Global Issue in Management

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MODULE 20
GLOBAL ISSUES IN STRATEGIC MANAGEMENT – THE GLOBAL
CHALLENGES, STRATEGIES FOR COMPETING IN GLOBAL MARKETS,
LOCAL MARKETS AND CULTURAL VARIATIONS.
20.1 INTRODUCTION
20.2 IMPACT OF GLOBALIZATION
20.3 IMPACT OF ELECTRONIC COMMERCE
20.4 GLOBAL CHALLENGES IN STRATEGY IMPLEMENTATION
20.5 STAGES OF INTERNATIONAL DEVELOPMENT
20.6 CENTRALIZATION VERSUS DECENTRALIZATION
20.1 INTRODUCTION
Globalization is the process of linking a nation‟s economy with the global economy. The policy initiated by the Government of India in the form of structural reforms through liberalization, privatization and globalization will enable the country to become an active participant in the global market. The business community particularly the large business houses concerned with exporting, how to understand the message of globalization in the right perspective.

Definitions of Globalization:
1. Rhodes (1996) “Globalization is the functional integration of national economies within the circuits of industrial and financial capital”.
2. Walters (1995) “Globalization as a social process in which the constraints of geography on social and cultural arrangements precede and in which people become increasingly aware that they are”.

3. McGrew and Lewis “Globalization as a set of processes which embrace most of the globe or which operate world wide; the concept therefore has a special cannotation……….. On the other hand it also implies an intensification in the levels of interaction, interconnectedness or interdependence between the state and societies which constitute the world community”.189 20.2 IMPACT OF GLOBALIZATION

Today, everything has changed. Globalization, the internationalization of markets and corporations, has changed the way modern corporations do business. To reach the economies of scale necessary to achieve the low costs, and thus the low prices, needed to be competitive, companies are now thinking of a global (worldwide) market instead of a national market. Nike and Reebok, for example, manufacture their athletic shoes in various countries throughout Asia for sale on every continent. Instead of using one international division to manage everything outside the home country, large corporations are now using matrix structures in which product units are interwoven with country or regional units. International assignments are now considered key for anyone interested in reaching top management. As more industries become global, strategic management is becoming an increasingly important way to keep track of international developments and position the company for long-term competitive advantage. For example, Maytag Corporation purchased Hoover not so much for its vacuum cleaner business, but for its European laundry, cooking, and refrigeration business., Maytag's management realized that a company without a manufacturing presence in the European Union (EU) would be at a competitive disadvantage in the changing major home appliance industry. See the Global Issue feature to learn how regional trade associations are changing how international business is conducted. Similar international considerations have led to the strategic alliance between Air India and Lufthansa and to the merger between Daimler-Benz and Chrysler Corporation.

20.3 IMPACT OF ELECTRONIC COMMERCE
Electronic commerce refers to the use of the Internet to conduct business transactions. A 1999 survey conducted by Booz-Allen & Hamilton and the Economist Intelligence Unit of more than 525 top executives from a wide range of industries revealed that the Internet is reshaping the global marketplace and that it will continue to do so for many years. More than.90% of the executives believed that the Internet would transform or have a major impact on their corporate strategy within two years. According to Matthew Barrett, Chairman and CEO of the Bank of Montreal, "We are only standing at the threshold of a New World. It is as if we...
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