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The Impact of Globalization on Global Product Development

The world has fast become a global village where you can be in any part of the world in some hours. Even faster than that, you can reach any part of the world in a matter of seconds or minutes. However, not many know that globalization serves product development in the same way.

Faster means of transportation and communication have helped ease the burden of being and reaching far locations. Similarly, economic globalization has helped ease the challenges in new product development. Check out these reasons for developing new products during a challenge-packed recession.

Reaching your next-door neighbor via call will not intrigue you so much. Also, small-scale production would not seem like much of an achievement with globalization. Hence, global product development can best be appreciated in the production of large-scale products.

As beneficial as globalization is to product development, the manufacturing industry, national economies, and nationalities have suffered gravely because of it. Therefore, this article will explore the benefits and the disadvantages of globalization. Altogether, we will be able to identify the impact of globalization on global product development.

Opportunities for Global Product Development

Pros 1: Affordable Products and Better Services

Global products are often easier to produce. One of the main reasons for that is that countries with an abundance of raw materials are the selected location for manufacturing. Hence, such companies can produce goods at low unitary costs.

Through this advantage, companies can offer affordable services without compromising quality. Furthermore, globalization helps to achieve customer supremacy. It means customers can pick the best quality at a low cost.

Globalization forces competing companies to offer better services. Hence, many companies pick a niche and seek to offer unique products to their market scope. Some of these businesses can satisfy their niche through proper product differentiation.

Pros 2: Production Speed and Cost Savings

While globalization drives the best business production, it does it at an even reduced cost. The cost of transportation of raw materials is the most substantial fee being canceled out.

Without the need to import material for production, businesses can use the money to expand their product line. Furthermore, they can fast-track production with raw materials in hand.

Also, globalization reduces challenges in new product development because it brings them close to several markets. When Tesla opened its Gigafactory 4 in Berlin, it has been able to penetrate the European market faster. Likewise, the economy of the production country is improved through employment and accessibility to quality products.

Pros 3: Improve International Relations and Outsourcing

For companies that cannot open their factory in another country, globalization makes it easy for them to still benefit from other countries. Through globalization, they can outsource some of the processes of their manufacturing to companies in another country. Even better, they can outsource the production of parts of their product to companies in another country.

Globalization has helped improve the relationship between international companies so that they can collaborate on different enormous tasks. Furthermore, this bolstering relationship can help these companies share privileged technologies. You can learn how to cut the cost of prototyping in this article.

Challenges against Global Product Development

Con 1: Environmental Concerns and Compliance

One of the side effects of global product development is that some counties can become too concentrated in manufacturing. This concentration would deplete the resources in such counties and leave them barren after their exploration is complete. Hence, there are concerns over the cultural and environmental compliance of globalized companies.

Many of these companies may be hindered from establishing in a foreign country if they do not satisfy certain compliance criteria. Even more, their factories can be shut down by regulators if concerns are raised about them during operation. In such cases, a lot of resources will be left at the factory as waste.

Con 2: Recruitment Difficulty

The prospect of globalization is advantageous to the country’s economy because of increased employment. However, some of these countries do not have the expertise needed to oversee the production cycle of globalized products. Having a factory in a country with little or no technical expertise can be challenging for a business engaging in global product development.

Such businesses would need to bring in foreigners to oversee the operations in the manufacturing country. Regrettably, these countries can have policies against foreigners hiring others. Furthermore, the country might not be in support of hiring foreigners or paying them.

Some countries are more lenient because they provide criteria that must be satisfied before being able to employ a foreigner or before a foreigner can be employed. Check out this article on how to hire foreign employees.

FAQs on the Impact of Globalization on Global Product Development

Check out more questions and answers below on how globalization is impacting product development.

1. What are the main types of globalization?

Globalization can be categorized into economic, political, and cultural. Economic globalization is interdependence in the form of international financial markets and foreign exchange. Political globalization employs the tie of global organizations to prevent conflicts and improve interstate interaction. Another form employs the use of sister cities to oversee the integration of two different cultures. Through this integration, ideas and values are transmitted between the two nations.

2. What are examples of production globalization?

Asian countries have a lot of manufacturing industries. Hence, Western countries outsource the manufacturing of their products in these countries. For instance, Nike is an American country with several outsourced companies in Asia where its products are manufactured.

3. What is the objective of production globalization for developing countries?

Developing countries can participate in global production networks through manufacturing, trade, and distribution. Through this participation, they can grow their country's economy. Furthermore, their economy can be bolstered and the poverty rate can be reduced through capital flows and movement of labor.

4. What does the globalization of production refer to?

It refers to the diversification of production processes to maximize the factors of production. Hence, goods and services are sourced from various locations around the globe. By employing different sources, the cost and quality of factors of production can be maximized.

It’s a Wrap

The impacts of globalization are both favorable and otherwise. With this article, businesses can capitalize on the pros. Also, it shows what to avoid during global product development.

Does your company need help strategizing how to break into the global production economy? You can get all the help you need from LA NPDT.

We are an international firm that offers consultancy services for production companies. You can reach us at 318-731-9573 or via lanpdt.com for more inquiries.

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