Globalization is no longer an abstraction but a stark fact, that virtually all companies, large and a little, face. Firms that want to survive in the 21st hundred years must confront this all encompassing force that pervades every part of business. In an array of industries from cars to food and clothing, firms face the pressures of global competition at home as well as in international market segments. Choosing not to participate in global markets is no more an option. All firms, no matter their size, have to create strategies in the broader context of world market segments to anticipate, act in response and adjust to the changing construction of these marketplaces.
Navigating global waters successfully and establishing path to steer the firm in an significantly turbulent world environment is a key problem facing today's managers. To date, this has largely been perceived as the purview of large multinationals with diverse far-flung businesses in all elements of the global market. (1) Of key importance is the need to remain attentive to local marketplaces, while at the same time reaching global efficiency through integrating and coordinating businesses across world marketplaces and allowing for the transfer of learning from functions in one part of the world to another. (2)
For large multinationals with experience in plying global waters, this orientation is not misplaced. However, the conclusions and implications do not connect with businesses with limited experience in international markets who are just starting to target customers far away and learning how to build functions in these markets. Today, a growing range of small and medium-size companies 're going global and their concerns are markedly different from those of proven multi-nationals.
Firms initially coming into international markets could be more concerned with learning about international marketplaces, selecting a proper arena to contend, and determining how to leverage main competencies in international marketplaces. Once in international markets, firms have to generate their position in these market segments, establishing a strong local existence by developing services and adapting to local tastes and personal preferences. As the firm expands internationally, it will need to move from country-centered strategies and improve integration and coordination across national market segments, leveraging its competencies and skills to develop a command position. (3)
The purpose of this paper is to recognize the problems facing businesses in global marketplaces and develop a framework that can be applied by all organizations in dealing with these challenges, regardless of their level of participation or experience in global marketplaces. First, the four major troubles (change, complexity, competition and conscience), and the implications for businesses in each level of participation in international markets are talked about. Then, three key management tools for coping with these difficulties are analyzed - information systems technology, administrative set ups, and resource deployment, and their utilization in each of the three phases of participation are specified.
The Changing Globescape(4)
Establishing a plainly defined competitive strategy to provide direction because of their efforts was a paramount matter of professionals in the '80s. (5) As competitive pressures became more acute, management identified that they needed to develop a strategic thrust geared to securing and sustaining a competitive edge in their served market segments. Effective strategy moves were grounded in assessment of the firm's current competitive position and identification of the skills and functions affording the most leverage in the light of future market innovations. (6) Recently, the validity of traditional methods to strategy(7) and even the value of proper thinking(8) has been questioned. The change of the competitive scenery by broad-based changes in technology, structural changes impacting industry, the introduction of new resources of competition, and increased environmental concerns, have all resulted in a re-evaluation of strategic thinking and strategy development. In particular, the changing competitive landscape and significantly turbulent environment suggest the necessity for new approaches and a broader view of how the organization should respond to changing environmental conditions. (9)
Technology is speedily altering the nature of competition and strategy in many industries. The global proliferation of relatively inexpensive computing electricity and global linkages of computer sites through telecommunications have resulted in an information-rich, computation-rich and communication-rich organizational environment. Telecommunications and computer networks are changing how professionals work and interact, providing links between country-centered organizations, and permitting technology to be quickly distributed and learning transferred throughout the organization. Because of this, speed of technological diffusion and change is swiftly increasing. (10) At the same time, the growing technological orientation of many market sectors and use of pcs and telecommunications technology have created increased knowledge power and dependency. Often technological knowledge and rapid product and process advancement is the sine qua non to achieving and sustaining competitive success in the global software industry.
The telecommunications trend has also activated major structural changes in market sectors and organizations. Vertically built-in, centralized organizational systems have given way to decentralized, highly fragmented smooth structures, linked by agreements, agreements and working romantic relationships. This has radically changed the nature and basis of competitive gain and the economics of doing business. At exactly the same time, traditional industry restrictions and demarcation lines are breaking down as business and systems fuse or converge (for example, communications and consumer electronics, entertainment and education) and new business emerge, with as yet no clearly identified boundaries. (11)
Competition is also intensifying, as globalization changes the boundaries of competition and new sources of competition emerge. The foundation for competition is also changing, as new players have the ability to enter the marketplace with an efficiency unknown even ten years ago. It has dramatically transformed the costs of doing business and allowed organizations to bypass stages in the worthiness string, for example, heading right to customers, or outsourcing functions and operations. Such factors have altered the nature of the worthiness chain in many establishments, permitting new and non-traditional opponents to enter the marketplace rapidly and remain competitive effectively.
Concern within the impact of commercial activity on the surroundings in addition has heightened, increasing the complexity of doing business in today's world. New forms of packaging, demand for recycling, better use of resources, greater responsibility for protecting the environment, restricting toxic waste products, as well concerning educate consumers also to develop more "user friendly" products are compounding the jobs and demands placed on the organization. Increasingly, businesses are called upon not and then be environmentally and politically right, but also to become more responsible citizens in every their activities worldwide.
Challenges Facing Global Markets
Involvement in global markets presents the firm with a number of difficulties. These challenges affect competitive gain in global market segments, and partly determine how quickly the firm can perform economies of size and range as well as realize synergies from procedure in a multi-country environment. In trying to develop a technique that will make it more competitive, the firm must grapple with four interrelated troubles of global online marketing strategy - change, complexity, competition and conscience [ILLUSTRATION FOR Body 1 OMITTED].
The rapid pace of change implies that online marketing strategy must be continually monitored and adapted to take into account new economic, technological, political and sociable realities. The interplay of these forces in several geographic areas creates a fresh complexity as market configurations evolve, taxing the firm's ability to manage far-flung and diverse [TABULAR DATA OMITTED] procedures. The increasing intensity and accelerated velocity of competition, constitutes just one more challenge in the road towards success in global markets. Competitors activities also speed up change and improve the amount of complexity. Furthermore, growing understanding and nervous about cultural responsibility and ethical issues, such as environmental safeguard and conservation, or consumer privileges, require that the company develop a cultural conscience, and heed this in shaping its global online marketing strategy (see Table for a summary of the challenges and responses by stage of international engagement).
Rapid change pervades all aspects of procedures in global market segments as well as the context where they happen. Not only are the rates of scientific evolution, knowledge obsolescence and the strength of competition increasing at an alarming speed in many companies, but unforeseen situations are dramatically changing the political and economic framework in which marketplaces develop and strategies are created.
Technological change makes product development, production procedures, and experience swiftly obsolete and contributes to escalating investment costs as well as heightened competitive pressures. Inside the notebook segment of the non-public computer industry, for example, the routine of new model introduction has shrunk to less than three months, rendering models rapidly obsolete and requiring regular vigilance to new product development and attention to keeping ahead of the competition.
The rapid tempo of change is further complicated by its more and more discontinuous nature. Before overdue 80's, change was somewhat predictable and linear in nature. Today, proven models for predicting change no longer work in many instances due to the discontinuity of change. At onetime, market styles and progress in a developing country could be predicted on the basis of trends in more complex countries ten years earlier. For instance, development of telecommunications systems within a country progressed little by little and required substantial investment in cables and wires to hook up customers. Today's mobile technology makes it possible for a country to quickly develop a modern telecommunications system and "step frog" the line stage. Further, mobile technology opens up the marketplace for fax machines, personal digital assistants, modems, etc.
At once, as customers become more mobile and are exposed to new ideas and habits of action through the new global mass media, the diffusion of new products and innovation occurs more rapidly. Instead of first being used by opinion leaders and then trickling down to other people of society, improvements are now distributing horizontally across countries and societies. No faster does a new development or fashion emerge in one country than it spreads rapidly to another. Not only are global marketers real estate agents of change in adding new and innovative products and services to other countries, but in addition, they must respond to the rapid speed at which societies are changing and market developments evolving.
While the rate of change is accelerating, pressed by the engine of technology and global communication, it is now increasingly uncertain and unpredictable-occurring in unpredicted ways from unexpected sources. Events including the break-up of the Soviet Union have had far-reaching, often cataclysmic effects on world market segments and the geopolitics of world trade. Subsequent political and economical events significantly halted the speed of economic development and overseas investment in the Soviet current economic climate. The split up also had an impact on previous trading partners such as India, Cuba, Vietnam, and Northern Korea, forcing them to search out new markets for their products, and resources for energy, forearms, minerals, and other raw materials. It also put an abrupt end to the Cool Conflict and ushered in a new political era. Industries such as protection, which fed on the desire to keep the geo-political balance, declined, triggering the realignment of related and tributary business such as aerospace, consumer electronics, and vehicles.
A new economical order thus appears to be emerging, characterized by new players and new and much more diverse patterns of trade. Yet, each one of these changing patterns look fraught with doubt, as a surge in one path is countered by way of a move in another. A new instability has crept into world marketplaces, threatening at any moment to tilt the precarious balance of financial forces. Goes toward world monetary growth, local integration or the empowerment of UNDER-DEVELOPED nations, can unexpectedly be thwarted by stresses to retreat behind the bulwark of economical nationalism.
Coping with Change
While there is absolutely no denying the immediate speed of change, the results differ depending on stage of globalization. Firms in Stage 1 - international market access - are relatively less affected by the uncertainty spawned by change, since their scope of international activity is confined to a few market segments. Furthermore, they can stride their involvement relative to the anticipated rate of change, and selectively avoid markets seen as a high degrees of uncertainty, including the Latin American marketplaces.
Firms in the PHASE 2 of globalization - local market growth - with rather extensive international businesses will have to cope with deviation in change. Some markets will be changing swiftly while others will be more stable. These unequal rates of change result in multi-directional pulls as the organization attempts to chart a course through the cross-currents of differential change. The difficulties of change will be exacerbated by the amount of markets where the firm is involved.
Firms in PHASE 3 of globalization - global rationalization - will be influenced by pervasive change which influences all areas of its business throughout markets worldwide. Given the extent of its global operations, this impact will be believed on the continual basis. Not only must the firm cope with change on market by market basis, but it must offer with the interlinkages between marketplaces. Thus, change is a regular certainty and mechanisms must be developed to include it in to the firm's overall strategy.
Rapid change has both negative and positive aspects. For businesses able to modify rapidly to the new environment, there are many opportunities. Those struggling to adapt will dsicover their market talk about dwindle. Firms in the original entry period have the luxury of picking and choosing market segments that are suited to their core competencies. Organizations in PHASE 3 - global rationalization - need to concentrate on retaining strategic overall flexibility to cope with the fast change that is happening at unequal rates in several markets. Among the key responses is to be able to deploy resources so as to help condition change, somewhat than being swept along by its pushes. Organizations in PHASE 2 - local market development - are caught in the middle and face the most challenging challenge in coping with change. They have got not totally developed the structural mechanisms to organize and control multiple interlinked markets and have increased difficulty re-deploying resources across market segments.
A second challenge arises from the increasing complexity of handling international businesses. Technological advancements, on the one hand, enable management to point, coordinate, and control operations over a much broader and diverse geographic level and scope than recently possible. Yet at the same time, such developments add further complexity, as management must master the tools and skills required to handle the burgeoning international infrastructure. As the geographic opportunity and range of operations extends further and additional, management is confronted with the duty of directing and handling diverse and far-flung activities at various periods in the value chain, often in generally divergent environmental contexts. Additional levels of organization get started to creep into the corporate infrastructure and further complicate the global management task. With styles toward local market integration, management systems are established to direct and coordinate market operations within a region, and to provide an intermediate link between corporate headquarters and local management. At the same time, organizational links between functions in each level of the worthiness string are added at a worldwide level to ensure the transfer of ideas, information and experience across geographic areas and to exploit potential synergies worldwide. Similarly, as customer markets become more dispersed, establishment of linkages with customers and suppliers becomes increasing critical in order to coordinate providing and servicing these marketplaces rapidly and effectively, and to compete effectively in global marketplaces.
Sometimes links are set up with other organizations, in some instances competitors, to exploit newly growing opportunities in specific product market segments or parts of the world. Proper alliances may be produced with businesses to provide desired geographic market coverage, or skills and resources needed to implement confirmed strategy. In other conditions, temporary sites are formed undoubtedly flung lovers (suppliers, customers, and rivals) showing costs, skills, gain access to, and businesses in global marketplaces through digital links, using the latest it, to take benefit of a specific market opportunity. These networks are smooth and flexible, innovating in response to changing market conditions. Once a chance is met, or disappears, so the network will disband.
Spatial market habits are also becoming increasingly complex. After the configuration of marketplaces was predominant national in character, surrounded by seemingly impenetrable restrictions. However, the gradual wearing down of such limitations in many elements of the world, means that market segments previously seen as separated and self-employed are becoming associated and beginning to work as one.
Contending with Complexity
Complexity in the global environment is something of contextual factors such as technical advances, diverse sociable and monetary change, and political upheavals. More directly, for the company complexity is intensified by the opportunity of its operations in global market segments, at different levels of the value chain and how they are really arrayed across market segments, the interlinkages and interdependencies between markets, and the increased blurring of product market limitations, both functionally and geographically.
Firms in PHASE 1, have a tendency to face relatively simple operating environments. Control and coordination are straight-forward issues as marketing activities are limited to a few countries beyond the local market. Decision making is unidirectional emanating from the home market foundation.
As firms extend their international procedures in PHASE 2 and commence to focus their efforts on producing products and services to suit likes in local markets, they begin to come across a greater degree of complexity. Coordination and control of activities in international marketplaces become more problematic as the appropriate amount of centralization becomes unclear. Organizational buildings become more communication intense and matrixed to reconcile possibly conflicting goals and various market conditions in each market. Decision making tends to take place on parallel songs.
Firms with intensive international procedures must develop strategy and carry out business in highly complex conditions. Outsourcing of functions and establishment of relational networks paves just how for the virtual group. Business functions become interlinked and interact to allow for ideal control and coordination of activities on a worldwide basis. Companies such as Ford, IBM, and Bristol Meyers Squibb have started to develop organizational structures that allows them to remain competitive effectively into the 21st century.
Increasing strength of competition in global marketplaces constitutes yet another task facing companies by any means stages of involvement in international markets. As markets start, and be more included, the tempo of change accelerates, technology shrinks distances between markets and reduces the scale features of large firms, new resources of competition emerge, and competitive pressures mount at all levels of the business.
As increasingly more firms enterprise into global marketplaces, competition proliferates, posing new hazards and risks to be reckoned with. Furthermore to facing competition from well-established multinationals and from local businesses entrenched in their respective service or product markets, companies face growing competition from businesses in recently industrializing countries and previously protected market segments in the 3rd World, as well as emerging global systems or coalitions of organizations of diverse nationwide origins.
Firms from newly industrializing nations such a Taiwan, Singapore, Korea and Hong Kong are ever more taking the initiative in competing in global markets, rather than behaving as low-cost suppliers to companies in the Industrial Triad. The threat of competition from companies in countries such as India, China, Malaysia, and Brazil is also on the rise, as their own local markets are checking to foreign competition, stimulating higher awareness of international market opportunities and of the necessity to be internationally competitive. Companies which previously focused on shielded domestic markets are getting into markets far away, creating new resources of competition, often targeted to price-sensitive market sections.
At the same time, spurred by new innovations in communications technology and speedy obsolescence, the quickness of competitor response is accelerating. No longer does a pioneer in global marketplaces enjoy a substantive lead time over competition. Nimble competitors, profiting from lower over head and operating costs, enter speedily with clones or low-cost substitutes, and take advantage of the pioneer's investment in R&D and product development. Modern marketing communications and it also encourage speedy competitor respond to price changes, or new syndication and promotional techniques, and additional heighten the pace of competition.
Not only is competition intensifying for any firms no matter their amount of global market engagement, but the basis for competition is changing. Competition is still market-based and in the end relies on delivering superior value to consumers. However, success in global markets is determined by knowledge deposition and deployment. Firms that win in the market place will be those that may use information with their advantage to steer the delivery of superior value. Further, the increased blurring of product market boundaries and interlinking of marketplaces means that how value is perceived and by whom is less clear.
Firms starting to enter international market segments are able to limit competitive coverage by choosing market segments that are free of formidable foes. They can zero in on market segments where they have a competitive benefit, such being the low cost supplier in a price sensitive market. Furthermore, firms in Stage 1 tend to be coping with established competition that are known amounts, and frequently be competitive about the same dimension, e. g. , cost leadership.
Competition mounts quickly for businesses in Stage 2 as they broaden their functions in international markets. Not only does indeed competition increase, but it will proliferate and be quite diverse. New competition may enter the market, and existing competition respond to the firm's activities, requiring version of its competitive strategy. Furthermore, the nature of competition may change from one market to some other. In some marketplaces, the organization may distinguish its products, to conquer competition while in others it needs to focus on cost leadership, making it difficult to leverage central competencies across markets.
Firms in Stage 3 of international market development face strong competition across the world. Their far-flung functions will encounter rivals of most types who may support a frontal strike, or cherry-pick rewarding market niche categories or try to obstruct the firm's extension into new market segments or market segments. Furthermore, global markets are often highly interdependent, with activities in a single market having results for most other market segments. The astute global marketing consultancy will try to gain a competitive edge and take advantage of these interdependencies.
The fourth concern pertains to the firm's moral and interpersonal responsibilities in the global software industry. A bunch of such obligations can be determined, covering a broader spectrum of social and commercial issues. Environmental issues, for example, have emerged as a key theme in the 90's. (12) Companies have become increasingly alert to the necessity to take methods to limit devastation of the surroundings. These include options to limit pollution of the atmosphere through the emission of gases and other toxins, to save resources such as newspaper and plastic, whose production ends up with environmental destruction, and produce and design products and product packaging which are green.
Such actions need to repay all areas of the firm's activities from R&D and development to marketing and service, as well as its functions in all elements of the world. Creation should be built so as to save resources and limit toxic waste. Products should be designed to be free from environmentally harmful chemicals, such as phosphates and fluorocarbons. Usage of recyclable presentation and refillable containers also helps reduce environmental air pollution.
Another region of cultural responsibility of particular relevance in international market segments is nervous about customer education and standard well-being. This is often an important concern in marketing in UNDER-DEVELOPED countries, where disadvantaged or badly educated consumers are less in a position to judge the merits of something or service or understand how to use it. Focus on the probable of promotional material or product information to mislead customers is important. While customers in industrialized nations are accustomed to puffery or exaggerated product says, and are typically highly skeptical of manufacturer-originated materials, customers in growing countries tend to be less well-equipped or less likely to screen such material. Capability to read or understand utilization instructions is another concern requiring attention. Employing support staff to make clear appropriate utilization and educate consumers is often an effective approach.
Product safety specifications should also meet up with the most exacting international standards, even in countries where no such legislation exists. This is especially critical regarding products such as pharmaceuticals, where substantial health risks are present. Companies must take the responsibility to provide accurate information to the industry and regulatory bodies, and to inform consumers and vendors to ensure appropriate utilization.
Conforming to Conscience
Intense competition, immediate change, and increased difficulty in the global marketing environment make it more challenging, but all the more imperative, a firm act in a socially responsible manner. Organizations in Stage 1 may find the duty simpler than those in Stage 2 and PHASE 3, as their activities are contained in a small variety of markets. They may, however, choose a relatively parochial approach to social responsibility, making use of the standard of their house market in other countries.
Firms in Stage 2 will tend to be faced with diverse standards of ethical and socially responsible tendencies. These conflicting requirements often make it difficult to formulate a coherent strategy for dealing with ethical issues in the several countries. Furthermore, they pose a moral dilemma for the organization in terms of whether and how far the organization should impose the honest standards of its home market far away, where they are recognized to be superior. Differing legal systems and codes of business do may further complicate the issue.
In PHASE 3, conscience becomes an all encompassing matter. With procedures in many countries across the world and with sales quantities exceeding the G. N. P. of several nations, the global firm must be highly sensitive to the impact of its decisions. Conscience becomes multi-faceted and requires a consistent global eyesight and strong corporate and business leadership, to guide activities worldwide. Decisions that impact the surroundings, individuals, and consumer basic safety and wellness in different marketplaces and parts of the globe are also becoming more inter-twined. A conclusion to move development to a developing country has implications for jobs in other marketplaces and potential air pollution of the surroundings, and may bring about issues of exploitation of UNDER-DEVELOPED personnel, or bribes to local representatives and so forth. The firm must consider each of its actions and possible final results carefully to ensure that they conform to its global communal and moral conscience.
Organizational Responses to Global Challenges
The difficulties of global markets imply that professionals need to radically enhance the organization and rethink the ways that they respond to the new competitive panorama. Organizational transformation entails three main components: 1) information systems; 2) structure of the business; and 3) deployment of resources. As shown in Amount 2, each part is present in all three stages, but assumes a focal role in one of them. As the firm expands its occurrence in international market segments it builds progressively on the components to establish the foundation for the organizational response.
Information systems play an integral role in shaping the response, not only in providing external linkages to industry, customers, real estate agents and suppliers and other organizations, but also in forging links within the business and creating strong coordinating mechanisms, and permitting the emergence of new organizational forms. Organizational structures also need to be modified to respond to the changing dynamics of environmentally friendly and competitive scenery. Firms organized based on vertical, hierarchical set ups will no longer have the ability to respond quickly enough or to contend effectively, and have to be substituted by flatter coordination-intensive horizontal buildings. Finally, source of information deployment at different periods of the value chain must be orchestrated in order to stretch and tap new opportunities in different parts of the world, while making sure global efficiently and counterbalancing risk.
The nature of these organizational changes and the specific function which is most salient in anatomist change be based upon the stage of involvement in international markets. In initial admittance into international markets, the establishment of a powerful information system associated with customers, competition and product market segments in various countries throughout the world is crucial. As the company begins to establish a occurrence in local markets, organizational form takes on increased importance. Although it is still important to keep building a highly effective information system and in particular to stress collecting information from local options, building strong horizontal links between organizational items across countries to provide for copy of learning and experience and better co-ordination of functions becomes an integral priority.
In the final phase of internationalization, the firm looks for to rationalize businesses in world market segments and map out a globally integrated system. Focus on the deployment of resources assumes primordial importance. These decisions should leverage the firm's competitive position in global market development, while enabling the company to remain competitive on multiple fronts.
Information technology and telecommunications are radically reshaping the competitive landscape, and changing the way in which individual professionals and firms connect to each other around the world. (13) Information systems are a powerful tool in shaping the firm's reaction to the emerging issues. They provide the foundation that permits the company to be competitive effectively in global marketplaces.
In the original phase of access, information systems are critical to funnel information relating to customers, suppliers, marketers and product marketplaces in different parts of the world to guide the firm's tactical thrust, and at the same time direct the flow of goods and services and funding to the market segments targeted. Initially, these details will consist mainly of supplementary data relating to market and environmental conditions in several regions, and can provide type for choice of countries and marketplaces to get into, and modes of market entry. Later, as the organization begins to enter into and operate in these countries, information can be collected from personal sources such as local managers, salespeople, agents, and distribution channel members to provide richer insights into the nature of markets and working conditions as well as the effectiveness of the firm's businesses in these market segments. A key function of this information is to permit management to find out about dissimilarities in market conditions, competition, and market infrastructures in other areas of the world, and determine the necessity for adaptation to these marketplaces.
In Stage 1, information takes on an integral role not only in guiding marketing strategy and operational decisions, but also in minimizing uncertainty and identified risk. For the magnitude that management lacks familiarity with foreign markets, businesses in these marketplaces are perceived as uncertain and to be approached with caution. An effective information system really helps to reduce perceived risk and doubt, and enables the organization to link straight with customers and market segments, keeping abreast of changing market conditions, and implementing a proactive methodology in stepping into and going after these marketplaces.
In Period 2 of internationalization, emphasis is located on building inside information systems within the organization, linking functional devices, and providing mechanisms for coordination and control. As the firm's operations become more geographically dispersed, information systems linking operations across national boundaries become critical to be able to ensure improved co-ordination of procedures in different countries, and exchange of ideas and experience. (14) Information systems thus allow firms to use in multiple countries and contexts without lack of efficiency, and at exactly the same time take advantage of their geographic dispersion and variety, by linking up and facilitating the instantaneous exchange of information between any area of the organization no matter its geographic location.
In the Period 3 of internationalization, information systems provide both horizontal linkages to assist in communication and co-ordination of activities across boundaries, but also vertical linkages guiding the stream of goods and services from creation to point-of-sale. Establishment of direct information linkages allows the company to respond quicker to fluctuations and changes popular, and improve the efficiency of global logistics. (15) Establishment of a worldwide information system is also necessary to monitor environmental tendencies, identify new product and market opportunities, monitor competitor techniques and performance worldwide, and therefore guide allocation of resources in global marketplaces.
Information systems provide the organization with a competitive border in global establishments, by enabling these to respond more effectively to the emergence of new business or the restructuring of establishments, by creating a more effective competitive strategy within the business, among vertical businesses, or across horizontal businesses, or finally by expanding collaborative strategies, with suppliers, clients or competitors.
Organizational composition is another aspect where changing technology both facilitates and the stimulus for version to the changing configuration of the market environment. In the initial phase of accessibility into international market segments, organizational composition is unlikely to learn a catalytic role in internationalization, but instead will observe the collection/speed of management moves into international markets. First, responsibility for international marketplaces is likely to stay within the local organization, with international functions considered an appendage to the local market. As these grow, another organization or supervisor accountable for international activities will be designated.
In PHASE 2 as emphasis shifts to growing local markets, independent organizational entities or country subsidiaries with substantial autonomy are typically established. Links with commercial headquarters are likely to be relatively weak based mainly on financial controls. While using integration of market segments, and increasing depth of competition, stresses arise for tighter links across geographic boundaries, to boost co-ordination, eliminate duplication of work, and allow for copy of learning and experience from one area of the organization to some other. Advances in marketing communications technology facilitate the expansion of new information-rich, coordination-intensive organizational buildings. As a result, traditional hierarchical models of organizational framework are offering way to "heterarchies" with strong organizational links(16) predicated on close working human relationships somewhat than formal plainly defined organizational principles and responsibilities. These facilitate joint development and worldwide writing of knowledge so that tactical functionality and competitive benefits is enhanced and the firm's primary competencies and skills are leveraged worldwide across geographically dispersed procedures.
In the 3rd period of internationalization the organizational structure must not only provide strong horizontal links between functions worldwide, but also tactical flexibility to help speedy deployment of resources in response to rival techniques or changing market, source of information and environmental conditions. Especially in sectors where technology is changing speedily or seen as a highly volatile turbulent conditions and discontinuity, development of adhocracies- organizational buildings which are job established, may be most reliable. This sort of structure is based on the utilization of project groups, or highly decentralized systems of relatively autonomous individuals or communities. Intensive lateral communication is then required in order to control interdependencies and ensure that the team or network functions effectively.
In a global organization, project clubs may take the proper execution of cross-functional groups, set up to cope with issues which cross geographic and efficient restrictions, as, for example, the design or development of global or local products or the management of global or local brands or additionally the management of global customer accounts. Top management's role thus shifts from that of handling functions and activities in an organizational hierarchy to 1 of owning a geographically dispersed network. In a large organization, this may lead to the creation of the superstructure or basic infrastructure of investments, resources and management techniques, which helps and nurtures versatile networks of people or organizations which are powered by top of the infrastructure.
New coordination intense networks also cause a change to increased reliance on marketplaces and outsourcing of functions and functions rather than doing them internally. Hence organizations may get involved as part of a virtual firm coordinating or collaborating with other organizations for a specific project or process. Because of this, not only will inner organizational buildings become flatter, and become characterized by more powerful horizontal coordination, but external networks will become more critical and communication intensive, as an increasingly range of functions are performed by loose networks of businesses collaborating jointly across time and space.
Management must also deploy resources to achieve the desired degrees of expansion in the path targeted. As in the case of organizational composition, in the initial phase of international operations, resource allocation is relatively logical, and is made within the construction of local market operations. The primary issue is the relative allocation of resources to international market segments. Often this allocation is made incrementally, as the organization gradually corners into international marketplaces, rather than targeting a particular goal or level of international sales.
As the organization expands in international marketplaces and steps into Period 2 - local market enlargement - learning resource allocation decisions are likely to be made over a country by country basis, as each local unit or country subsidiary manages autonomously. Often this results resource deployment focused on current market probable, with limited attention to future market development and growth, or potential in areas outside the existing opportunity of operations, as, for example, in emerging markets. At the same time, coordination of resource deployment across national boundaries is typically lacking, leading to duplication of effort.
In the Stage 3 of globalization, as the firm looks for to rationalize businesses worldwide, and map out a internationally included strategy, effective tool deployment plays a larger role. Portfolio examination offers a useful tool to determine global source of information deployment and determine which areas of the globe and product businesses provide the most attractive opportunities for future growth and where procedures should be harvested or divested. The interconnectedness of geographic market segments and product businesses can also be assessed to regulate how far extension or retraction decisions will impact success in other markets or product businesses. Resources may then be deployed to be able to achieve a balance between expansion and mature marketplaces in order to ensure that the firm is well-placed for future years and that risk is varied. (17)
At the same time, the interconnectedness of markets must be considered, as it impacts management's ability to diversify risk by being in independent marketplaces as opposed to obtaining economies through building a strong competitive position in highly interconnected (interdependent) markets. Opportunities for obtaining global efficiencies through scale economies, or improved upon co-ordination and integration of businesses or additionally the transfer of ideas and experience across geographic market segments and product businesses can be identified.
A global collection of countries, product businesses, and market sections should thus be decided on which allows the organization to push ahead the frontiers of global market expansion. Resource deployment should at exactly the same time, position the firm to remain competitive on multiple fronts, and meet diverse sources of competition, while retaining strategic flexibility to respond to a turbulent and rapidly changing market environment.
Regardless of where in fact the organization is on the path towards globalization, it must respond to the forces shaping the global environment and the challenges they present. The precise dynamics of the problems continues to improve and the form they will ingest the twenty-first century remains uncertain. It really is however clear that to reach your goals, the organization must be a far more astute marketer than in the past. The need to respond quickly and properly to opportunities and obstacles across the world places a premium on developing a powerful global strategy.
An ever more turbulent environment poses new obstacles to managers that require different organizational replies with respect to the degree of engagement in international marketplaces. The firm's information system and its own use of technology, helps initial engagement in international market segments and establishes the building blocks for subsequent expansion. As the organization expands its involvement in international marketplaces, the organizational structure must evolve to coordinate procedures in diverse and far-flung market segments. Finally, as the organization looks for to consolidate its position in global marketplaces, the ways that it deploys resources through out the world takes on paramount importance. To succeed the firm must become an organic and natural process that constantly evolves, adapts, and responds to the changing realities of the global marketplace. Firms that are able to do this will prosper; firms that do not, will wither.
Notes and References
1 For your discussion of the value of global strategy, see George S. Yip (1995) Total Global Strategy: Taking care of for Worldwide Competitive Advantage, Englewood Cliffs: Prentice-Hall; Susan P. Douglas and C. Samuel Craig (1995) Global Marketing Strategy, New York: McGraw-Hill.
2 C. K. Prahalad and Yves L. Doz (1987) The Multinational Quest, New York: The Free Press; Christopher A. Bartlett and Samantha Ghoshal (1989) Managing Across Edges, Boston: Harvard Business College Press.
3 C. Samuel Craig and Susan P. Douglas (1996) "Developing Technique for Global Marketplaces: An Evolutionary Perspective" Columbia Journal of World Business (Springtime): 70-81. And Susan P. Douglas and C. Samuel Craig (1989) "Progression of Global ONLINE MARKETING STRATEGY: Scale, Opportunity and Synergy, " Columbia Journal of World Business (Semester): 47-59.
4 The word, Globoscape, includes not only the global scenery in which companies be competitive, but also the communications and technology that comprise the framework of global business.
5 George S. Day and Robin Wensley (1988), "Assessing Gain: A Construction for Diagnosing Competitive Superiority, " Journal of Marketing, 52 (Apr): 1-20.
6 George S. Day and Robin Wensley (1983), "Marketing Theory with a Strategic Orientation, " Journal of Marketing 47 (Fall season): 79-89.
7 C. K. Prahalad and Gary Hamel (1994) "Strategy as a Field of Study: Why Search for a New Paradigm?, " Strategic Management Journal 15: 5-16.
8 Henry Mintzberg, (1994) The Climb and Semester of Strategic Planning, New York: The Free Press.
9 Richard A. Bettis and Michael A. Hitt (1995) "THE BRAND NEW Competitive Surroundings, " Strategic Management Journal 16:7-19.
10 Stephen P. Bradley, Jerry A. Hausman and Richard L. Nolan, (1993) "Global Competition and Technology. " Pp. 3-32 in Stephen P. Bradley, Jerry A. Hausman and Richard L. Nolan (eds. ), Globalization, Technology and Competition, Boston, MA: HBS Press.
11 The Go up and Street to redemption of Strategic Planning.
12 Thomas N. Gladwin (1993) "Envisioning the Sustainable Firm;" Emily T. Sheet, Taking care of for Environmental Brilliance, another Business Frontier, Washington, D. C. : Island Press.
13 Peter G. W. Eager (1991) Shaping the Future, Boston, MA: HBS Press.
14 Thomas W. Malone and John F. Rockart (1993), "How will IT Reshape Organizations? Personal computers as Coordination Technology. " Pp. 37-56 in Stephen P. Bradley, Jerry A. Hausman and Richard L. Nolan (eds. ), Globalization, Technology and Competition, Boston, MA: HBS Press.
15 Robert G. Eccles and Richard L. Nolan (1993), "A Framework for the Design of the Emerging Global Organizational Framework. " Pp. 57-80 in Stephen Bradley, Jerry A. Hausman and Richard L. Nolan (eds. ), Globalization, Technology and Competition, Boston, MA: HBS Press.
16 Julian M. Birkinshaw and Allen J. Morrison (1995), "Configurations of Strategy and Buildings of Multinational Organizations, " Journal of International Business Studies (Fourth 1 / 4): 729-753.
17 Susan P. Douglas and C. Samuel Craig (1996) "Global Portfolio Planning and Market Interconnectedness, " Journal of International Marketing 4: 93-110.
C. Samuel Craig is professor of marketing and international business and chairman of the marketing section at Stern University of Business, NY University.
Susan P. Douglas is teacher of marketing and international business at Stern School of Business, NY University.
Source: Columbia Journal of World Business, Winter 1996 v31 n4 p6(13)
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