Coca-Cola, a U.S.-based company, has over 80 per cent of its profits coming from outside the United States. For small and large multinational companies, there are many advantages and disadvantages of becoming a global business. A global business is considered any that competes with other businesses in the world market and whose competitive advantage is determined by businesses of the same nature around the world.
The main reason for any business to exist is to increase sales and profits. When you go global, then the likelihood of increasing sales goes up as you open up your market to consumers all over the world. This allows businesses to reduce dependence on their local and national economies. With the number of Internet users on the rise, global businesses are able to do business at all hours of the day with consumers from every point on the globe. The potential for expansion for businesses increase as they enter into more markets.
When entering the global market, businesses need to be aware that the gains may not be seen in the short term. It may be many years before they start reaping the rewards of their efforts. Another disadvantage is that they have to hire additional staff to help launch their companies in the global markets they expand into. Companies usually have to modify their products and packaging to suit the local culture, preferences and language of the new market. Travel expenses are sure to increase for the administrative staff, as they will now be expected to travel all over the world to oversee their business outlets in other countries. Also, companies need to know the regulations and tax laws in foreign countries, which takes time and money, and they may need to hire professionals in those countries to help with legal and financial issues.
While it might be a boom to a business to go global, the effects it has on its employees can also be viewed as advantages or disadvantages. Some employees like the ability to travel around the world and see new places and experience different cultures. Others do not like to be away from their families for extended periods of time or complain about having to learn a new language and adhere to the new countries' local customs and ways of doing business.
Consumers who are able to get their favourite products from multinational firms, such as Wal-Mart or McDonald's, are very happy when businesses go global. They are able to buy items in their own towns, without the extra costs of international shipping involved. Yet, the disadvantage is felt by those consumers who buy a product online and then are not satisfied with the product, as they are left either keeping the product or paying for shipping costs to return the product to the country of origin.