Corporate Evolution Flashcards
In what order do firms historical he evolve from?
Domestic, to international, to multi national, and finally to global operations.
Key characteristics of a domestic company.
The company comes into the market with a product or service researched and developed at home, produced at home, and marketed at home.
The profit margin is high because the product or service as new and unique and there are no competitors. The organization structure is centralized. And domestic firms, international cross cultural differences are not important. The company is home culture is the norm. In human resources there are no ex patriots, therefore cross cultural training and development is not an issue.
Name characteristics of an international company.
Affirm expands to international market, it changes orientation from them for size in the creation of a new product or service to marketing! Technology is now shared among cerebral firms. The logical first place to expand for a company who wants to become international is across the nearest border. For example a US based company expanding into Canada. Cultural sensitivity becomes very important to market to clients in each foreign country.
Cross-cultural communication is very important but only for the few people assigned to the international division or working in foreign countries.
The international firm now includes many ex patriots. Good people but not great people are sent abroad. Generally, people in marketing are sent abroad in this phase. This is not seen as a good career move for 50% of ex-pats. This is primarily because international operations are neither highly valued nor well integrated into the core of the home company.
Describe characteristics of a multinational company.
Multinational face becomes more centralized, pulling decision making back to headquarters. A firms change from international to multinational strategies, they change their focus from marketing to price. Distribution is worldwide, and profits are made through large scale sales. While multiculturalism begins to become less important outside the firm it becomes more important inside the company. In the global phase, The number of ex-pats again increases. Managers are center broad as the glue of the company to coordinate and integrate strategic activities, not merely to complete particular tasks. Only managers who are considered high potential or executives who already hold senior positions are the best candidate for international assignments. These executives know that it is necessary to have a global perspective for their own careers in for the organizational development of their company, and they can only achieve such a global perspective,
Through significant exposure abroad. Professional reentry therefore becomes easy.
What is the fifth phase in a companies evolution?
The fifth stage would be trans national. The highest form of globalization. Corporations have gained the ability to operate globally, yet still maintain a semblance of local flexibility and control. Cultural differences suddenly become highly significant when the foreigner, rather than being an assembly line worker, is the CEO at an important meeting, who is an acting as I am and who doesn’t understand me as I thought he or she would.
Senior managers and executives, and working throughout the world, must understand multiple perspectives. In general many European firms have had more practice at using multi national approaches then have North Americans. However, leading firms from all geographies are becoming increasingly transnational.
