According to the article from HSBC Global Connection, the exports rate of Canadian firms has increased 31% since 2008; expanding internationally becomes a good opportunity for many Canadian firms. However, an external blog post from Oracle Blogs called “Five Globalization Risks and How To Manage Them” clearly introduced the five types of risks that will occur in globalization. I think this blog is useful for understanding the risky side of globalization and what to do to solve the risks.

In my opinion, Resource Constraint is the most perilous risk to globalization. This risk could undoubtedly impact the profit of an international business. The increasing rivalry of the industry will cause the lack of resources and skills, since businesses look for effective planning with dynamic resource management to increase their profit. I think the drastic competition will also cause the barrier to entry to be comparatively high to the firm. Therefore, when the firm first time enters the market, the power it has in the market is relatively tiny by comparing to the leading companies. As a result of both relatively low power in the industry and the drastic competition for resources, the firm will be much more difficult to find out a sufficient local supply chain, since suppliers with abundant resources of supplies will cooperate with the leading companies. Without the resources of supplies, the company will be hard to solid their feet in the foreign market and impact on the further expansion of the firm. Moreover, the relatively low power in the new market will not only impact on the supply side but also the demand side. The advantages of the leading companies in the market will also attract more customers. Rather than purchasing a new brand, the customers would buy from the brand that is well known to them.

Even though globalization is a significant opportunity to companies, but the risks of expanding into the global market is outstanding. Companies need to come out with solutions to the framework of the problems and risks they might encounter and do plentiful research before they enter the foreign market.

Reference:

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“Manage Working Capital in Each Stage of Your Business Lifecycle.” HSBC Global Connections. HSBC, 06 Nov. 2014. Web. 08 Nov. 2014.

Lopes, Melissa Centurio. “Five Globalization Risks and How to Manage Them .” Oracle Blogs . Oracle, 06 May 2013. Web. 08 Nov. 2014.