The difference between internationalization and globalization is that internationalization is the process of developing products and services by a country to expand its subsidiaries in foreign markets and cover a wide area while, on the other hand, globalization is the economic, social, technological, and cultural relations amongst countries empowered by international trade and investments.
Internationalization involves the importation and exportation of goods and services. It increases trade dealings and relations at international levels. It aims to expand businesses in and outside a country’s boundaries to meet International standards.
It enhances good relations between member countries thereby allowing each country to increase its enterprise presence and pushing the world to globalization.
Globalization focuses on the free flow of goods, services, and capital around the globe. It’s the mutual interdependence of countries across the world fostered by free trade and the removal of trade barriers. It leads to a rise in international trade since there will be no barriers to trade.
Trade barriers include a lack of a common currency. Globalization aims at having a common currency between member countries to ease trade. It leads to easier access to the world market
Key Takeaways
- Internationalization focuses on modifying products or services to accommodate various cultural, linguistic, and regulatory requirements across countries.
- Globalization involves the integration of economies, cultures, and markets worldwide, promoting the exchange of goods, services, and ideas.
- Internationalization is a business strategy that companies adopt, while globalization is an ongoing process affecting the world.
Internationalization vs Globalization
Internationalization refers to the exportation, and importation of products to other countries in order to create international relations and increase market value. Globalization focuses on building economic, and political relations between countries for investment and other purposes.
Comparison Table
| Parameter of Comparison | Internationalization | Globalization |
|---|---|---|
| Meaning | Development of products to expand foreign markets | The mutual dependence of countries across the globe |
| Relates to | Firm/business | The economy of the country/world |
| Affected by | Taste, preference, and people’s cultural traditions | Infrastructure, network, and logistics |
| Focuses | Business expansion | Free flow of goods and services |
| Outcome | Increase enterprise presence | Removal of trade barriers |
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What is internationalization?
It is the process of developing goods and services in a country to expand its subsidiaries in foreign markets and cover a wide area. It involves the relocation of businesses across the globe.
It also involves the importation of goods and services. Money is the main form of exchange and barter trade to a lower extent. It aims at hitting its target in the world market thereby incurring high profits and hence expansion of constituent businesses.
It is highly influenced by several factors:
- Taste and preferences- different people have different urges and ideas about different products and services. People will tend to choose more of the goods and services they are familiar with prior to the new ones in the market.
- Traditions- based on different ethnic groups of people around the world, different goods and services will be used by different people.
- Capital- this plays a major role in the world of exchange. The purchasing power is highly influenced by the money flow in the economy.
Internationalization increases trade dealings and relations at the international level. When a business in a country has increased nationally, it generates ideas and income to grow beyond its borders therefore the need for internationalization.
It focuses on the expansion of the business both locally and internationally. Since competition in the world market is usually so high, this will prompt a country to produce goods and services that are unique and better off as it is said, “competition is healthy.”
What is Globalization?
It is the economic, technological, social, and cultural relations among countries across the globe empowered by international trade and investments assisted by information technology. It focuses on the free flow of goods and services across the globe.
Through the removal of trade barriers, globalization has enhanced trade in the world at large. On the other hand, migrations have increased since there are no strict rules on immigration. Also, duties and taxes on goods and services have been lowered.
Information technology has highly enhanced globalization. This is because trade is carried over the internet effectively. Therefore, business time is not limited for customers to purchase whatever they want at any time.
Globalization is influenced by infrastructure which is the development of roads and other transport links across the globe in order to easen trade. This is also influenced by the type of goods being transported.
Main Differences Between Internationalization and Globalization
- Internationalization is the process of developing goods and services by a country in order to expand its subsidiaries in the foreign markets while globalization is the economic, technological, social, and cultural development among countries empowered by investments and information and technology.
- Internationalization is highly influenced by taste, preferences, and traditions while globalization is influenced by infrastructure and network logistics.
- Internationalization focuses on business expansion both locally and Internationally while globalization focuses on the free flow of goods and services through removal of trade barriers across the globe.
- Internationalization relates to a firm and its businesses while globalization relates to the economy of the particular country and the world at large.
- Internationalization involves importation and exportation while globalization involves removal of trade barriers and increased external relations and migrations.
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Chara Yadav holds MBA in Finance. Her goal is to simplify finance-related topics. She has worked in finance for about 25 years. She has held multiple finance and banking classes for business schools and communities. Read more at her bio page.
