Bartlett & Beamish state, "Today, every firm must meet the challenges of managing strategies, organizations, and operations that are increasingly more complex, diverse, and uncertain than during earlier times -- and do so within the confines of their administrative heritage. Discuss this statement in light of relevant ideas presented in "Distance still Matters" (in what ways do ideas in the readings complement or conflict with the claims of Bartlett & Beamish?)
The statement of Barlett & Beamish clearly complements with the ideas presented in "Distance still Matters." Distance still Matters are an article that goes into extensive depth in order to explain the hard reality of global expansions for organizations. PankajGhemawathas put forward ideas and arguments that are completely in line with the statement of Barlett and Beamish.
Pankaj in his article "Distance Still Matters" explains that the impact of distance should not be neglected by organizations because it is rapidly becoming a challenge for many successful organizations. He states that the impact of distance should be measured in order to completely evaluate the complexity involved with expansion into foreign markets.
Firstly, in order to measure the impact of distance, Pankaj has discussed the relationship put forward by economists that trade and distance has a negative correlation.
Secondly, this article also discusses the "Cage distance framework" which has four dimensions of distance, which are namely, cultural, economic, administrative and geographic. The Cage framework is discussed in great depth in order to explain the potential challenges that organizations have to face in the long run due to expanding in far off foreign markets. Each dimension of this framework explains different situations that arise to due distance and diversity impacts.
Thirdly, Pankaj has put forward the idea of "Industry Sensitivity to Distance" in order to measure how sensitive different industries are to distance. Along with a research associate at Harvard Business School, Pankaj carried out this research to analyze different dimensions of distance that affect foreign market opportunities. The research showed for example, that electricity is highly sensitive to geographic and administrative dimensions of distance as compared to cultural dimension.
The impacts of geographic distance are explained in further detail as we go ahead with the article. Pankaj states that the farther you are from a country, the more difficult it becomes to conduct business there. He then proceeds with the argument that distance is not the only issue, other factors such as the size of the target country and its market, political situation of that country, access to waterways, oceans, labor wage policy of the country's government and environmental and legal rules and regulations of the country also play a major role in foreign expansion.
Then the article proceeds to economic distance and the factors associated with it. The article clearly states that the most important economic factor that forces organizations to create distances by expanding their operations into other countries is the wealth and purchasing power of their potential customers. In short, we can say that the demand of customers forces organizations to expand into new territories in order to satisfy the needs and wants of their loyal customers around the globe. Organizations take expansion and distance decisions only when they see a highly positive response from their customers, therefore, the economic distance factor mainly depends upon the financial well being of customers, that is, whether customers have a sound element of purchasing power or not.
Q2. Bartlett & Beamish state, " For most multinational enterprises, the challenge of the 2000s is both strategic and organizational, as firms are required to simultaneously capture the advantages of both localization and globalization while responding to conflicting external demands <(ex)customers' demands, host government's demands.>."
Discuss this statement in light of relevant ideas presented in "Culture and organization" (in what ways do ideas in the readings complement of conflict with the claims of Bartlett & Beamish?)
The explanation given in this chapter of culture and organization are in line with the statement of Barlett and Beamish.
The chapter on culture and organization discusses in great detail how culture influences organization structures, processes/operations etc. The paper starts with the Hofstede's research of 1960s in which he used a sample of 116000 employees in 40 countries to measure the impact of culture on organizational structure. Hofstede's research was successful in finding five dimensions, which are as follows, power distance, uncertainty avoidance, individualism/collectivism, masculinity/femininity and long-term orientation.
The cultural factors influence an organization's capabilities because different societies and people have different cultural values and promoting the brand and products according to the cultural values leads to successful results. If the customer demand and loyal factors for an organization are high around the globe then that organization takes the decision of expanding into foreign markets. But immediately after taking the expansion decision, the organization has to evaluate the cultural and globalization challenges.
Adopting the right organizational culture is no doubt extremely essential for multinationals which operate around the globe. In today's highly competitive globalized world, each and every organization needs to focus on its strategic and organizational demands in order to cater to the demands of its customers successfully.
Multinational organizations have to go a step ahead in their management functions because they have to deal with various issues at the same time. Multinationals have to cut their costs, adapt to different cultures, deal with the rules and regulations the governments of different countries and make changes to their products and services according to the taste of customers of different countries.
For example, the business strategy of Nike is highly smart and efficient. Nike is selling products all around the world at high prices whereas many critics argue that Nike shoes almost cost nothing to make because they are made in countries like Vietnam where the cost of labor is extremely low. But Nike argues that there are various elements that add to its cost structure and results in high prices of its shoes.
One of the main elements that allow Nike to dominate the market and to charge high prices is because Nike has been successful in achieving a competitive advantage over its competitors. Competitive advantage means a unique advantage that an organization has in term of its efficient resources, strategy or methods which cannot be imitated by any other competitor. Nike has developed a highly unique strategy which is to maintain its standardized quality over the world. It has become brand equity of the organization and helps in sustaining competitive advantage over its rivals (Hall & Jones, 2000)
The high quality of Nike makes its customers loyal and high prices do not matter to them. Also, the marketing strategy of Nike is highly costly but at the same time effective because Nike targets unique segments of the market as well as mass marketing. It uses unique niche segments to develop strong brand equity and brand name in the target markets so it can sustain its competitive advantage over its potential competitors. The high level income group and different age groups are targeted by Nike to cater to the upper/rich class in order to maximize their profits in the long run (Malik & Merunka, 2006).
Q3. Bartlett & Beamish state, "The competitive intensity in most industries is such that a firm must gain competitive parity in terms of efficiency, flexibility, and learning, and it must also achieve differentiation on at least one." Discuss this statement in light of relevant ideas presented in "regional strategies for global leadership" (in what ways do ideas in the readings complement of conflict with the claims of Bartlett & Beamish?)
The ideas which are presented by PankajGhemawat in his Harvard Business Review article "Regional strategies for global leadership" are to complimenting with Barlett&Beamish's statement only to a certain extent. Barlett & Beamish state that in order to survive the intense global competition, firms must gain competitive advantage over their competitors with respect to flexibility, efficiency, learning and differentiation.
On the other hand, PankajGhemawat has explained the importance regional strategies for global leadership. Pankaj argues that multinational organizations need to fully understand and implement strategies at the regional level. When organizations expand into new territories, they immediately try to adopt and implement a global strategy which consumes most of their energy, time and attention and in the end does not show good results. Due to this reason, Pankaj states that organizations that want to operate efficiently around the globe should adopt a regional oriented strategy.
The article proceeds forward with examples of successful organizations such as Wall Mart International, General Electrics and Toyota who have understood the importance of regional strategies to operate successful in today's era of globalization.
Jeffrey Immelt, the CEO of GE states that he has hired regional teams to deal with the company's globalization initiatives effectively. On the other hand, Toyota's Vice President states that the company aims to move forward with globalization through their strategy of localization and through dealing with each region independently. The CEO of Wall Mart has also talked on similar lines by stating that…