Get under the skin of it
6. Global And International Strategic Management
6.1 Prologue
Before globalisation is considered we perhaps need to put it into perspective. There is a general sense in business today that we are living in a global community or at least we are going that way.
According to the Institute of Policy Studies in Washington DC – 51 of the top 100 economies in the world were corporations (cited in Wheen, 2004). Thus the ‘Principality of’ General Motors was more economically powerful than Denmark. We might reasonably feel that this is an example of the growth of globalisation; however, during the eighteenth century the East India Company once collected £3.5m in taxes at a time when the total expenditure of the UK exchequer was £7m. On this basis we might ask if we will ever see globalisation on this scale again.
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In a social sense Wheen (2004) also points out that:
“During the nineteenth century about 60 million people left Europe for America, Oceania or Africa; 10 million moved from Russia to central Asia and Siberia; 12 million Chinese and 6 million Japanese emigrated to East and South Asia; 1.5 million left India for South-East Asia and Africa.” (Wheen, 2004:257)
Current global economic migration doesn’t come anywhere close to this scale of mass movement.
We see then that globalisation could in fact be in decline, and in terms of the movement of capital and labour it probably is, however, there has been an increase in media and technology around the globe. Although globalisation in terms of trade is in decline; globalisation of culture, politics, economic values and media makes it look like there is more globalisation. Whether or not we are experiencing a decline or growth of globalisation we do need to consider the affect it has on strategy development.
If we were to brainstorm a list of the dimensions of strategy or strategic management we might come up with a list such as:
x Product/Service x Finance
x Labour
x Management Skills
x Culture (of the workforce and the market) x Marketing (including logistics)
x Infrastructure (transport, education, communication etc.) x Environment (economic, legal etc.)
This list is not extensive or exclusive and we will go no further with it but the point here is that should these issues only be considered when thinking about a home strategy and not a strategy in another country or continent or even the globe? The obvious answer is ‘no’ strategy is strategy is strategy and it doesn’t matter where you are, it’s just the emphasis that changes. When we live in a country, do strategy in that country, transport our products and sell our products/services in that country we probably don’t consider culture, infrastructure and economics that much, as they are pretty much the same for the workforce, management and the customers. We probably don’t consider the limitations of the infrastructure that much because we have grown to accept them and they are in our subconscious rather than in our explicit plans. Globalisation requires us to revisit some of the dimensions of strategy we can take for granted in domestic strategy formulation and implementation.
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The multinational enterprise (MNE) and globalisation provides a problem for strategists in that strategy as a subject has drifted away from the universalism and biases of economics in favour of other constructs such as technology and organisation theory. In globalisation, we need to go back to basics and revisit Coase’s (1937) seminal question ‘Why do firms exist?’ – The original answer being broadly that market transactions are less efficient than those brought within the control of the firm. Madhok and Phene (2001) in rethinking Coase’s question into ‘Why do multinational firms exist?’ suggest that again because markets will fail but also it’s because of the multinational’s superior ability to take advantage of knowledge creation and transfer.
Ultimately the world develops globally, social and technological changes have allowed or encouraged the more significant changes that may be construed as globalisation. That is, there is a tendency for things to evolve and grow in size or in number (unless constrained by internal structure or environment) – we see this in nature and in commerce. The American anti-trust laws and the UK Mergers and Monopolies commission are evidence as is the concern of the power held by large organisations in relation to governments, from General Motors, IBM, Du Pont in the past and now the concerns of Microsoft and Google determining how we access the internet superhighway.
Perhaps Michie’s (2003) notion that globalisation, due to its political dimension, is a choice and that we can chose not to have it, is not really open to us. In electronic communication you cannot always choose who picks the phone up or even it seems where they are. 0800 numbers and personal telephones are independent of the other participant in the transaction – once when you phoned someone up and then asked ‘where are you?’ it was a stupid question but no more.
Bird and Stevens (2003) in their case study of the thirty nations that competed in the 1996 ESPN Extreme Games, noted that the competitors were largely indistinguishable due to their similar dress, argot and aspirations. Clearly it is not surprising that late teens in Shanghai have more in common with late teens in Colorado than their respective middle aged parents but more
interesting is their similar tastes in slang, tee shirts and cultural mores. Bird and Stevens (2003) go on to explore the idea that this globalisation is the result of similar culturisation processes of these young people who have ventured out into other cultures. In doing so they have changed and so seek others with similar experience that they may ‘connect’ with. Bird and Stevens (2003) suggest that these ‘local globals’ or ‘glocals’ have travelled and experienced the world to the point of holding dual nationality – they are citizens of their own country and citizens of the world also. These world citizens tend to be:
x Well-educated and knowledgeable about world affairs.
x Connected to the world i.e. able to travel and communicate.
x Self-confident based on their success and spirit of adventure.
x Pragmatic (not un-principled) in that they will find creative and imaginative ways to get things done.
x Not intimidated by national cultures and boundaries.
x Democratic and participatory – will take initiative and expect others to.
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x Individualistic (sometimes idiosyncratic) but inclusive in that they take the initiative but design others in rather than out.
x Flexible and open.
x Begin from a position of trust when initiating relationships – tolerant but not necessarily approving of others. (Bird and Stevens, 2003:401-2)
Tensions may develop between local globals (or glocals) and nonglobals in that glocals may be seen as defectors from the national worldview or nonglobals may become alienated or feel alienation from world developments. As with the Extreme Games competitors global managers have more in common with other global managers than their national compatriots. In a sense this is not new we have seen the pervasiveness of global language with Greek then Latin then French then English and now (American) English so we may simply be entering a new chapter rather than a new book.
Enterprise has and will cross national boundaries, globalisation (as used currently) is the same but different. Trade is not only in inert objects but also in information and here the medium is instantaneous (or nearly) and often not controllable by either participant in the transaction;
consequently the choice is not whether or not we have globalisation, its how you choose to match its variety – how you deal with it.
what‘s missing in this equation?
maeRsK inteRnationaL teChnoLogY & sCienCe PRogRamme
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Dunning (1980) is concerned with developing an approach that is useful and flexible in dealing with the multifaceted problem of globalisation and living with it.