Global Corporate Strategy and International Management Trends

Introduction

The emergence of strategic management has always been attached to military history (Tallman, 2007). Studies in this area reveal various examples where the strategic management of offensive and counter-offensive operations led to decisive victories. Within the corporate sphere, strategic management emerged following the Second World War. The dramatic growth of nations such as China, Japan, and the United States created a beneficial environment for large international corporations that needed to evolve in their planning and thought processes. The competitive climate has since created challenges for global corporations trying to sustain success without meeting the changing requirements of business and adopting strategies to counter those changes.

Strategic management is an art that uses the processes and principles of management to create the mission or objective of any business. It identifies appropriate targets to meet objectives, establishes current opportunities and constraints in the business environment, and creates methods to achieve those objectives. The operation of any business in the global arena is highly dependent on the quality and implementation of its strategic management. This paper synthesizes the major trends shaping the future of strategic management in global corporations.

Drivers of Change

The shifts in the strategic landscape that modify the transferability of resources across nations accrue from complementary internal and external forces.

Greater global integration via market liberalization, trade, investment, and migration has not led to convergence but has instead intensified the gap between rich and poor, and between powerful and powerless nations in the world order. It has therefore been accompanied by issues of inequality and development, which remain central to the reality of globalization.

Dhillon and Ebrary Inc. (2001) explored global challenges in the new millennium and found that organizational and technological capabilities are benchmarked against competitors worldwide, and that business models are crafted to exploit global integration and linkages. Internationally operating companies create pressures on competitors to invest in staying ahead in core business areas where they may secure market leadership, thus driving a global focus (Vrdoljak et al., 2016). Such competitive pressures shift up and down the value chain, particularly when consumers move toward global marketing or global sourcing. Global operations become imperative when markets transcend national boundaries, customers pursue diversity, and competitors operate internationally at various points around the globe.

White (2004) found that these market dynamics trigger different pressures for customers and international companies. Given that rival firms cut their prices via global integration, this creates pressure on others to either exit or strengthen operational capabilities. When consumers pursue global sourcing, suppliers are forced to expand their global scope to sustain their globally operating customers. Many entities in business-to-business industries may therefore be pushed to invest overseas following the internationalization of their customers. Manufacturers of consumer goods face varying consumers in each country and might find it easier to expand their brands to related product lines and thereby prosper through diversification strategies.

Devinney et al. (2010) predict the future of international business and strategic management, revealing that globalization has fundamentally challenged how managers conceptualize their business strategies. In the 1970s, international firms had to choose between being a small fish in a big pond or a big fish in a small pond. Today, that choice no longer exists; globalization has created one big pond in which nearly every firm, regardless of its size, competes with any other company offering similar goods (Devinney et al., 2010). The strategic challenge is therefore to observe the industry internationally and to identify threats and opportunities at that level. Often, new business opportunities emerge with new business models that merge operations at varying locations worldwide. While seeking to identify and apply such opportunities, global companies must develop new organizational capabilities and structures across the enterprise. Such a model must make cross-border interaction a cultural norm for people in various functional departments, not only those in leadership positions. Often, this global organization can be built via mergers and acquisitions, which are typically accompanied by leadership challenges of integration management in cross-cultural and cross-border contexts. The management challenge is therefore to develop corporate capabilities—particularly communications infrastructure and human capital—that create and exploit global linkages. This demands leaders with an international perspective coupled with cross-cultural competencies to function effectively across large geographic distances.

A nation's institutional framework encompasses all the formal and informal laws that guide business corporations, and thus it moderates how businesses grow, compete, fail, or survive. When these rules fail to secure the efficient operation of markets, companies may choose to organize transactions internally (Oakey, 2008). For instance, they may develop human capital internally rather than sourcing it externally. Reputable entities thereby benefit from access to the best talent, which can then be allocated throughout the business based on need. Other resources that may be shared across a conglomerate include bargaining positions and network relationships. International growth grounded in sharing these resources may therefore represent an appropriate growth strategy in weakly transparent and network-oriented contexts.

Changes in institutional contexts are often characterized by legal reforms aimed at making markets more efficient—for instance, reducing tariff or non-tariff barriers to global business. This liberalization makes it easier for foreign investors or importers to compete (Oakey, 2008). Information about prospective employees and partners also becomes more readily available, thereby reducing the incumbent's advantage derived from nation-specific networks and knowledge. Market liberalization reduces the costs of moving goods across borders and creates opportunities to build capabilities based on international operations. Within a liberalized context, international companies can more easily attain a competitive edge by integrating and coordinating geographically dispersed operations.

Managing Diversity in Global Organizations

Managers often view cultural diversity in business as a problem to be managed. In reality, it can be either a drawback or an important source of competitive advantage. Failing to handle diversity effectively can create numerous problems for an organization. The first significant issue is economic cost due to high turnover, absenteeism, and legal cases. Organizations lose all the money spent on hiring and training when a dissatisfied worker exits. High turnover also means workers are regularly in the learning stage rather than operating at full potential. Absenteeism carries a significant cost as well: there is a positive relationship between employees' sense of being respected and cared for and their attendance. Legal cases involving racial bias can further impose fiscal costs on the company.

By capitalizing on the potential benefits of employee diversity, organizations gain added value and competitive advantages over those that fail to respond to this challenge. Companies can drive growth and improve customer service by leveraging their diverse workforce. This means making use of cultural sensitivity, language skills, knowledge of business systems in employees' home countries, and industry expertise. With these key resources, organizations are better positioned to promote products or services to a progressively diverse and migrant community, as well as to the international market. For instance, the Avon Company was able to turn around its unprofitable inner-city markets in the United States by placing Hispanic and African-American managers in charge of marketing to those populations. Just as cultural minorities may choose to work for companies that value diversity, they may also choose to purchase from such organizations.

Organizations have approached workplace diversity management in various ways, often encountering significant challenges. Leading corporations like Coca-Cola, however, have made substantial efforts to address this issue. The company operates in many countries characterized by entirely different cultures. Therefore, in every nation where Coca-Cola operates, the local culture must be taken into consideration when developing the organizational framework. To effectively manage diverse employees and continue promoting its diversity culture, Coca-Cola organized various outreach and monitoring groups to educate employees and serve as mechanisms for addressing diversity challenges, as well as guiding employees through day-to-day activities both at work and in their personal lives.

For instance, the Coca-Cola Lesbian, Gay, Bisexual, Transgender and Ally (LGBTA) group aims to promote an inclusive work environment. It fosters a platform for sharing where workers feel comfortable with their ethnic background and can contribute to business success. Another initiative, The Coca-Cola African-American Business Resource Group, advocates for a winning, inclusive culture in which individual diversity is respected.

Conclusion

International companies will need to continually identify appropriate resources, adapt to changing market conditions, and remain flexible in order to secure a competitive edge in the future. They must devise an optimum strategy and redirect it based on the social, political, and economic contexts of the moment. A successful strategy is grounded in the difference it makes, the benefit it generates, and the attractiveness of the market it targets. This helps the company secure a profitable and competitive position.

International companies are employing a wide range of strategies to remain viable (Tallman, 2007). This paper has discussed various types of strategies and offered insights into the most successful approaches used by leading corporations. In choosing the appropriate strategy, companies must weigh primary factors including environmental controls, emerging technologies, and time to market. International companies seeking expansion into foreign markets most commonly employ strategic alliances, mergers, and diversification. In the decades to come, companies are predicted to become more complexly integrated, relying on more intense communication, and their behavior is likely to become more proactive than reactive. They will also face intense rivalry from online enterprises that are rapidly expanding their market presence and share.