A Globalized Economy

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Globalization is not only a concept of economic but also it is social, cultural and political developments that is a multidimensional way. In economic terms it is noteworthy that these three dimensions of globalization: trade globalization, financial globalization and the globalization of production. The globalization of production refers to the tendency among firms to source goods and services from locations around the globe to take advantage of national differences in the cost and quality of factors of production (such as labor, energy, land, and capital).

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By doing so, companies hope to lower their overall cost structure and/or improve the quality or functionality of their product offering, thereby allowing them to compete more effectively. For example the Boeing Company’s commercial ,the 777, airliners. It includes 132500 important component parts which are produced by 545 suppliers around the world. 8 Japanese suppliers make components for the fuselage, and wings; a supplier in Singapore makes the doors for the nose landing gear; 3 suppliers in Italy manufacture wing flaps; and it continues ‘’ Globalization of production has a lot of benefits. The first one is access lower-cost workers. Global production activities allow companies to reduce overall production costs through access to low-cost labor. For decades, companies located their factories in low-wage nations to churn out all kinds of goods, including toys, small appliances, inexpensive electronics, and textiles. Yet whereas moving production to low-cost locales traditionally meant production of goods almost exclusively, it increasingly applies to the production of services such as accounting and research. Although most services must be produced where they are consumed, some services can be performed at remote locations where labor costs are lower. And the second one is access technical expertise. Companies also produce goods and services abroad to benefit from technical know-how. And the last one is access production inputs. Globalization of production allows companies to access resources that are unavailable or more costly at home. The quest for natural resources draws many companies into international markets. Japan, for example, is a small, densely populated island nation with very few natural resources of its own—especially forests. ’’ (The Globalization of Production and the Changing Benefits of Conquest Journal of Conflict ResolutionOctober 199943:646-670) Management has a big importance in International Business. Nowadays, firms are looking for high skilled managers who have got skill to manage on the entire world. Because firms do not want to produce for just their people. Firms have started to mergent with each other to earn a lot of money, to reduce costs, to make more profit. So if the firms are managed well by high-skilled management then these collaborations will survive longer. Also a firm managed well, has a huge capital and reputation. For example Koç Company is managed by high-skill managers and as we know Koç Company is the biggest company in Turkey then others also in terms of globalization of production.

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