Factors that Affect Globalization of Consumer Goods Markets
In layman’s terms, globalization can be defined as the process of speeding up the movement and exchange of goods and services across the globe. Globalization assists in promoting and increasing interactions between diverse regions and populations around the planet.
Further, globalization has affected consumer goods in that their prices have substantially reduced. That is because it enables goods and services to be produced or offered in different parts of the world. Therefore, this aspect may lead to specialization, which will, in turn, lower the cost of producing goods, thus reducing prices for all consumers.
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To answer the question, which factor hinders the globalization of consumer goods, let us first kick off with a definition of terms to simplify the jargon.
Globalization at large
As earlier defined, globalization referred to speeding up the movement and exchanging goods and services across the globe. It leads to interdependence between countries and promotes capital, knowledge, and people throughout countries. A good example of globalization at play is when Coca-Cola expanded its operations globally, and it is now a recognized brand globally.
Consumer goods can be defined as the products purchased for consumption by the everyday consumer. Thus, they are the products you purchase daily for sustenance. Examples include televisions, groceries, cell phones, and more.
Market globalization can be termed as the integration of markets into the global economy. As a result, it will lead to increased interdependence among different national economies. An example is when a country starts to produce crude oil. Other countries will begin to depend on it for the crude. When the cost per barrel rises, gas prices will go high, and this effect will be felt across all the countries that import this crude oil.
Globalization of consumer goods markets
Globalization of consumer goods markets is defined as hurtling the movement of consumer goods across different country economies. For instance, if a firm based in China, a manufacturing giant, decides to expand, set up shop in other countries, and export to different national economies, which is the globalization of consumer goods markets.
Some examples of global consumer goods include:
• Mobile phones
A commodity such as crude oil cannot be classified as a consumer good since it must be processed to become a finished good, which is then consumable.
Here are some factors that might hinder the globalization of consumer goods markets
- National differences in tastes and preferences
Different countries have their values, defining if they will consume certain imported products into the country. Certain countries tend to have a hostile reception to some goods and services while others are pretty receptive and welcoming. For instance, some countries have a strong stance against alcohol and cigarettes. Therefore, the uptake of these products will be relatively slow compared to other countries, which have relaxed rules on the mentioned goods.
- High cost of production in developed countries
Some countries have policies in place that discourage the start-up of industries. They institute high taxes and levies on initiatives that then translate into a hiked cost of production. That will then translate into reduced market globalization. Modern-day, many businesses are setting up stores in countries that have low production costs. That then allows them to offer low-cost goods to consumers. For instance, instead of producing your steel, you might opt to import by buying cheaply from a neighbouring country whose cost of production is low.
- Homogenization of material culture
Homogenization is listed as a characteristic of globalization. It refers to the decline in cultural diversity via diffusion and popularization of a broad range of cultural symbols. Homogenization takes place mainly in two ways, namely, material (physical objects) and customs. While the globalization of cultures means an exchange of cultural values from diverse countries and a convergence of traditions, this may not always be the case if a country is hostile in its reception to different material cultures from other nations. That will undoubtedly hinder globalization.
- Increased outsourcing of goods and services
Outsourcing commonly refers to procuring services or goods from a third party specializing in a particular field. While outsourcing is an essential outcome of globalization, it might be overdone, and in this case, globalization might be affected in more ways than one.
Globalization is an essential aspect of any economy and should be promoted aggressively.
While some factors might hinder globalization, such as National differences in tastes and preferences, homogenization of material culture, increased outsourcing of goods and services, and high cost of production in developed countries, it is essential to keep in mind that globalization is crucial for economic growth.
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