The Global Economic World: A Look at Globalization - Essay Sample

Today's environmental scanning is not limited to domestic industry landscape--instead, it has already been a global competition. Please provide your definition of the global economic world. Discuss the strategic reasons for the globalization of business and value chain activities. And do you agree with the argument, "The World isn't Flat."? Why?

Is your time best spent reading someone else’s essay? Get a 100% original essay FROM A CERTIFIED WRITER!

Save 25%

In my opinion, the global economic world is an increased dependency amongst nation-state economies as a result of the shared flow of capital, goods and services, and technology between territorial borders (also called export and import) in the entire world. To some extent, the global economic world is an exact symbol of countries' interdependence when it comes to trade and the sharing of some essentials like technology. Likewise, there is a sense in which the global economic world is the reason for wealth that nations of the world possess. Going by this definition, it is important to note that the fundamental reason for the globalization of businesses is to increase revenues due to the open shoot up of sales, thereby resulting in the realization of strategic yearly set targets and to obtain publicity and the spread of business brands.

Also, globalization of business ensures proper utilization of the technical competence and knowledge that different countries have. The synchronization of such competencies and experience has, therefore, proven to be the best way to improve products. The main reason for the value chain practices of globalization is to limit costs incurred in operations where retailers bank on the chains of supply to swiftly convey costly commodities to save themselves from expensive inventories in their stores any more prolonged that it could have suitably been. To add on that, producers depend on the chains of supply to transport materials to their sites to save themselves from material shortages, which could cripple the production processes. I concur with the statement, "The World isn't Flat" because every human being in the world is presumably thinking in the same direction on whatever they need. Essentially, everyone desires a smart work, get more income, and they use their revenues for the benefit of their respective nations.

There are three types of global competitive strategy: Global, Multi-domestic, and Transnational approaches. Discuss the advantages and disadvantages associated with the multi-domestic strategy. Provide your suggestions on the managerial considerations (e.g., organizational structure, control systems, coordinating mechanisms, etc.) for the successful implementation of the multi-domestic strategy.

Concerning a multi-domestic strategy, an organization becomes receptive to the concerns of its customers in a more profound manner in an international marketplace where it does business. The benefit associated with this strategy is the fact that it makes business companies' offers receptive to the concerns presented by customers and assists in the strong establishment of companies into the international marketplaces. A strategy is an important tool used by business entities to create a better connection with customers all over the world. The decision on what strategy to use depends on the nature of the organization's products as well as the overall strategy adopted by the organization. The strategy is appropriate in a situation where business organizations try to gain economies of scale and efficiency. Also, it is worth noting that a multi-domestic strategy is considered appropriate for food products, which exhibit a considerable difference in customers' tastes for different countries. This strategy is disadvantageous in the sense that there is little local receptiveness, which also leads to the high probability of loss-making in the local markets and that an organization can only make small adjustments to the product in a bid to make it suitable for the market.

Another limitation associated with this strategy is that during the standardization of products, a significant extent of coordination is necessary for all international operations. On my side, I would propose an international strategy for business companies to open their branches in the overseas markets. This proposed strategy is beneficial in the sense that it will permit business companies to make cost-benefit by moving production operations to presumable low-cost regions of the world, thereby helping them to gain economies of scale. With the manufacturing of standardized products at a low price as well as high quality, business companies build their reputations as well as their competitive advantage. Such organizations can become global market leaders.

Discuss how the need for control over foreign operations varies with the strategy (e.g., global standardization vs. localization) and distinctive competencies of a company. What are the implications of this relationship for the choice of entry mode?

The desire to have control over operations in the foreign market certainly differs depending on an organization's competencies and strategies. At some point, we have had manufacturing firms whose sole desire is to exploit overseas markets. They assume a handoff strategy and enter into alliances with local companies who exercise control over the operations, with the company only offering the commodities. This strategy is associated with some sense of sophistication of the local market as well as product superiority. We earlier discussed the arms-length approach, which keeps companies away from the target market and, in the long run, turns into a significant barrier to effectiveness. Also, for the strategies of global outsourcing, there is a great desire to practice absolute control over foreign operations. Regardless of whether it is purely a manufacturing firm, economies of scale are inevitable when such activities are transferred to the overseas market. The effects posed by choice made on the organizational structure as well as entry include; the determinant of the level of success in the market, determines the significant competencies as well as strategies, and, most importantly, the costs experienced are dependent on the entry mode and organizational structure. The determination of the level of success in the market, as well as the entry mode exercised by the company, are critical to the overall success that the organization will get from the foreign market depending on the type of approach is used in its operations. Also, it defines the strategies and significant competencies that, in the end, will be dependent on the structure of its services and how the entity entered into the foreign market. The associated costs are also dependent on the entry mode and organizational structure.

Why was it profitable for GM and Ford to integrate backward into component-parts manufacturing in the past, and why are both companies now buying more of their parts from outside suppliers? What value creation activities should a company outsource to independent suppliers? What are the risks involved in outsourcing these activities?

Business organizations can improve on their overall value when there is control over ownership of their processes at different phases of the chain of supply. Perhaps, this is the only way through this backward integration can be controlled. Backward integration limits risks associated with increased costs, the disturbance on the essential material supplies, and issues about product quality. General Motors and Ford Motors are the perfect examples of backward integration in the motor industry. Both have been producing crucial components for themselves. Henry Ford (the founder of Ford Motors) had a belief the cost of production begins right from the purchase of the raw materials. To this end, he wanted to gain full control of every stage of the production process, therefore, tried backward integration. Nevertheless, companies or the day prefer purchasing production components from outside companies, a move that has been caused by several factors.

The extremely viable pricing, as well as high costs of labor, are some of the reasons the business has been considered unattractive for companies. There are countless suppliers of spare parts that can offer their goods at considerably low costs compared to the expenses incurred when companies produce spare parts on their own. Furthermore, these firms do not necessarily need to enter into labor consensus with UAW when they purchase materials from outside. In most cases, firms outsource activities that create value for their products such as non-strategic and non-core (knowledge management and business process) to their supplies. Thereon, the risks anticipated may include: firms becoming over-dependent on outsourcing, even though such a threat may be alleviated by formulating a parallel policy of outsourcing. Another chance is that companies may lose control of how the supply chain is scheduled, which can be controlled by outsourcing from more than one organization.

What steps would you recommend that a company take to build mutually beneficial, long-term, cooperative relationships with its suppliers?

The management of supplier relationships is crucial to all companies who want to enjoy the associated advantages. The steps hereunder should, therefore, be considered by business entities to establish a long-term relationship with their suppliers:

Companies should have a better understanding of how suppliers work. This includes getting in-depth knowledge of their business, how they operate, and they must as well respect their suppliers' operation styles.

Companies must know how they can turn the rivalry between their suppliers into an opportunity. Companies can outsource their components from two or more vendors. This, as a result, helps them in creating compatibility in the philosophies and systems of production. Sharing some knowledge with different vendors is helpful in strengthening the relationship

Companies ought to supervise their suppliers. In so doing this, companies can provide them with a performance scorecard and give them instant and regular feedback. When there is a problem, a solution can be made by involving the senior management body.

Companies should develop their suppliers' technical know-how. They can do this by utilizing their problem-solving skill as well as innovation capabilities.

Companies should learn to share information in an intensive but selective manner. Official meetings should be held regularly and share information in a rigid and structured way. Suppliers must also ensure that they only collect accurate data for future growth and opportunities.

Companies should conduct joint improvement practices. They can do this by sharing ideas, methods, and views with their suppliers and help in forming supplier small study groups.

When is a company likely to choose (a) related diversification and (b) unrelated diversification?

Related diversification is a situation where an entity decides to expand or enter into business lines that are closely related to its current line of business. For instance, a computer manufacturing company may decide to expand its line of operation to produce smartphones as a method of diversifying its current line of business. Companies can decide to enter into related diversification due to many reasons. First, a company may be looking out for easier consumption of its goods, hence starts tries to offer complementary products and services. For instance, a shoe producing company may start the production of other leather products and purses. Also, an electronic repairer can add other services such as the renting of already finished appliances to its portfolio so that his customers can temporarily use it at a cost when their appliances are still under repair. Also, other enti...