Impact Of Globalization On The Business Environment

1732 Words Sep 25th, 2015 7 Pages
Globalization has created a great amount of advantages and disadvantages for businesses of all different varieties. International business relationships have allowed companies to operate more efficiently by moving manufacturing to foreign nations that offer cheaper labor (Petri, 1991). Additionally, the business environment is greatly impacted by global forces that may put organizations at a disadvantage (Lowe & McCrohan, 1989). When companies operate on a global level, they are expected to respond to the cultural and economical dynamics of the nations in which they are conducting business (Petri, 1991). Failing to acknowledge such dynamics can ultimately discourage foreign consumers from purchasing goods and services that are offered from international businesses (Lowe & McCrohan, 1989). Moreover, organizations face larger competition as well as exchange risk.

Caterpillar, a major exporter of construction and mining equipment and engines, falls within the category of international businesses that experience the advantages and disadvantages of globalization. The company exports to over 200 countries worldwide and competes against other large equipment manufacturers such as Komatsu (Hill, 2015). The following information will evaluate how Caterpillar has responded to changing global dynamics and the effects it has had on business.

The Stronger Dollar

Being an American based manufacturer, Caterpillar is tied to the U.S. dollar. In the 1980’s, the U.S. dollar held strong…
Open Document