Question

Sara Al Madani is well - known serial entrepreneur in the field of fashion , Restaurants , tech and more . She has setup many startups which are operating in the UAE as well as in the United States . List and explain the five major motivations why Sara had gone global ?

Answer 1

The five major motivations why Sara had gone global with her businesses are as follows:

1. Containerisation: The costs of shipping overseas have come down, due to containerisation, bulk shipping, and other efficient improvements. The lower unit cost of shipping products around the global economy helps to bring prices in the country of manufacture of the products closer to those in export markets, and thus it makes markets more contestable globally.

2. Technological change: Improved technology makes it easier to communicate and share information around the world. Rapid and sustained technological change has reduced the cost of transmitting and communicating information which is a key factor behind trade in knowledge products using web technology.

3. Economies of scale: According to many economists there has been an increase in the minimum efficient scale (MES) associated with some industries. If the MES is rising, a domestic market may be regarded as too small to satisfy the selling needs of some industries and thus can expand globally. Firms exploit such gains from economies of scale to gain increased specialisation.

4. Less protectionism and non tariff barriers: Old forms of non-tariff protection such as import licensing and foreign exchange controls have gradually been dismantled over the years. Borders have opened and average import tariff levels have fallen. Thus reduced tariff barriers encourage global trade and this has mostly occurred through the support of the WTO.

5. Improved mobility of capital and labour: In the past few decades, there has been a general reduction in capital barriers, making it easier for capital to flow between different economies. This has increased the ability for firms to receive finance. It has also increased the interdependence of global financial markets. Also, people have become more willing to move between different countries in search for work which has also improved the supply of labour.