A global manager needs to know what point his or her organization has reached in the globalization process, and where it wants to go. Understand the process and recognize the strategies that will give your organization a global advantage.
Find out about your organization’s plans for global development.
Points to REMEMBER
– Having subsidiaries worldwide is not the same as operating as a single global organization.
– Even a small, domestic business can become a global organization.
– Adapting to global markets requires a great amount of personal and organizational learning.
A national or domestic business is based solely in its home market. Such a firm has not made any Foreign Direct Investment (FDI) to set up international operations. However, it can enter the international marketplace by licensing its products and services, by franchising, or by exporting. Be aware that in free-trade economies, a domestic business is always in danger of losing its home market to more competitive global firms.
When a domestic organization’s international activities reach a certain size, it will probably establish an international division to monitor cross-border transactions, such as the licensing of rights, the setting up of franchise operations, or the exporting of products. Then, a sales office may be opened in another country, or a joint venture partnership established with a foreign business. Consider how partnering can help you gain access to new markets – it can significantly reduce the amount of research you need to do in order to succeed in a new territory.
Creating a Multinational
As an international business expands, it develops a physical presence (subsidiaries) in multiple countries. It might do this through mergers and acquisitions or by creating new operations. Power tends to be distributed geographically, with each country unit focused on doing business and performing a range of functions, including sales and customer service, in its own territory. The challenge is to co-ordinate product development and manage brands across geographical borders.
Evolving into a Global Organization
The next challenge is to integrate the subsidiaries into a fully functional network: a global organization must think and act as one business worldwide, while also maintaining local responsiveness. At this stage, power usually moves from country units to worldwide business groups, responsible for global product and brand strategies, research, and development. Recognize that excellent cross-border co-ordination is a critical business advantage, and will give your organization capabilities that competitors cannot easily match.
Questions to Ask Yourself
– Where can I find up-to-date information on my organization’s global strategy?
– How can I help my staff and myself to develop a global outlook?
– What can I do in my area to support global co-ordination of the business?
– Are our operating methods in line with best practices from around the world?