Powerpoint Notes
Implications of Global Operations
Due to globalization and advancement in technology, many business organizations were able extend their markets to other countries and to the rest of the world. From this, global operations increased, thus, creating an extended and continuous network of profit and sales.
The extent and continuous global operations can be analyzed in reference to its implications or effects in the global economy. This will be done using the strengths and weaknesses of global operations.
Strengths
Strengths of global operations include the creation of monopolistic dominance through multinational investments, wherein certain global corporations widen their networks and their markets by using advanced technologies and other means of communication, such as the Internet. The global operations of these companies sustain their businesses with these means, such that by using the Internet, they can maintain good relationship and communication with other countries. Through these, they can sustain, maintain and make new investments, such that becoming the primary supplier of specific products or services, thus, creating monopoly over networks and markets. Another strength is the reduction in costs of factors of production, which would be helpful because with reduction of costs, companies will be able to allocate and budget their resources efficiently, to be distributed in other functions of the company. Third strength is that it avoids high levels of retaliation from market leaders and competitors. Because the company has already gained monopolistic dominance, it would be difficult for competitors to overcome the company’s power over its market or network. Fourth is the reduction of transaction costs, wherein similar with the reduction of costs of factors of production, the company will be able to allocate resources not only their operation but on other functions.
Another strength is the company’s ability to choose between hierarchy or market strategies, which would enhance the ability of the company in its implementation of market and business strategies in relation to encountered changes and competition. In addition, the company will be able to develop competitive advantages, for its members will have the edge of facing a variety of crises that would enhance their ability to develop effective and efficient strategies or solutions. Lastly, the company can provide incentives to prevent tedious and costly understanding of firm behavior and performance. Through incentives, employees would be more motivated to work in the company for they will realize that their hard work is well compensated.
These positive implications are very useful in the analysis of a company’s or business organization’s global operations because with these, the company can maximize the use of their existing market and business strategies. In addition, the company can continuously utilize the use of a variety of means of communication that would not only enhance, improve and develop the interrelationship and coordination in the company, but would also give importance to customer value and interrelationships.
Weaknesses
However, despite the discussed strengths of the implications of global operations, several weaknesses or disadvantages can also be determined. Primarily, some home bases in specific countries, such as in Europe and North America may be subject to terrorist attacks. This is because through extended networks and market, some countries will become more open to transactions and interrelationship with other countries than others will, which would lead to more susceptibility to terrorist entry. Another weakness is the possibility of eliminating trade barriers due to conflict. Conflict between corporations and countries due to competition and other socio-economic factors would lead to serious problems, such as the disruption of the existing friendship and interrelationship among corporations. This would be disadvantageous because corporations must co-exist with one another to promote and encourage harmony in their industry, for with harmony, corporations will be able to face global economic and societal crises effectively.
Third weakness is the existing differences in cultural and institutional attributes of many corporations in different countries and societies. An example of this difference is exhibited by the differences in the views of hierarchy between Japan and China. Japan views hierarchy through group harmony and social cohesion, while China views hierarchy for personal relationships and good connections. Although their perception with hierarchy is completely different from one another, their beliefs can still be used for the profit and sustenance of their companies. The focus of Japan is to promote group interrelationship and unity in their corporation, while China’s focus is on building personal relationships. The difference in beliefs can be a source of conflicts, such as cultural clashes and diversity in certain instances, including mergers, leadership, and implementation of strategies. Another weakness is the implications of economic recessions to host countries, such as what happened to Argentina in its 2001 financial crisis. Such crisis largely affects the operations of global companies because prices, supply, distribution and consumption or demand of products will be greatly reduced during recession. Although only one country experiences the recession, the operation of global corporation will be also affected because their sales depend on the consumption or demand of consumers on that particular country. The last weakness or disadvantage is the presence of other attributes of host countries, such as disruption of political stability, human resources and peace. Without these aspects, corporations will have difficulty in maintaining and sustaining their global operations. With the presence of political instability, corporations will be restricted to do business with other corporations. In addition, without the skills and abilities of human resources, corporations will also have difficulty in continuing their processes and functions in the company, for human resources are one of the company’s assets, and without peace, corporations will have difficulty in co-existing in the market and in the industry, and cause its downfall.
Credit:ivythesis.typepad.com
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