CREATING THE GLOBAL

ORGANISATION
Overview:

Manager often cites growth as a desirable goal for their firm.

Growth enables increasing economics of scale and scope of
operation. In addition, having to operate in new markets together
with new brands and partners requires modern streamlined
business models. With heterogeneity rather than homogeneity
being the status quo, firms need to embrace such diversity in their
strategy process. As organizations operate beyond their initial
markets, they are soon faced with additional levels of
complexity.  Internally, the CEO has to reallocate structure  and
core processes. In today’s connected marketplace it is now 
inappropriate to purse organizational structures that were built
upon a traditional combination of risk, control and money.
Learning objectives:

● appreciate the political, economic and regulatory forces

which shape globalization 
● be able to understand the differences between
internationalization and globalization
● be able to critically analyses how globalization shapes the
structures of traditional organizations both large and small
● be able to identify appropriate  organizational structures for
strategy implementation
● be aware of the national, sector and firm level drives for
global strategy.
Markets

Financial markets

Accelerating financial market panic by put a brake on the strong trend

towards globalization. Prior your 2008 a cross-border flows among and
emerging economics fuelled capital injection in business sectors.
Unfortunately , when capital flows are reversed due to tightening
external financial condition or rises in internal and imbalances, or a
combination of two, countries can get into trouble. Regulatory reforms
have attempted to reduce the rest, to foster a stable and resources
financial system. That said , tightening on capital flow can lead to a
lack of investment funds for to fund entrepreneurial activity.
Government attempt to look into the future and try to translate internal
and external financial market forces into predictable forces.
 How will the unpredictability of some European economics affect the
UK ? Well investors panic and seek refuge in the US? The rise of and it's
financial banks has pre-writing previous economics models. China's
financial markets continue to undergo gradual development with
established monetary , bond , stock , insurance , foreign exchange , gold
and financial derivatives markets. But the devaluation of the Chinese and
the fool in the country's stock could be the start of a domino effect
worldwide. With slowing economy , and October 2015 in the IMF
downgraded its growth forecast to 3.1% , the lowest since 2009. many
years double-digit growth China struggling to reach GDP growth of 7%,
and the only certainty is that the future will be much tougher than the
past , at the time of writing , recovery among G7 countries is strongest in
the USA and UK with Germany , Italy , France , Japan and Canada at least
than 2%.
Polarization 

Despite the uncertainties facing the global economy , certain trends are
predictable. The world will become a smaller(the "global village"), with a
more affluent aged society, be more urban focus , more urban-focused, more
risk adverse and with the greater polarization between the rich and poor.
Climate change will continue , food prices will rise and economic power
will ship from shift from the West to the East. In his book entitled THE
WORLD IS FLAT, Thomas Friedman (2005) asserts the globalization is a
leveler of inequalities in society. Yet , the evidence around us suggest that
the world is not flat , and new forms of economic inequalities continued to
distort the process the gap between rich and poor is becoming increasingly
large , but global poverty, but global poverty is Intrinsically link to global
wealth and vice versa (Bond & O'Byrne, 2014).
MNEs (Multinationals enterprises) are expected to contribute
economically and socially to achieve development. Yet fairness and
exploitation of poor workers by multinational remain an emotive subject.
The media often headlines example of workers working in extremely
challenging conditions for $1 per day. Occasionally the fault may not lie
with the MNE apparel firm per se, but with its first-tier, suppliers, which
cut, sew and assemble how these mills recruit their labor force. Problems
identified from audits include instances of trafficking and exploitation.
The apparel industry operates using a complex supply chain that serves
global operations. MNEs now need to determine the optimal number of
tier-one supplier that they can actively manage and ensure that their
audits delve deeper into supply chains. Ultimately, in the MNE is
accountable and needs to create a sustainable footprint.
Changing business production models-offshoring, reshoring and nearshoring

While acknowledging the opportunities and desires to serve a larger markets,

CEO’s are mindful of answering the question. “Which countries are we targeting
for job creation in the next three years? “in recent years China was the number 1
destination for manufacturing starts-up offshoring. But at the same time for the
period 2006-2014, China’s average manufacturing wages tripled, This has eroded
China’s international competitiveness
Globalization 

has displaced low-cost manufacturing of cotton t-shirt ,sports shoes, and

toys to lower-cost destinations such as Cambodia or Bangladesh. Trends
such as reshoring  (returning jobs home  from overseas countries, such as
China) and nearshoring (locating production close to a primary markets,
say Mexico, to serve the USA.) General Electric used an outsourcing
model to set up production in China to cut costs and improve efficiency.
As global conditions changes, US supply chain operations have
announced plans to bring production of a line of energy-efficient hot water
heaters from China to Kentucky. Interest in reshoring remain strong. In
their 2014 “Made in America Again” survey, Boston Consulting Group
highlighted the primary reasons for US companies coming home, these
being benefits of increased regionalization, throng workforce and business
environment and control over process and quality. 
Collaborative economy

The way individuals consume, contribute, and participate are changing and
has led to a new way of thinking about business exchange, value and
community (Stoke, Clarence, Anderson, & Rinne, 2014 ). The connected
society has changed not only behavior, but also fundamentals of virtually
every organization. This trend is about people connecting with each other,
with products(and services) and with organization. People want a purpose
and studies show that millennial (individual born between 1980  and 2000)
possess a desire for something other than just profit. Millennial represent a
third of the US workforce. A purpose-driven company can be profit or non-
profit, but the founders see a need within society and seek to fill that need.
Trust in business is on the upturn since 2008, but it is still low. But these
organizations with a real sense of purpose can be at the forefront of
exploring how organizations with a real sense of purpose can be at the
forefront of exploring how organization with purpose can positively
change society.
The rise of the micro-multinational

Prior to the technological disruption, operating in overseas markets was tough

and expensive. Having global communication and budgets to global travel were
the preserve of large organizations. Small and medium-sized enterprises, which
served to local markets, can use digitized platform to enter global markets.
Large organizations with global reach can suffer from ineffective bureaucratic
structures with blind spots. This leaves them vulnerable to smaller and more
nimble entitles. The ability to quickly respond to challenging environments and
a collaborative DNA makes this a viable proposition for self-service and
service-driven SMEs. Strategy can be formulated that enable SMEs to focus on
precise areas where they can add value. This is also has significant implications
for employees. Freelancers and self-employed can use the enabler of
digitization to scale up and deliver products without the large infrastructures
and bureaucracy of traditional enterprise. The formation of ad hoc self-
organizing teams to accomplish specific strategic tasks will become the norm.
Blurring reality

As a consequence of blurring, over the past decade our perception of what is real (and
what is not) has altered. The advance of new technology and globalization makes this
of significance to corporate strategists. Consumers experience a declining trust in the
messages projected by firms and politicians, although consumers seems to long for
trust, realness and authenticity, this is only partly true. Society’s relationship with
“Fake” and “Real” is ambivalent. 

When considering expanding a business outside of its home market some question
is consider include:
● Which product/services are suitable?
● Which countries/markets to choose from, and in what order?
● Where to locate value-adding activities?
● What market development method to deploy (internal - exporting, subsidiary, or external
- strategy
alliance, M&A, franchise and license)?
Strategy nuggets

Rugby sevens
The origins of Ruby sevens date back to 1883, at the Melrose Sevens in school in
Scotland (Martin et al., 2013) For more than a century sevens remained in the
shadow of the parental 15-a-side rugby union game. However, since the turn of the
twenty-first century the spot has seen a rapid injection of global interest and respect.
One of the main drivers of global interest and growth relates to the popularity of the
HSBC World Sevens series. The HSBC World Sevens circuit currently comprises ten
micro-tournaments that are held annually around the world. The micro tournaments
span all seven continents enabling spiraling interest. The show piece for the HSBC
Sevens series is held annually in Hong Kong.

In 2015-2016, the series was attended by 715,000 fans (the highest number ) with
6,000 hours of broadcast in more than 100 territories and 61m video views. This is
an contrast to humble beginnings of, 1,147 hours in 2005-2006, rising to 4,590 hours
in 2013 to 2014 (international World Games Association, 2006 Telegraph sport,
2014) When Rugby sevens was played at the Rio Olympics, it became the first rugby
Olympics in 92 years.
“The Future of Rugby: An HSBC Report” makes seven productions for 2026
including:

NEW COUNTRIES
● more nation break through
● sevens creates its own big bash

NEW PLAYERS
● participants doubles
● women lead the charges

NEW AUDIENCES
● broadcast pyrotechnics transform converge 
● media value moves to social platforms
● summer sevens becomes self-funding
Strategy nuggets 
Chinese football salaries
The January transfer window is usually a battle between the big spending
European football powers, sash as Manchester United, Real Madrid and Paris
Saint Germanain. However, in January 2016 the Chinese Super League spent
$278m, outspending the entire English Premiere League ($250m). The
corresponding figure for clubs in Germany, Italy, Spain, and France was
$193m. 

The Chinese president Xi Jinping's attempt to transform the Chinese Super

League into one of the best in the world is beginning to take shape. In contrast
to the US Major League Soccer, Chinese clubs have been able to buy players in
their prime. The major League Soccer has tended to be the last career challenge
for aging players.

So how has China been able to lure leading players from leading clubs? The
primary incentive has been size of contracts, which have catapulted many
players into the top earners of professional football. 
Analyzing nation’s competitiveness and MNE’s

The traditional building blocks of national competitiveness required

consideration of key drivers. Ketels (2016) suggest that traditional
building blocks now consists of: rules and regulations; financial
markets; physical infrastructure; macroeconomic policies. Identifying
the smallest numbers of factors that can drive prosperity and
productivity levels can reap economic benefits. Thus the systemic
interaction of competitiveness is various context complicates
economic models. Porter’s (1990) work on competitiveness is well
cited and newer models have been proposed. The following sections
consider porter’s diamond and Bartlett and Ghoshal’s
integration/responsiveness framework.
Porter’s Diamond
Michael Porter’s diamond  (see Figure 5.3), a competitive advantage model
which originates from a study of ten nations, proposes that location
advantages may derive from four main attributes: factor conditions; demand
conditions; related and supporting industries and firm strategy; structure and
rivalry/ The overall size of the diamond can represent competitiveness. Dogl
and Holtbrugge (2010) explain how a large diamond represents high
competitiveness and a small diamon low competitiveness. But a country with
four medium values is more a competitive than a country that possesses two
high and two low values. Now consider each attribute in turn

Factor conditions
The “factors of production” may be beneficial when employed in the
production process of a product or service. Their mere existence is
insufficient for competitive advantages. Abundance of physical resources
together with location can bring advantages for certain markets.  For example,
London is seen as a global financial centre due to its killed labour force and
its favourable time zones. It continues to grow as foreign exchange market
because of financiers
COMPETITIVE ADVANTAGE FOR COUNTRIES

• Firm strategy, structure and rivalry 

• Factor conditions
• Demand Conditions
• Related and supporting industries
Figure 5.2, Poster’s Diamond

Ability to trade with the East and West on a normal business day. Adverse
conditions such as being located in desert region can be tackled with
imagination and resources. For example, the sprawling Jebel Ali plant in
the United Arab Emirates can produce in excess of half a million gallons of
water a day from the sea. So, for a country afflicted by water scarcity this
reliable and efficient source will provide innumerable benefits for its
people.
Demand Conditions

The home market need can be more challenging than overseas needs.
The process of local demand can be translated into competitive
advantage. If local demand forces organizations to innovate, this
could be used as an early signaling device for overseas markets. In
such cases , this may make products services more attractive for
overseas customers. Key segments in the home market may shape
the product. Airbus created larger multi-seat airlines to shuttle
passengers short distance within Europe, which illustrate the nature
of the home markets. The Italian fashion for cars and the US craving
for credit has led to both countries being able to anticipate need
elsewhere.
The influence of national values and priorities can create a fierce competition
in the domestic market. When rivalry is fierce this will enhance productivity
and be attractive overseas.

Bartlett and Ghoshal’s Integration/responsiveness framework

Besides determining locational advantage the MNE through select a model

that best suits the environment to obtain global competitiveness. The
selection of model can be assessed through drives that push the MNE’s
global integration and or global differentiation. Those MNE’s that need
innovation to remain competitive will enable autonomy in decision making
in these subsidiaries and companies. Ideas can be created within subsidiaries,
which is successful can be this dispersed to the entire MNE’s. CEOs have to
cope with the dilemma of economic integration and national responsiveness.
How companies achieve integration and responsiveness simultaneously is a
challenge.
Government Policy- can affect element of the diamond
and have a strong influence on international
competitiveness :

Strategy > Demand > Cluster > Factors

Chance- Can affect each element of the diamond and refers to random
events effects. This will influence international competitiveness.

GLOBAL INTEGRATION

> GLOBAL STRATEGY

> TRANSNATIONAL STRATEGY
> INTERNATIONAL STRATEGY
> MULTIDOMESTIC STRATEGY
Integration/responsiveness framework

A refined analysis of the nation of global integration and responsiveness is

depicted in the Bartlett and Ghoshal (1987.)Integration responsiveness
framework see( figure 5.5). Despite the two constructs of integration and
responsiveness be a much broader dancing all dimensions the framework is
taught unknown international business global strategy programmers. Prahalad
and Doz (1987) put forward seven factors that impact global integration.

>Importance of multinational customers

>importance of multinational competitors investment intensity
>technology intensity
>pressure for cost reduction
>universal needs of customers
>access to raw material and energy
Similar, Prahalad and Doz (1987) propose five factors that impact local
responsiveness:

>differences in customer needs

>differences in distribution channels availability of substitutes
>market structure
>local regulations
Despite the opportunities and desires to pursue global competitiveness ,
some discipline is paramount. The CEO needs to analyze silence industry
forces , determine the broad differences and assist the a level of global
integration and local responsiveness clarity and desires have to align
market offer and strategic business unit posture. These are likely to be
imbalances between strong and weak interdependence. Firms need to
articulate a position in terms of markets , industry sectors , value chairs
and business objectives. Interdependencies need to be strong four core
functions. Marketing and finances are two such areas. Various
segmentation models for identifying country clusters and customers
segments need to be translated into financial cash flow models. Bartlett
and Ghoshal integration responsiveness framework along with the
typology of transitional , multidomestic , international , and global
typology are briefly contemplated.
Transnational

Transitional strategies appear attractive as they combine economics of scale

and learning with the benefits of locally adapted products and processes.
Knowledge flows not exist between headquarters and subsidiaries , but
between subsidiaries. Given this flows the organizational structures usually
employed is the matrix structure , and realize on the relocation of managers
across the MNE. Bartlett and Ghoshal asserts the MNEs should pursue a
traditional strategic combining high levels of integration and local
responsiveness.
Multidomestic

Responding to local market needs is imperative , so a portfolio of national

companies can fulfill local needs. This portfolio of autonomous national
companies possesses the entire value chain , which offers locally adapted
products for each market. This empowers managers of companies to for sure
local adoption , and ignores solely seeking economics for scale. Thus,
duplication of effort can be seen as relatively expensive and financial terms
and it is hard to spread innovation and knowledge beyond the national
company level. (Meyer & Su, 2015).
International

International strategies are law on both global integration and local

responsiveness. This can be the first step of trading overseas and normally
begins with exporting for a production company or franchise for a service
company. However, it does not seek economies of scale nor fit to local
customers and is often mentioned as are inferior strategy. In the early phases
will the majority of customers are local it's fine , but when international sales
grow it can become a challenge. Typical organizational structures in use
include , international division parallel to the domestic division (Meyer & Su,
2015).
Global

A global strategy seek integration at the expense of local responsiveness.

Economics of scale are sought through highly integrated processes which
functional divisions. The HQ will possess the full value chain, as the
subsidiaries are weak.
 GROUP 5
Dimaisip, May Anne
Dordas, Renna
Echalar, Jerre Mae
Feria, Jelai
Sumagaysay, Helen Joy