Scribd
Upload
71 views

The Impact of Globalization On Strategic Management Report

Uploaded by

Manilyn Alapot
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
71 views

The Impact of Globalization On Strategic Management Report

Uploaded by

Manilyn Alapot
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
You are on page 1/ 13

THE IMPACT OF GLOBALIZATION

ON STRATEGIC MANAGEMENT
PRACTICES IN MULTINATIONAL
CORPORATION
DEFINITION OF GLOBALIZATION

Globalization is the process of increasing interconnectedness


and interdependence among countries, driven by advancements
in technology, trade and communication. It involves the
movement of goods, services capital, ideas, and people across
borders, leading to greater economic integration and cultural
exchange.
Impact of Globalization on Strategic Management Practices
in Multinational Corporation:

- Globalization significantly influences strategic management practices in


multinational corporations (MNCs) by expanding market opportunities and
intensifying competition. MNCs must adopt a global mindset, integrating diverse
cultural perspectives and leveraging technology to enhance decision-making and
collaboration across borders. However, this interconnectedness also presents
challenges, such as navigating complex regulatory environments and managing
cultural differences, which require adaptive strategies for sustained success.
Key Impacts of Globalization on
Strategic Management
and Practices within MNCs
 Increased Market Opportunities and Competition
- Globalization has opened up vast new markets for MNCs, allowing them to reach a
wider customer based and diversify their revenue streams. This expansion has been facilitated
by the removal trade barriers, the growth of e-commerce, and the rise of emerging markets.

Example: Nike, a global sportwear giant, has successfully tapped into emerging
markets like China and India boosting it sales and brand presence.

 Access to Global Resources and Talent


- Globalization has facilitated the movement of talent and resources across borders,
allowing MNCs to access diverse skillets and leverage cost-effective resources from different
parts of the world.

Example: Tata Consultancy Services (TCS), an Indian multinational IT services


company, has established a global presence by leveraging the talent pool cost advantages in
India.
 Cultural Sensitivity and Localization
- Globalization has been highlighted the importance of cultural sensitivity in
strategic management. MNCs need to understand local customs, traditions, and
consumer behaviors to tailor their products and marketing campaigns to meet the
specific needs of different markets.

Example: McDonald’s for instance, has localized its menus in different countries
to cater to local tastes and preferences. This requires a shift from a standardized, one-size-
fits-all approach to more localized and culturally sensitive strategy.

 Strategic Alliance and Partnership


- Globalization has prompted the formation of strategic alliances and partnerships
between business across borders. These collaborations enable companies to
leverage each other’s strengths and gain a competitive advantage. Strategic
alliances can also help companies navigate complex regulatory environments
and overcome cultural barriers.

Example: The partnership between Renault and Nissan, has resulted in


cost savings, shared technologies, and expanded market reach.
 Technological Advancements and Digitalization
- Rapid exchange of information and technological advancements, transforming the way
businesses operate. Strategic management now involves embracing digitalization and
leveraging technology to gain a competitive edge. Companies are also using digital
platforms to reach global audiences, build brand awareness, and manage their reputation
across borders.

Example: Amazon, a global e-commerce giant, utilizes advanced data analytics and
artificial intelligence to optimize its supply chain and personalize customer experiences.

 Risk Management and Ethical Considerations


- Exposes businesses to various risks, including political instability, economic fluctuations, and
natural disasters. Strategic management now entails identifying and mitigating these risks to
protect the interests of the company. It also brought increased scrutiny of ethical practices,
with companies under pressure to ensure compliance with ethical standards and corporate
social responsibility.

Example: Procter and Gamble, a multinational companies have robust risk


management strategies in place to navigate geopolitical uncertainties .
 Strategic Flexibility and Continuous Adaptation
- The dynamic nature of globalization requires businesses to be agile and adaptable to changing
market conditions. Strategic management involves building flexibility into the business model
to respond effectively to emerging trends and challenges.

Example: Netflix, a global streaming platform, successfully transitioned from a DVD


rental service to a digital entertainment provider, demonstrating strategic flexibility.
POSITIVE AND NEGATIVE IMPACT ON
STRATEGIC MANAGEMENT PRACTICES
IN MULTINATIONAL CORPORATION
Positive Impacts:

Increased Market Opportunities:


- Globalization allows MNCs to access larger consumer bases in different countries,
leading to increased revenue and diversification of their business portfolio.

Access to Cheaper Labor and Resources:


- MNCs can leverage lower labor costs and access a wider range of resources in developing
countries, leading to cost reductions and increased profitability.

Technological Advancements and Innovation:


- Globalization fosters competition and encourages MNCs to invest in research and
development, leading to technological advancements and innovative products and
services.

Economies of Scale:
- Operating in multiple countries allows MNCs to achieve economies of scale, reducing
production costs and enhancing competitiveness.
Enhanced Competitive Advantage:
- Globalization forces MNCs to constantly adapt and innovate to stay ahead of
competitors from around the world, leading to stronger business models and
strategies.

Cross-Cultural Management:
- Globalization encourages MNCs to develop cross-cultural management skills,
fostering diversity and inclusivity in their operations.
Negative Impacts:

Increased Competition and Market Saturation:


- Globalization has led to increased competition, making it challenging for smaller companies to
compete with larger MNCs that have greater resources.

Exploitation of Workers and Resources:


- MNCs may exploit workers in developing countries by taking advantage of lower labor costs
and weaker environmental regulations.

Loss of Local Identity and Culture:


- MNCs may homogenize local cultures by promoting a global brand identity, leading to a loss
of diversity and cultural richness.

Displacement of Jobs:
- MNCs may outsource jobs to countries with lower labor costs, leading to job losses in
developed nations.
Greater Dependence on Global Supply Chains:
- Globalization has increased reliance on global supply chains, making MNCs vulnerable to
disruptions caused by natural disasters, political instability, or other unforeseen events.

Political and Economic Risks:


- Globalization exposes MNCs to political and economic risks such as changes in trade
policies, currency fluctuations, and geopolitical instability.

You might also like