Question

Question 7 Explain how every local firm is part of the global economy. Provide a local example.

Answer 1

Globalization refers to a process by which regional economies, societies and cultures become integrated through a global network of communication, transportation and trade. The liberalization of the economies around the world along with the development of information technology and other technologies caused more and more firms to enter into the global market. Businesses around the globe participates in the global economy utilizing their greatest assets; concepts, competencies and connections.

Presently, more and more regional as well as local firms are stepping to the global scenario. Every local firm is becoming part of the global economy. In the industrial economy, place of location of businesses mattered great because they gave them control over factors of production- men, material and labor and access to transportation networks that helped them in reducing their cost of moving products between places. Even though advancements in technology and IT helps in overcoming the problems of transportation and availability of information of trade, local proximity of the firms that produce similar, competing and or related products still matter. Global competitiveness often depends on highly concentrated local knowledge. We focus on local firms where their business entered global markets has developed through the efforts of a cluster of small firms.

Local products and knowledge are gaining momentum these days, global economy has become more inclusive. Local firms have cheap and better access to resources required for production. This helps them in lowering their cost of production, which in turn they can pass onto consumers globally. There has also been a growing taste towards local produce among international consumers. All these are great opportunities for local firms and motivate them to go global. This combination of growth opportunities, learning, hedging risk by diversifying markets, increased revenue, and other benefits that can contribute to firm competitiveness provide powerful incentives for the right firms to enter global markets, despite the costs, periodic ups and downs, and the immediate headwinds of the current trade landscape.

Foxfury lighting solutions was a family owned company headquartered in the coastal, northern outskirts of San Diego. They developed a specialized light to allow night surfing on crowded beaches. Today, FoxFury exports cutting-edge “Xtremium” headlamp products to China, Japan, and other countries around the world, helping fire and rescue officials respond to major global humanitarian disasters from earthquakes in Fukushima and Italy to hurricanes in Puerto Rico and Texas. Their shift from a locally operated business to a global exporter is an evolution. In San Diego, where FoxFury accelerated its exporting activity through a grant competition and support program administered by the World Trade Center San Diego, an affiliate of San Diego Regional Economic Development Corporation (EDC).