The Internal & External Factors of Globalization

by Ben Taylor; Updated September 26, 2017

Globalization is a ubiquitous term that has became increasingly significant following the Second World War. As a function of primarily free economies, globalization allows businesses and individuals to interact and trade as part of a world economy. It removes traditional geographic and political boundaries to commerce, staging the entire world as a theatre for business. Such staging has internal and external affects on various segments of a business, including company branding, employee capabilities, and consumer and market analysis.

Globalization Factors

A global economy opens new markets for both buying and selling; as such, the way companies do business, and the way consumers interact with companies, must change. These changes are the internal and external factors of globalization. Internal factors of globalization include how the firm changes its practices to compete on a worldwide scale. Production, development, customer service and marketing strategies are all internal factors of globalization, according to the Intelligent Business Plan Software website. External factors include new market environments to which the company must become accustomed, particularly the nuances of the people and laws to which the company will be exposed.

Company Branding

Internally, the company should develop branding strategies that align its logo and external presence in a new market with its global image. One approach is to emphasize the brand’s association with quality products and services, according to the website My Strategic Plan. Company branding needs to spark interest in the company itself, according to The M Companies. The perceptions worldwide consumers have of a company and its brands are a prominent factor of globalization because a company’s brand is often the first thing consumers see when they interact with the company.

Employee Capabilities

To compete in a worldwide market, companies must internally evaluate the work that their employees are capable of. Primarily, companies need to ascertain the strengths and weaknesses of their employees, as well as any problems, constraints or performance uncertainties that global competition might create, according to My Strategic Plan. Identifying strengths and weaknesses internally permits the company to reorganize itself for maximum efficiency and will help the company negotiate the world economy and the new markets it opens.

Consumer Analysis

Consumer reaction to a new product or company is paramount when entering a new market. Externally, globalization requires a company to analyze consumption trends for several markets, then adapt to what their new customers buy. Analyzing consumer trends includes segmenting the market into different types of consumers, identifying a consumer’s motivation for buying and ascertaining the market’s unmet needs, according to My Strategic Plan. Such an analysis enables the company to create unique offerings for unique consumers, creating a vibrant presence.

Market Analysis

Externally, companies in global markets need to understand the market itself. Market analysis helps a company determine the size of the market, how it is growing and how to create a presence in the market geared toward profitability, according to My Strategic Plan. Each market will have unique barriers to entry, including local political or economic uncertainties, the availability of resources, and even the local reaction to a global company.

About the Author

Ben Taylor has been writing since 2005 and has had work published by WEKU-FM and West Virginia Public Broadcasting both on air and online. Taylor holds a Master of Arts in English from Eastern Kentucky University and currently teaches composition and ESL there.