Introduction
Flushed with confusion the international world of business theory and practice has arrived at an important moment in history. Issues of diversification stimulate the need for global conglomerates to pay attention to how they are planning to add new businesses to the firm, which are really separate from the core product or service. Acquisition and restructuring present challenges as well. Yet the bottom line in the quest for best practices in corporate-level strategies is to win, in terms of competition. One scholar asks the pertinent question whether the merging market economies, of the globe, are causing Asia and Europe to converge (Hoen, 2014). Hoen (2014) agrees that we live in “a smaller world,” today and that “tough competition on international markets forces countries to adopt their institutional settings as mechanism to survive” (p. 44). This discussion examines the case study of the style of Korean business conglomerates, referred to as ‘chaebols’ in terms of their success up to the late 1990s. These companies, explains Peng (2014) include giants such as Hyundai, LG, and Samsung. This discussion takes into account the Korean style of conglomerate building, and advances the analysis to talk about the following aspects: diversification, acquisition, restructuring, MNC strategies, ethical/critical challenges, and a general evaluation of learning in the international management environment.
Diversification and Acquisition
While it is true, in the case study of the Korean big-business model conglomerates having had major success in the international marketplace, times have changed. Two markers characterized the Korean case situation: (1) government assistance from their country, and (2) the Asian financial crisis just prior to the year-2000 cusp. Diversification involves products and the geographic scope as well. Product diversification, whether product-related or unrelated to current production speaks for itself. Nowadays, diversification and acquisition form a tight partnership. One reason why, Ricard, Reynaud, Gopinath, and Ravilochanan (2012) think so is that “globalization has differential impacts in both developed and developing countries” (p. 44). Having measured the opinions of young international managers’ attitudes, not all agree upon the correct approach. In our case study of the Korean chaebol-model is their non-Western, non-European structure of capitalism in that its capitalist philosophy. Murillo and Sung (2013) state that the chaebol Korean case-study model consists of myriad firms, which are affiliated, and operate diverse “number(s) of industries,” maintain ownership “in a dominant family,” which greatly comprises a large percentage of their country’s GDP. Peng (2014) concurs.
Acquisition today, in the global environment, will almost guarantee the need to expand beyond the mother (or dominant) culture – especially if the corporation wishes to expand. Peng (2014) advises that product-related diversification usually leads to better performance outcomes, but also advocates that understanding the crucial nature of geographic diversified expansion must be carefully planned – because there can always run the risk of a negative impact (p. 264). Acquisition is quite another story. The key to gaining triumph and success in attaining an acquisition, is not unlike learning to live through a survival mode of change. No one can refute that social media has, for example, place a very strong impact upon all conglomerates despite the factors that it may be currently profitable. One wrong or negative word about company executives’ or employees’ attitudes can literally crush its reputation! Therefore, acquisition forms a key element in the corporate-level business strategy in learning how to compete, while leveraging the creative synergy to push it forward into the emerging future. Almor et al. (2014) believe the theoretical research is lacking in the current literature, and present data that show global companies do best if they ‘stay-in-their-lane’ by not acquiring other firms until they can prove continued “operations if they survived the first decade” (p. 421). If you really think about this, it makes common sense.
Restructuring and Multinational Strategies
One key investment and building smooth transitions into effective multinational strategies, is being aware of the two knowledge types. Thus far, we have learned that explicit knowledge is the kind an IT department might consistently use. The tacit knowledge is obtained via experience. In other words, on-the-job-training (OJT) demonstrate skills with people, and operations that money cannot buy, nor theory can teach. When multinational replicators, for example, fail to recognize the value of tacit knowledge, even the strong Korean models in our case study can falter. Restructuring always must consider operational synergy. This ‘synergy’ must obviously function in the conglomerate’s internal environment, but learning to navigate the importance of tacit knowledge in the external world of the consumer is critical. Goodhope (2012) indicates that multinational strategists and global managers, including our Korean case representatives, must be aware that the international economy has an overarching and central implication about the “current sophistication and dynamism of the consumers” (p. 197). In other words, the smart and research-savvy consumers of today are increasingly knowledgeable about different regional economies, exploitation, and have environmental concerns as well.
In the effort to restructure its corporation in an emerging globalized capital market, sustainability and corporate responsibility are expected. In other words, consumers will not be very happy if they know that the manufacturers of their products are killing off trees or endangering certain nature, in an unneeded way. Social media has been known to have exposed a lot of corrupt corporate behavior. People worldwide, for example, as a majority were firmly in support of Edward Snowden’s exposure of blanket spying on ordinary citizens. Even if you politically disagree with his actions, the global opinion in social media can be a powerful influencer. The Korean originating business-model position of chaebol, must remember that the new globalization has a heavy impact on consumer behavior, opinions, and attitudes, too.
Global Learning, Innovation, Responsibility, and Ethics
An important TED-talk speech delivered by Alex Tabborok truly smacked an impact in arguing about the overall impact of globalization, across the board. Firstly, Tabborok mentions the historical disaster in human affairs, in terms of political walls, trade walls, and communication walls between global peoples. Given date on how we learned from trade failures, it was noted that transportation walls came tumbling down with better technological improvements. Digitalized communication have shown remarkable progress, and trade with China increased to over $300 billion dollars as exports from the United States (“How ideas trump,” 2009). Innovation in India has bloomed in technology, innovation, and economically viable products and services. While it is true that Africa as a whole, is lagging behind, the intelligent socio-political observer can trace historical reasons. But even Africa is starting to change for the better, in terms of partnership growth in powerful ways.
The speaker smartly provides an illustration applicable to responsibility and ethics in extending needful products to the majority of what most people commonly need. Examples of larger markets given included movies, and medicines to help common ailments. Creating ideas and driving innovation, Tabborok mentions, are the twin industries of science and technology. Noting that the United States is not the absolute leader in these areas anymore, and that this is a good thing because new, better ideas and innovations can derive from a variety of places instead of having tunnel-vision. Optimism, if you really understand the reality of the situation, is easier gained when a wider berth of people contributing to society occurs. One stunning figure and piece of data given, was that by the year 2100 the average GDP worldwide per capita would be approximately $200K annually – in U.S. dollars this reflects million-dollar achievements. Ethics involves not only respectful treatment towards employees, but creating of products and services that serve the greater good of the majority of people.
Challenges and Managerial Strategic Challenges
Education has been called a sort of light in society. Learning, therefore, can help to meet and conquer some of the challenges in planning, decision-making, and implementing strategic global moves in re-structuring. Global challenges in project development for conglomerates, represent a plethora of aspects and approaches. One key is to keep learning, and never get lazy. In a Harvard Business Review (HBR) article, one observer offers ten rules to better manage global innovation. Among the challenges Wilson (2012) suggests that the unfolding role of executives is unclear, and that “finding a good balance between formal and informal project management processes” can be daunting (p. 85). One thing he wisely points out is that the internal team must share a common, unified corporate culture, by knowing what is important about the project and being flexible enough to make crucial changes as required.
The first rule is quite surprising. Wilson (2012) says that when an enterprise approaches new innovations, that it must start small before committing to making a “contribution to a global project,” because team members need to benefit from the “collective tacit knowledge” (p. 86). Obviously, this build a sense of support, camaraderie, and enforces channels of trust. The Korean model of chaebol had served a successful era, yet it must not remained closed-minded towards opening new, salubrious avenues for capital gains, and exploring unfamiliar pockets of international management. Fortunately, the tools for communication have greatly opened doors for conglomerates to continue to achieve financial goals, while behaving ethically towards the natural environment and people. In closing, at the end of the day the Earth is small, and we are all on it together.
References
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