Chapter 6 Assignment

A) Watch this BBC clip http://www.youtube.com/watch?v=FzxGyKyzfP8&feature=related and discuss the problems with globalization. Do you believe it is possible for a global company to simultaneously achieve the goals of global efficiency and integration, national responsiveness and flexibility, and worldwide transfer of knowledge and innovation? Discuss Globalization has many apparent issues that were highlighted in the video. One of the problems shown was related to non renewable resources. A globalized company might leverage less restrictive environmental laws in an emerging market to build a product for a cheaper cost than in a more strictly regulated, environmentally monitored country, The company would be benefactors of the profits while the resources were depleted and the environment damaged in the country where the product was built. This can lead to conflicts, or different interpretations of the benefits of this global approach which, in my opinion, was the point of the video.
I don't believe that a company can achieve all of the goals simultaneously as national responsiveness is about management responding to the unique needs of individual countries, whereas global efficiency is usually satisfied by taking a global, standardized approach to managing issues. These would take entirely different organizational capabilities to manage, as would transfer of knowledge and innovation, which would also be hard to standardize and capture without a structure that was designed to handle the unique differences in things like language and culture.

(B) Under what conditions should a company consider adopting a global geographical structure as opposed to a global product structure? Name some companies that you think could succeed today with a globalization strategy and explain why you selected those companies. How does the globalization strategy differ from a multidomestic strategy? A company that was interested in satisfying the more localized needs of different geographical regions would best be served by adopting a global geographical structure. Their structure would have a CEO for each geographical region they did business in who would have the authority to manage the business that would best be successful in his/her area. A company that had more standardized products and was interested in having its different product divisions handle their operations for all of the countries they did business in the same manner would be a better fit for a global product structure. Here are a couple of companies I feel that could adopt a globalization strategy:
Scotties facial tissues, this product would be fairly standardized around the world and the production could be done in most countries, including countries that had cheaper labour costs and cheaper raw materials. More information can be found here http://scottiesfacial.com/about-us.aspx
Harley Davidson Motorcycles are iconic and worldly and would not produce unique models for different countries. More information can be found here http://www.harley-davidson.com/content/h-d/en_CA/home.html A mutli-domestic strategy is tailored to an individual country which allows an individualistic approach to things like product design and marketing allowing for tailoring the product to best suit the country. As discussed earlier globalization is all about standardization, which is why it would work for some products and not others as there is no management mechanism to meet the individual needs of a specific country.

(C) Why would a company want to join a strategic alliance rather than go it alone in international operations? What do you see as the potential advantages and disadvantages of international alliances? Why is knowledge sharing so important to a global organization? Strategic alliances would allow a company to leverage the business and market knowledge of their partner, as well as share information and technology that would be beneficial to both, whereas going it alone would require a company to develop this kind of knowledge and capacity independently. The advantages to international alliances include ease of entering a new market, sharing of innovation and knowledge, the ability to have multiple alliances at any given time, and of course knowledge sharing. Knowledge sharing is important in globalization as it opens doorways to such a wide diversity of different perspectives, innovative thinking, cultural knowledge and understanding. Encouraging the sharing of knowledge just makes an organization that much stronger.
(D) Students have difficulty in imagining a truly transnational organization, and so it makes for an interesting group discussion to find and discuss a company that truly functions as a transnational company. Reckitt-Benckiser is such a company. Discuss some of the organizational design and management implications of such a structure in particular, the diversity in the executive team and management. See http://www.rb.com/home What an interesting company. When I first looked at the executive team and saw such cultural diversity I immediately thought this was new company designed to work in the new business world. And then I looked at their history and found a company that has its roots dating back to 1823 with an impressive timeline of expansion, partnerships, and innovation. Who would have known that Gaviscon was discovered by accident!. Their historical timeline can be found here https://www.rb.com/rb-worldwide/rb-history.
When I read the bios of the executives you start to get a feel of just how different this kind of a structure is. I am currently doing a marketing report on Victorinox the makers of the Swiss Army knife which is also a company that has been around since the 1800's however their CEO is the great grandson of the Swiss founder which is more typical of businesses that have been around so long. More info on Victorinox can be found by taking marketing management at NAIT or by checking their website http://www.victorinox.com. In our textbook it talks about Transnational Model as being " a managerial state of mind, a set of values, a shared desire to make a worldwide learning system work, and an idealized structure for effectively managing such a system" (Daft & Armstrong, 2012, p. 231). When you look at the biographies of the executives you get a complete sense of this worldwide learning system as each one has worked in a multitude of countries.

(E) What are some of the primary reasons a company decides to expand internationally? Identify a company in the news that has recently built a new overseas facility. Which of the three motivations for global expansion described in the chapter do you think best explains the company’s decision? Discuss. Three of the main reasons for a company to expand internationally are as follows:
They want to grow and reduce their costs by producing the largest quantities of a product at the lowest prices. This would be economy of scale. They want to expand their products and services to different countries and develop the knowledge to succeed in these different countries. This is economy of scale.
They want to lower production costs by either acquiring cheaper raw materials or manufacturing where labour/material costs are cheaper. These are low cost production factors.

(F) When would an organization consider using a matrix structure? How does the global matrix differ from the domestic matrix structure described in Chapter 3?
(G) Do Chapter 6 Workbook: Appreciating Cultural Differences Organizations (Page 236). After completing the activity answer question 1 and 2.