Today wave of globalization that began immediately after World War II has moved businesses and entire world economy to a state of interdependence, and it enabled it through making the possible expansion of investment and trade across the national borders. Multinational companies that are always referred to as borderless organizations have played a key role in accelerating the pace of world economic interdependence and integration by expanding their businesses (Wallerstein, 2009). Globalization has led to the dismantling of national barriers and the breakdown of barriers to the flow of goods, capital, services, ideas and people, and the explosion in the volume, complexity, and variety of those flows. In addition, it has led to increasing uniformity and standardization among businesses, the growing homogenization of infrastructure, policy, and ideas to conform to the global platforms(Wallerstein, 2009).
For most of the business organization, globalization means an opportunity of taking advantage of scale, and exploiting synergistic benefits, as well as benefiting from the geographical merits and the market power advantages. However, according to the scale economy theory, the average cost per unit goes down as the number of goods and services that are provided increases. Growth and expansion abroad of the business are the key strengths to getting the benefits of scale, hence achieving important cost reduction for the cost of a production unit, sales system costs, and the supply costs incurred. In this manner, there is an intensification of the stages of exploiting the outcomes of the development and research activity while innovations are being promoted at the same time(Bernard, Redding &. Schott, 2007).
In addition, the businesses also have new possibilities of reducing prices, by means that companies continue to maintain their competitiveness. .