Part 1
Managing multinational companies has remained a major challenge for managers and the business community for many years. However, the introduction of technology, rapid change in the business environment, availability of information, and stiff competition has compelled managers to implement various global management strategies to address challenges in their organizations. As a result of stiff competition coupled with regional integration, the business environment is characterized with price fluctuations, downsizing, and change in consumer behavior, mergers, relocations, and layoffs, which affect operations of organizations.
Global operation management is a broad terms that refers to, and not limited to global sourcing, distribution, and global manufacturing of products and services where each facet has its own ramifications in the business arena. In essence, it is the interplay of suppliers, distributors, and manufacturers in an international platform aimed to satisfy human needs, expand market niche, and increase profit margin.
McDonalds, Coca-Cola, and FedEx are some of the multinational organizations in America that demonstrates application of global operation management approach. These organizations operate in a dynamic and unpredictable business environment where they implement various strategies to address the challenges they face. For instance, McDonalds employs multidomestic strategy that embodies joint ventures, franchise, provision of subsidies, and formation of alliance with other organizations. Coca-Cola Company employs transnational strategy that focuses on the economies of scale and promotion ideas and innovations across the cultures to expand market niche and profit margins (Heywood, 2012). In the same breath, FedEx employ an international strategy that involves imports/exports of products to expand market spaces, win consumer trust and loyalty, and increase the sales volume.
Multinational organizations need to be competitive in the global environment in order to increase their profit margin, expand market niche, and maintain their image and reputation in the public. Implementation of effective management strategies coupled with change in economic activities in other regions including China, Africa, and Asia have influenced American organizations change their management operations (Heywood, 2012). This aspect has created stiff competition in the business environment and American organizations need to implement new management strategies to remain relevant and competitive.
Part 2:
Businesses play an integral role in national, regional, and global economic development because they create employment opportunities, increase government revenue, and sponsor community-based programs through the corporate social responsibility initiative. Although businesses remain an indispensible component in the economy, they operate in unpredictable and unprecedented business environment that is marked with numerous challenges including political instability, change in consumer behavior, technology advancement, government involvement, and dynamism, which affect business operations, profit margin, and productivity. Despite these shortfalls, managers have ensured that their businesses remain in operation, make profits, address and satisfy consumer needs, and compete effectively in the international market.
In the last few years, the level of competition in the business cycle has increased steadily and many firms have employed various coping mechanism to address this issue. Some of the businesses have embraced technology in their operations, adapted the use of effective management strategies, and use of effective marketing strategies (Clotfelter, 2010). Although this is the case, many multinational organizations have established their branches and outlets in other regions as one of the ways to expand their market niche and increase the sales volume. The move to expand business operations at the global level has numerous benefits to the business including formation of alliances with other multinational organizations, large market share, and ability to access suppliers and distributors.
However, various issues arise in the host foreign country a result of this expansion. First, collapse of the local industries and businesses. As a result of stiff competition, many local industries and businesses in the host country would collapse because they experience unhealthy and cut-throat competition from multinational organizations. In essence, multinational organizations sell their products at a lower price than the local industries because the former enjoy the economies of scale and have high capital share. Therefore, multinational organizations would attract more consumers and increase their profits whereas local industries would incur loss. Second, the expansion would lead to pollution and depletion of natural resources. Many multinational organizations use non-renewable sources of energy that emits greenhouse gases into the atmosphere thus leading to global warming and climate change. In essence, pollution would have affect energy balance in the host country thus leading to depletion of natural resources. Third, the expansion may fuel “dumping” of sub-standard products in the host foreign country. In most cases, multinational organizations produce products in large scale; an idea that affects quality and safety of the products (Clotfelter, 2010). However, these organizations use their political and financial power to market substandard products, which have effect on the consumers. Based on these assertions, the expansion would have negative impacts on the host country.
Multinational organizations experience several cultural barriers and diversity issues when marketing their products in different regions. It is important for multinational organizations to understand the culture, political aspects, demographic characteristics, traditions, and values of their consumers before designing, innovating, and marketing the products. Failure to conceptual and consider these constructs may negatively affect the organization operations, productivity and performance. First, values, norms, and traditions of consumers poses cultural barrier to many multinational organizations. In essence, these aspects influence consumers’ purchase behavior and relationship with the organization (Yip, 1998). In other words, multinational organizations should design, innovate, and market products, which satisfy the needs and observe values, traditions, and customs of the consumers. For instance, a multinational organization that deals with processing and marketing of pork cannot operate in a Muslim region because Muslims do not consume pork. Based on this assertion, multinational organization should consider these cultural aspects. Second, difference in demographic characteristics also poses a challenge to multinational organization. In most cases, multinational organizations use differentiated market segmentation strategy to expand their sales volume and increase their profits, but variance in demographic characteristics of consumers affect this move. The youths form greater percentage of the population in most communities, but the aged also form the majority in other communities. Based on this fact, multinational organizations find it difficult to balance and articulate the needs of all age groups.
Diversity remains an imperative topic in the international arena because it enables managers implement effective management strategies, adapt effective technology, implement viable marketing strategies, and expand market niche and maximize profits. Those businesses, which embrace diversity in their operation understand their consumers’ needs, innovate, design, and market products that consider values of different consumers, form good relationship with workers, and nurture talents, skills, and creativity. Concisely, diversity helps an organization compete effectively in the business arena.
In certain instances, organizations fail to consider and integrate issue of diversity and multiculturalism in their operations; a move that may have negative impacts on the business. Failure to consider these issues creates poor working condition between the management and workers. It is important for the management to appreciate cultural diversity of the workers and address the workers’ need professionally. In such scenarios, managers should use diversity and multiculturalism to enhance the company’s image and reputation, create good working relationship, and encourage cooperation among the workers (Baden, 2011). Therefore, managers should view the issue of diversity and multiculturalism as strength to the organization and not as a weakness.
Political and economic issues may emerge because of global expansion. Power struggle is one of the political issues, which arise during the global expansion process. Developed nations dominate in the international market because they have high capital share and great influence over developing nations. However, global expansion enables developing nations have equal opportunity as developed nations in international market; an idea that create power struggle between the involved parties (Yip, 1998). In most cases, developed nations formulate and implement trade barriers to protect their political power over the emerging economies. However, the involved parties should formulate and implement laws, which would safeguard rights of each party and resolve the issue of power struggle amicably. Second, political instability may arise during the global expansion. In most instances, political instability arises when politicians and involved parties fail to agree on passing important legislations concerning global expansion thus creating wrangles and conflicts. However, this issue can be resolved by encouraging leaders to embrace unity, cooperation, and create a favorable environment to attract local and foreign investors.
Exploitation of natural and human resources is an economic issue that emerges during global expansion. In most cases, organizations waste natural resources when processing and manufacturing products to maximize their profits thus depleting the resources. However, the government should formulate and implement rules and regulations, which would promote sustainable economic development. Second, global expansion promotes industrialization, which in turn influences pollution. Organizations emit greenhouse gases, which influence global warming and climate change. However, the government should implement environmental conservation policies aimed to curb pollution in the region.
Germany and Japan are some of the emerging economies in the world today. However, it would be important that Germany and Japan integrate the concepts of diversity, multiculturalism, and cultural aspects in their planning framework. This move would enable the two nations formulate and implement laws and policies, which would facilitate global expansion, address political and social problems accruing from global expansion, and expand market niche and revenue in the region. Additionally, Germany and Japan would compete effectively in the international market.
References
Baden, B. (2011). The World's 25 Best Multinational Workplaces - US News and World Report. Business News and Financial News - US News Business. Retrieved October 9, 2013, from http://money.usnews.com/money/careers/articles/2011/10/28/the-worlds-25-best-multinational-workplaces
Clotfelter, C. T. (2010). American in a global market. Chicago: University of Chicago Press.
Heywood, S. (2012). The global company’s challenge. McKinsey Quarterly, 1(2), 1-10.
Yip, G. (1998). Total Global Strategy. New York, NY: Prentice Hall.
