I. Internationalmanagement1. GlobalizationThe globalization isthe process by which relations between nations have become interdependent andhave transcended the physical and geographical boundaries that alreadyexist.
Moreover, the globalization hasseveral aspects; indeed, it affects politics, the economy, culture, society oreven information. It represents the opening of borders and the advent ofinternational trade, relocation and the free movement of people, goods andservices.In fact, the symbolof globalization is represented by the emergence of a common culture, conveyedby the English language.Often described asinevitable, globalization represents the hegemony of the American model, butalso the growing desire of populations to discover other cultures and to sharewith other nations. Marshall McLuhan described the world as a global village,where each actor is interconnected, and where spatio-temporal boundaries areabolished to allow the sharing of information flows.Through this globalization, there are Sets of globalconditions and forces that operate beyond a company’s boundaries thus, it affectsa manager’s ability to acquire and utilize the resources available.
Thanks tothe globalization, an unimaginable number of companies expanded theirorganizations worldwide.2. Types of organizationThere are different types of organization both on sizeor the magnitude, here are some types of companies.A. Multinational Corporation (MNC) First we havethe MultinationalCorporation (MNC) which is a company that produces economic effects inseveral countries. It defines a multinational as a company “most oftenlarge, which, from a national base, has established abroad several subsidiariesin several countries, with a strategy and an organization designedworldwide” Thus, its shareholders do not come from the same country or have their headquarters in two or more countries.
According to Charles-Albert Michalet, the multinationalization of a company responds to five main determinants · The search for direct access to raw materials, especially during colonization.· The need to circumvent some hinders the exchange. For example, it is to produce in the market where the product will be consumed so as not to be affected by import tariffs.· The search for external markets as a result of the intensification of competition in the internal market. Moreover, once a firm adopts this strategy it will probably be imitated by the competing firms.
· The loss of a technological advantage in the domestic market can force companies to produce it abroad, at lower cost, so that it can continue to produce it profitably.· The search for lower labor costs. B. Multidomestic Corporation Then there is the Multidomestic Corporation which canbe defines as an MNC that decentralizes its management and other decisions tothe local country. The word multidomestic hasbeen use to describe a set of strategies used by enterprises that perform inmore than one country at a time. Thanks to that, lots of multidomesticcompanies are more capable and flexible of adapting to different businessenvironments.
However, Different business cultures will grow based on theculture of another country. As a company develop into business environmentsthat have divergent and opposite requirements, thus it makes sense to become thata company become multidomesticbecause as this permit the formation of separatebut effective organizational cultures. C. Global CompanyAfter that, there is the Global Company which is anMNC that centralizes its management and other decisions in the home country. This two terms «global company” and”multinational company” may seem to signify the same thing, howeverthey present diverse features. Peopleuse multinational and company global company like they mean the same thing.
Thedifference is that a company is global enterprise when it incorporates all ofits units and centers its marketing strategy around the world. For instance,changing a product line as much as possible which will help the firm to preserveit’s as low as possible by selling a bigger volume of a certain product. D. TransnationalCorporation (Borderless Organization)In brief, the TransnationalCorporation is an MNC that has eliminated structural divisions that imposeartificial geographic barriers and is organized along business lines thatreflect a geocentric attitude. Transnational”and “borderless corporation” represent multinational corporation.
While headquartered in one country, these kinds of business have a globalaudience, with production and facilities offices in several countries. On thehand it can be define as an entity with an international scope without anycentral headquarters. The location has formal no influence since there areseparate offices which manage and organize the strategy and share the resources,E.
Born Global/International New Ventures (invs)International New Ventures (invs) are organizations that grow from the inception. In fact, this kind of companies already existed for centuries such as East India Company. It recently becomes a new strategy due to the technologies development.
International New Ventures allow doing business in more than one country. It is called “born global «when a company, seeks to build competitive advantages by using resources located abroad and marketing their product in several countries, This process is also known as “New VenturesThey integrate from the beginning of their activity the constraints and opportunities of the globalization of the economy and the acceleration of exchanges.This early and rapid process of internationalization challenges the universality of traditional models of internationalization in stages. 3. International trade allianceOne significant aspect of today’s globalenvironment is the international trade that has been going on these days. Asdefinition we can say that Trade agreement assure the export, imports and some categories of goods or onesingle category and at the same thetime it adjust the international trade between nations.
Organizations and countries has been exchanging witheach other for centuries. And it is still strengthened by these two forceswhich are the international trade agreements and regional trading alliances.This advancement is fundamentally shaping the global trade.
As for the international trade alliance, it iscompose of the GATT which stands forGeneral Agreement on Tariffs and Trade.It was the first global multilateral free trade agreement between nations. Inothers words, it helped promote liberalization of trade.It was form in 30th June 1948 and itwas concluded in 1st January 1995 but it was reestablish as WTO (world trade organization).
From that moment, it main purpose was to removerisky trade and prevent it from happening like the great depression.The WTO is a place where themembers of diverse governments go and try to resolve the trade problems thatthey face mutually. One of the first steps to sort out the problem is to talkand negotiations around one table.