Globalization, a process --- increased proportion of economic, social and cultural activity --- across national borders --- has significant economic, business and social implications.
“The geographic dispersion of industrial and service activities --- research and development, sourcing of inputs, production and distribution, cross-border networking of companies --- joint ventures and the sharing of assets”
“Increasingly free flow of ideas, people, goods, services and capital leads to the integration of economies and societies”
Globalisation as a process results in changes for markets and businesses --- expansion of trade in goods and services between countries; transfers of ...view middle of the document...
The normal approach
Organization as a collector
1, global market improve living standard as firm be more efficient in the process,
2, the cost of the process --- concentration of social power --- impact of different coping styles
Ways of globalization
1, Export as way of internationalization --- low coordinate costs but concerns transport costs, barrier of entry, unpredictable market: adapt overseas consumers’ needs limited info of the overseas --- set international division to solve problem
2, Licensing and franchising is adaptable, like MacDonald --- sell permit to local investor and those investor doing the way MC does in US.
But franchising leads loss ctrl of standard quality of brands, may damage it --- loss ctrl and leak of the intellectual knowledge --- lower the compete ability --- limited knowledge of the change of the market --- bad market strategy. To solve ---
Monitoring --- Costs, damage economic logic of bargain.
3, Subcontracting --- regulation for manufacturer to produce goods --- save time and costs.
But problems coordinating with firms
4, Overseas production, FDI --- needs political and economic stability, with cheap labor
MNCs are a big contributor of FDI in/outward.
Why overseas production despite incur risks ---
Extending product life cycle. By shifting product (which is normally out fashioned in domestic) to overseas.
Internalization advantage. Reduce the risk of opportunism (overseas OEM --- expand the cost of production --- damage original firm)
Eclectic theory also known as OLI theory (is the criteria that a firm decided invest or not invest overseas) --- Ownership advantage (building own sites, own intellectual property, ability to reuse, increase productivity), Location advantage (closer to the overseas market closer to labour material and production), Internalization advantage (avoid opportunism and reach economic of scales) but need intergrade with overseas standards. --- to solve set management to solve integration, coordination,differenciation problems.
Trade off of multinational companies:
1, to standardize the product, massive produce then to achieve economic of scale.
2, to cope with national difference in terms of the trade barrier and customer’s different preference.
Different types of firm different approach to achieve firms’ strategy:
1, international companies: low global integration(LGI), low local responsiveness(LLR): headquarter transfers materials to local markets.
2, global companies: high global integration(HGI), low local responsiveness: standardized produce, reach economic of scale.
3: multinational companies LGI, HLR: focus on national market, low standard more flexibility.
4: Transnational companies: HGI HLR: to maximize on global scale to economies of scale yet remain local context central, to adapt and inter leaning across subsidiaries.
Internationally firm --- strategy mainly set by the economic incentives. Other factor --- less considered --- the ignorance is...