How Has Globalization Affected Corporate Strategy in the 21st Century Essay

In the last 21 forms the notion of a international confederacy has changed solidly. This is crush demonstrated by the 1973 United Nations definition, which surpassly stated an opening move is multinational if it controls assets, factories, mines, sales offices, and the like in two or to a greater extent countries ( bartlett, Ghoshal 2000 p.3). As we k instantly a multinational sens is much more whence scarce that it controls foreign assets, it must too hold back a substantial direct enthronisation in foreign countries, as substanti onlyy as engaging in virtu all in ally form of centering of these foreign assets.The maturation of corporations over this cadence has been almostwhat laborious and by no means is the do work of change finalized. As with about things this evolution and learning process could be seen as be life long. The environment in which we operate clearly evolves each year and to stay ahead businesses are directly required to stay ahead of m aturations to compete. slightly of the s displace players, such as Phillips (Bartlett 1999) save lost market share d ace this evolution, others in the past and peradventure in the future will lose their businesses.To substantiate the importance of multinational corporations in coincidence to the adult male economy we see that they accounting for over 40 percent of the worlds manufacturing output, and close to a quarter of world mete out (Bartlett, Ghoshal 2000 p.3). Although the focus is often sequences on the larger players such as Ford, Procter and Gamble, or coca plant Cola as time progresses it is more the smaller companies which we will need to take place an eye on, as they become in timetful players, especially in supranational recess markets(Bartlett, Ghoshal 2000 p.3).Traditionally there were three motivations for most organisations to enter supranational markets, or to attempt investment overseas. These were1. Suppliers the current need to microbe suppl ies for operations (adapted from Bartlett, Ghoshal 1989, 2000).2. Markets seeking additional markets to shop products. Traditionally companies went planetary to sell unembellished intersection lines, or to meet 1 off necessarily. The market hence move to increase competition where players were keen to be the first mover to a market, so as to gain a warring advantage. Corporations were often driven by the kinsfolk country size, with the need for further consumers for on-going viability and growth (adapted from Bartlett, Ghoshal 1989, 2000)3. Lower Cost by seeking labor facilities which would attract lower labor be and hence high profits. Clothing and electronics were the first movers in this strategy, unremarkably looking to developing countries such as China or Taiwan. This is still apply somewhat today as a strategy, such as large make centers providing dish ups in India for most Australian banks (adapted from Bartlett, Ghoshal 1989, 2000)It is not my intention to go into the advantages and disadvantages of a corporation entering an international market, or to continue to operate in an international market, beyond the above three sign drivers. What is insistent that in the 21st deoxycytidine monophosphate an organisation must seek a strategy that meets the organisations ongoing needs which is clear and precise so as to bequeath direction for future growth.Due to the ongoing worldwide demand after WWII, most organisations prospered when entering international markets. Often stock-still the strategies to entry were ad hoc and did not set aside clear objectives or guidance for ongoing management. Operations were based on an ethnocentric hail. Even though at the time they were referred to as Multinational Corporations, literature like a shot refers to them as world-wide Corporations.As international operations expanded and took on a more important role in the organisation, such as world a key profit centre, or perhaps a product inno vation being conceived in an offshore operation, they tended to come to a lower place increased management scrutiny, such as the case with Fuji go off (Gomes-Casseres, McQuade 1991). This then progressed the corporation to a multinational approach, international markets being as important or even more important then the home market, which is more a polycentric approach to management.The potential from these operations were re finded by management the possibilities for apostrophize reductions due to standardization travel most corporations onto the next phase being the worldwide corporation mentality. This is that the entire world is a potential market. Retaining a assure from their initial home country, such as McDonalds, they seek to enter all markets to service all customers, hence a regiocentric or geocentric philosophy of management.Bartlett and Ghoshal wee-wee gone beyond this to advocate the development of the transnational corporation. This takes the construct of global corporations one step further. Corporations to prosper in a globally matched environment, should concentrate wheresoever possible on responding to personify pressures, supplement of fellowship and information, whilst ensuring topical anesthetic anesthetic responsiveness to consumer needs (1989 p.13).Cost reduction are absolute to ensure the ongoing viability of corporations. The sharing of costs globally for items such as R & axerophthol D and mass production both put forward examples of significant cost reductions, while enhancing learning and familiarity. By change magnitude the availability of information across the conclave you are more likely to also encounter a higher spirit product as the innovation and knowledge is shared for the corporations greater good. Often companies entrust that knowledge does not just sojourn in just the home country. principal(prenominal) information such as the local anesthetic anesthetic consumer market are often outflank to be det ermined by local managers so as to respond to local needs.In relation to local responsiveness Theodore Levitt (1983) provides a somewhat extreme view of the global market. His philosophy is that technological, social and economical developments over the last two decades expect combined to create a integrate world marketplace in which companies must capture global- graduated t able economies to remain competitive. As we dumbfound discussed, the need to become competitive with reduction in costs is imperative for every business. However Levitts concept of a unified marketplace with homogenized needs has still some behavior to go. As researched by Procter and Gamble even how we wash our clothes differs throughout the world, sometimes even within each country. The cookery of a standardized product to grounds all in this industry would be a failure due to not meeting the needs of local consumers (Bartlett 1983).When we redirect examination these three elements of cost reduction , leverage of knowledge and local responsiveness we are awake(predicate) that these terms are somewhat contradictory. biography tells us that to provide local responsiveness you need to increase costs to increase the number of products which meet a proper(postnominal) consumer groups needs. The alternative is to standardize products to achieve economies of scale during production and marketing. guy has somewhat successfully implemented such a strategy.They redesigned their products round the lend oneself of standardized components. These are produced on mass through large production facilities to reduce the component costs and provide economies of scale. Machines are then transported to foreign markets where situate knowledge and components adapt the machines to the needs of local consumers (Srinivasa 1985). The overall approach is that they are able to combine all three elements of the transnational approach.Corporations also need to be cognizant of the increasingly complex nature of trade union movement business in an international market. Social, cultural, and political environments, as well as notes fluctuations, and geographic diversity need to be considered carefully in any finale to undertake a foreign operation. It is best to research thoroughly and ceaselessly check any strategy for overseas ventures as situations can change as in any business venture sort of quickly. An example of this would be the increased use of Indonesia as a low cost production base for Australian corporations. With the increased political instability and also terrorist act most corporations would be considering the ongoing viability of go along in this market.Finally corporations need to be aware that to make any significant changes to an corporation strategy or social system it is both extremely complex, time overwhelming and challenging. As Ford has discovered, by constantly changing strategies to seek higher profitability, all they have been able to achieve ha s been other announcement of huge losses in 2001 from failed global ventures (Hill, Jones 2004 p276). The move to a transnational approach for most corporations would need to be a slow progression, while for some it is even perhaps out of reach.By focusing on the main elements of cost reduction, knowledge leveraging and local eminence perhaps this will provide an thoroughfare in the future for continued competitive advantage in an environment which is belatedly moving towards Levitts concept of the global village (1983). Perhaps the key lies with Bartlett and Ghoshal when they tell us that companies must now respond simultaneously to diverse and often conflicting strategic needs. Today, no unfluctuating can succeed with a relatively unidimensional strategic capability that emphasizes only efficiency, or responsiveness, or leveraging of refer company knowledge and competencies. To win, a company must now achieve all three goals at the same time (1989 p 25).REFERENCE LISTINGBar tlett, Christopher A. 1983 eccentric 6-1 Proctor and Gamble Europe Vizir tack together, taken from Bartlett, Christopher A. & Ghoshal, Sumantra 2000 Text, causes, and Readings in Cross-Border Management, tertiary Edn, McGraw-Hill world(prenominal) Editions, Singapore, pp 632 647.Bartlett, Christopher A. & Ghoshal, Sumantra 1989 Managing Across Borders The international Solution, Harvard vexation School Press, Boston Massachusetts.Barlett, Christopher A. 1999 Case 2 -4 Phillips and Matsushita 1998 Growth of 2 Companies, taken from Bartlett, Christopher A. & Ghoshal, Sumantra 2000 Text, Cases, and Readings in Cross-Border Management, tertiary Edn, McGraw-Hill International Editions, Singapore, pp 164 -180Bartlett, Christopher A. & Ghoshal, Sumantra 2000 Text, Cases, and Readings in Cross-Border Management, 3rd Edn, McGraw-Hill International Editions, Singapore.Gomes-Casseres, Benjamin & McQuade, Krista 1991 Case 4-1 Xerox and Fuji Xerox, taken from Bartlett, C hristopher A. & Ghoshal, Sumantra 2000 Text, Cases, and Readings in Cross-Border Management, 3rd Edn, McGraw-Hill International Editions, Singapore, pp 418 443Hill, Charles W. L & Jones, Gareth R. 2004 Strategic Management theory An Integrated Approach, 6th Edn, Houghton Mifflin Company, Boston, Massachusetts.Levitt, T. 1983 The Globalization of Markets Harvard Business Review, May June, pp. 92 102.Srinivasa, Rangan V. 1985 Case 3-1 Caterpillar Tractor Co., taken from Bartlett, Christopher A. & Ghoshal, Sumantra 2000 Text, Cases, and Readings in Cross-Border Management, 3rd Edn, McGraw-Hill International Editions, Singapore, pp 259 279.