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DEFINING THE GLOBAL FIRM

Chapter 3 Lecture 1

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From Local to Global

Domestic

Local firms

Individual

Organizational

International

Multinational

Partially to almost or fully global

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Global Business is Important

to Economic Development

About 1/3 of world GDP is generated by

business activities.

Growth also is generated by business

activities.

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Characteristics of the Global

Enterprise

1. DR AWS RESOURCES FROM A GLOBAL POOL

capital, labor, materials

2. VIEWS THEWORLD ASITS HOME3. ESTABLISHESAWORLDWIDE PRESENCE IN

ONE OR MORE BUSINESSES

but may go global by chance or design

4. PUR SUESA GLOBAL BUSINESSSTRATEGY5. TR ANSCENDS EXTERNAL AND INTERNAL

BOUNDARIES

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Lets Look at

Some GlobalFirms

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Web Links to Explore These

Coca-Cola www.coca-cola.com

Benetton www.benetton.com

Doc Martens www.drmarten.com

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Global Enterprise

Characteristic 1

DRAWS RESOURCES FROM A

GLOBA

L POOL capital, labor, materials

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Global Enterprise

Characteristic 2VIEWS THEWORLD AS HOME

Reduces existing links

Moves its headquarters for all or some functions,e.g., Boeing, Alcatel to be stateless

Creates a perception that it is not place bound,e.g., a name that has no meaning or an adcampaign that makes it more local

Goes virtual so it has no fixed place

Undertakes activities that make it a worldcitizen, e.g., Royal Dutch Shell

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Global Enterprise

Characteristic 3

ESTABLISHESAWORLDWIDE

PRES

ENCE IN ONE OR MOREBUSINESSES

but may go global by chance or

design

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Global Enterprise

Characteristic 4

PURSUESA GLOBAL

S

TRA

TEGY via anINTEGRATIVE APPROACH

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Global Enterprise

Characteristic 5 TRANSCENDS EXTERNAL AND

INTERNAL BOUNDARIES

VERTICAL/HORIZONTAL

Verticalcustomers, suppliers

Horizontalcompetitors

TANGIBLE/INTANGIBLETangiblesomething we can measure

Intangiblehow people thinkor

perceive

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Five Levels of Strategy

Enterprise Strategywhy do we exist as anorganization?

Corporate Strategywhat businesses should we be innow and in the future?

Business Strategywhat is the source of our

advantage? Dependent on existing competencies

And on the nature of the industry indeciding

How shall we position ourselves in the industriesand businesses where we choose to operate?

Operational Strategyhow shall we coordinate amongPPS to meet enterprise, corporate, and business levelstrategies?

Individual Strategywhat must each individual dodaily at workto meet organizational goals consistent

with other levels of strategy?

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Enterprise Strategy

usually is articulated by top management

often is vague or abstract; can be described as vision,mission, values, etc.

varies from country to country and from organization

to organization within the same country can change over time, e.g.,

Boeing 1990 Mission: to be the number oneaerospace company in the world and among thepremier industrial concerns ofquality, profitability,

and growth Boeing Vision 2016: people working together as one

global company for aerospace leadership

informs (or should inform) all other strategy levels

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Compare These Statements of

Enterprise Strategy The objective of the enterprise is to make money

and to have fun doing so. WL Goreand Associates

Our goal is to provide superior returns to ourshareholders. Profitability is critical to achievingsuperior returns, building our capital, andattracting and keeping our best people. GoldmanSachs

It is our mission to improve the lives of customersand communities where we all live, work and play.Honda

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Corporate Strategy Defines Whats

in the Corporate Portfolio:Businesses to be in Now and Into

the Future Corporate strategyis reflectedbyportfolio

decisions

Expansion,bottledwaterforPepsi

Contractionorexchange, selloffa unit,e.g.,Corus soldits aluminumholdings

Exchange, Boeingexchanges forInternet services.

Corporate strategyis aviewoftheoverallcorporateportfolioofbusinesses

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Business Strategies are (Almost

Always) Industry Specific andAnswer Two Questions:

What are sources ofdistinctive advantage?

This can be based on many attributes or a combination of

physical, human or capital advantages financial, physical, legal, human, organizational, information,

or relational

Usually concentrate on 35 core competencies

Examples are price advantage, product advantage, innovation,

quality, ease of access How shall we position in the industry?

Competition on a head-to-head basis

Collaboration

Coopetition

May be articulated for the business or for a single subunit, e.g.,commercial airlines

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Operational Strategy Decisions

which people, processes, and

structures are needed to satisfy

enterprise, corporate, and business

strategies

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Decisions About Enterprise,

Corporate, Business and

Operational Strategies Define

individual objectives, job assignments,employee activities

And they are interconnected withorganizational culture, efficiency, and otheractivities

So we return to this point: Organizations areinterconnected internally, so action begins withenterprise strategy: why do we exist as anorganization?

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Fords Global Strategy

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Video: Making Globalization

Succeed

be looking for vision/statement of values

and how these values are embedded in

people, processes, and structures for

Levi, Motorola, andSony

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Argus Computers--IndiaAs you watch this, be looking for these

points:

what is the founders purpose?

how are people developed?

how is the organization structured?