of technical support and loans with advantageous terms.
As information technologies connect remote parts of the globe at speeds that would have been unthinkable even in the relatively recent past, fads, trends and tastes become international in scope, opening unprecedented opportunities for savvy companies to penetrate international markets. From Korean pop music to Harry Potter merchandise, marketable products and content have virtually unlimited potential provided the companies that manufacture and distribute them understand their various audiences.
While global markets thrive on the capacity to reach potential consumers virtually anywhere, global companies must also meet the challenges of understanding the many segments of international consumer bases. It's important to study trends, fads and tastes across global markets and to also do your own research. Track what sells by collecting data and also build relationships within the geographic communities you serve so you can benefit from insiders' perspectives as well.