DEFINING THE GLOBAL FIRM Chapter 3 Lecture 1

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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

• DRAWS RESOURCES FROM A GLOBAL POOL
• capital, labor, materials
• VIEWS THE WORLD AS ITS HOME
• ESTABLISHES A WORLDWIDE PRESENCE IN ONE OR MORE
  BUSINESSES
• but may go global by chance or design
• PURSUES A GLOBAL BUSINESS STRATEGY
• TRANSCENDS EXTERNAL AND INTERNAL BOUNDARIES

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Lets Look at Some Global Firms
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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 GLOBAL POOL
• capital, labor, materials

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Global Enterprise Characteristic 2

• VIEWS THE WORLD 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 ad
  campaign that makes it more local
• Goes virtual so it has no fixed place
• Undertakes activities that make it a world
  citizen, e.g., Royal Dutch Shell

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Global Enterprise Characteristic 3

• ESTABLISHES A WORLDWIDE PRESENCE IN ONE OR MORE
  BUSINESSES
• but may go global by chance or design

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Global Enterprise Characteristic 4

• PURSUES A GLOBAL STRATEGY via an INTEGRATIVE
  APPROACH

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Global Enterprise Characteristic 5

• TRANSCENDS EXTERNAL AND INTERNAL BOUNDARIES
• VERTICAL/HORIZONTAL
• Verticalcustomers, suppliers
• Horizontalcompetitors
• TANGIBLE/INTANGIBLE
• Tangiblesomething we can measure
• Intangiblehow people think or perceive

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Five Levels of Strategy

• Enterprise Strategywhy do we exist as an
  organization?
• Corporate Strategywhat businesses should we be
  in now and in the future?
• Business Strategywhat is the source of our
  advantage?
• Dependent on existing competencies
• And on the nature of the industry in deciding
• How shall we position ourselves in the industries
  and businesses where we choose to operate?
• Operational Strategyhow shall we coordinate
  among PPS to meet enterprise, corporate, and
  business level strategies?
• Individual Strategywhat must each individual do
  daily at work to 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 one
  aerospace company in the world and among the
  premier industrial concerns of quality,
  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 Gore and Associates
• Our goal is to provide superior returns to our
  shareholders. Profitability is critical to
  achieving superior returns, building our capital,
  and attracting and keeping our best people.
  Goldman Sachs
• It is our mission to improve the lives of
  customers and 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 strategy is reflected by portfolio
  decisions
• Expansion, bottled water for Pepsi
• Contraction or exchange, sell off a unit, e.g.,
  Corus sold its aluminum holdings
• Exchange, Boeing exchanges for Internet services.
  
• Corporate strategy is a view of the overall
  corporate portfolio of businesses

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Business Strategies are (Almost Always) Industry
Specific and Answer Two Questions

• What are sources of distinctive 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 with organizational
  culture, efficiency, and other activities
• So we return to this point Organizations are
  interconnected internally, so action begins with
  enterprise strategy why do we exist as an
  organization?

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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, and
  Sony

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Argus Computers--India

• As you watch this, be looking for these points
• what is the founders purpose?
• how are people developed?
• how is the organization structured?