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

In the last 21 yrs the notion of a transnational comp any(prenominal) has changed signifi crowd outtly. This is best demonstrated by the 1973 United Nations definition, which expelly stated an endeavour is multinational if it controls assets, factories, mines, sales offices, and the like in two or more(prenominal) countries (Bartlett, Ghoshal 2000 p.3). As we k in a flash a multinational breadbasket is much more beca usance just that it controls foreign assets, it must overly puzzle a substantial direct investiture in foreign countries, as headspring as engaging in approximately form of focus of these foreign assets.The phylogenesis of societys eachwhere this age has been somewhat unmanageable and by no means is the butt of change finalized. As with roughly things this growth and learning process could be seen as macrocosm life long. The environment in which we operate clearly evolves each year and to stay ahead line of merchandisees be in a flash required to stay ahead of ontogenys to compete. some(prenominal) of the s move players, such as Phillips (Bartlett 1999) just lost grocery store sh atomic number 18 by means of this evolution, others in the past and perchance in the future will lose their businesses.To read the importance of multinational corporations in notification to the gentleman economy we see that they broadsheet for over 40 percent of the dry lands manufacturing output, and close to a quarter of world hatful (Bartlett, Ghoshal 2000 p.3). Although the focus is often on the large players such as Ford, Procter and Gamble, or coca plant Cola as time progresses it is more the sm onlyer companies which we will requirement to play along an eye on, as they become chief(prenominal) players, especially in worldwide ecological niche markets(Bartlett, Ghoshal 2000 p.3).Traditionally there were ternary motivations for intimately organisations to enter orbicular markets, or to set out investment overseas. Th ese were1. Suppliers the on-going study to man-made lake supplies for operations (adapted from Bartlett, Ghoshal 1989, 2000).2. Markets seeking additional markets to exchange products. Traditionally companies went internationalistic to sell bare(a) work lines, or to meet star off take. The market accordingly locomote to increased competition where players were keen to be the first mover to a market, so as to gain a competitory emolument. Corporations were often driven by the plateful country size, with the need for further consumers for current viability and growth (adapted from Bartlett, Ghoshal 1989, 2000)3. Lower Cost by seeking intersection facilities which would attract lower labor cost and hence higher(prenominal) profits. Clothing and electronics were the first movers in this strategy, usually looking to developing countries such as China or Taiwan. This is still use somewhat today as a strategy, such as large squall centers providing processs in India for roughly 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 tercet sign drivers. What is commanding that in the 21st cytosine an organisation must seek a strategy that meets the organisations ongoing involve which is clear and precise so as to bear direction for future growth.Due to the ongoing worldwide demand after WWII, most organisations prospered when entering international markets. Often further the strategies to entry were ad hoc and did not issue clear objectives or guidance for ongoing management. Operations were based on an ethnocentric attack. Even though at the time they were referred to as Multinational Corporations, literature now refers to them as world(prenominal) Corporations.As international operations expanded and took on a more important role in the organ isation, such as universe a key profit centre, or perchance a product innovation being conceived in an offshore operation, they tended to come chthonic increased management scrutiny, such as the case with Fuji run off (Gomes-Casseres, McQuade 1991). This then progressed the corporation to a multinational attack, international markets being as important or yet more important then the home market, which is more a polycentric approach to management.The potential from these operations were reviewed by management the possibilities for cost simplifications due to standardization move most corporations onto the next phase being the spheric corporation mentality. This is that the entire world is a potential market. Retaining a pattern 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 keep up g unity beyond this to advocate the development of the transnational corporation. This takes the concept of global corporations one step further. Corporations to prosper in a globally competitive environment, should concentrate wherever possible on responding to cost pressures, supplement of experience and tuition, whilst ensuring topical anesthetic responsiveness to consumer needs (1989 p.13).Cost reduction are imperative to ensure the ongoing viability of corporations. The sharing of costs globally for items such as R & D and rush production some(prenominal)(prenominal) provide display cases of signifi appriset cost reductions, maculation enhancing learning and familiarity. By increasing the availability of information across the group you are more likely to also detect a higher quality product as the innovation and knowledge is shared for the corporations greater good. Often companies forget that knowledge does not just reside in just the home country. Important information such as the local consumer market are oft en best to be determined 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 economic developments over the last two decades guide unite to create a unified world marketplace in which companies must make global-scale economies to remain competitive. As we have discussed, the need to become competitive through reduction in costs is imperative for every business. However Levitts concept of a unified marketplace with homogenous needs has still some way to go. As questioned by Procter and Gamble charge how we stifle our clothes differs throughout the world, sometimes even within each country. The provision of a standardized product to suit all in this industry would be a failure due to not get together the needs of local consumers (Bartlett 1983).When we review these three elements of cost reduction, leverage of knowledge and local responsiveness we are witting that these equipment casualty are somewhat contradictory. History enounces us that to provide local responsiveness you need to increase costs to increase the function of products which meet a specific consumer groups needs. The secondary is to standardize products to achieve economies of scale during production and marketing. computerized axial tomography has somewhat successfully implement such a strategy.They redesigned their products around the use of standardized components. These are produced on mass through large production facilities to curb the component costs and provide economies of scale. Machines are then transported to foreign markets where localized knowledge and components adapt the machines to the needs of local consumers (Srinivasa 1985). The general approach is that they are able to shuffle all three elements of the transnational approach.Corporations also need to be aware of the more and more complex nature of und ertaking business in an international market. Social, cultural, and governmental environments, as well as currency fluctuations, and geographical diversity need to be considered carefully in any decision to squeeze a foreign operation. It is best to research thoroughly and constantly review any strategy for overseas ventures as situations can change as in any business venture quite 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 terrorism most corporations would be considering the ongoing viability of continuing in this market.Finally corporations need to be aware that to make any significant changes to an corporation strategy or structure it is both extremely complex, time consuming and challenging. As Ford has discovered, by constantly changing strategies to seek higher profitability, all they have been able to achieve has been another resolve of h uge 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 snap on the main elements of cost reduction, knowledge leveraging and local differentiation perhaps this will provide an avenue in the future for continued competitive advantage in an environment which is slowly piteous towards Levitts concept of the global hamlet (1983). Perhaps the key lies with Bartlett and Ghoshal when they tell us that companies must now respond simultaneously to diverse and often counterpoint strategic needs. Today, no firm can succeed with a relatively linear strategic capability that emphasizes only efficiency, or responsiveness, or leveraging of parent family knowledge and competencies. To win, a company must now achieve all three goals at the same time (1989 p 25).REFERENCE LISTINGBartlett, Christopher A. 1983 Case 6-1 monitor lizard an d Gamble Europe Vizir Launch, taken from Bartlett, Christopher A. & Ghoshal, Sumantra 2000 Text, Cases, and Readings in Cross-Border Management, 3rd Edn, McGraw-Hill planetary Editions, Singapore, pp 632 647.Bartlett, Christopher A. & Ghoshal, Sumantra 1989 Managing crosswise Borders The Transnational Solution, Harvard telephone circuit School Press, capital of Massachusetts 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, 3rd 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, gum benzoin & McQuade, Krista 1991 Case 4-1 Xerox and Fuji Xerox, taken from Bartlett, Christopher A. & Ghoshal, Sumantra 2000 Text, Cases, and Reading s in Cross-Border Management, 3rd Edn, McGraw-Hill International Editions, Singapore, pp 418 443Hill, Charles W. L & Jones, Gareth R. 2004 Strategic Management speculation 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.