ORGANIZATIONAL FOCUS
Organizational focus is a subject that goes well beyond the confines of goal setting and achievements. There is no doubt that all organizations seek to garner more and more profits from their business and focuses most of their time in seeking ways to enhance this. However, there are other important aspects of organizational focus that shifts from personal gains to address the needs of their employees, and also the society in which they revel.
Key Concept
Contemporary businesses have gone global and today, most organizations, be it in manufacturing or service, have relocated their production and service units to other countries to sustain or enhance their market share in the highly competitive global market. This is mainly because today, the ever-growing middle income group of consumers comes from developing economies like China and India, and to cater to their needs, major multinational giants have had to compete in unfavorable and alien competitive markets and against a much lesser-priced product market. In addition to this, these conglomerates had to engage in competition for a share of the global business with other competitors in an open market where their products and services were comparatively much cheaper. As production costs were much higher in the U.S and other developed countries, their competitors were able to produce and supply products on par with their own at much lesser price, thanks to their lower production costs and that which came from developing countries. Therefore, these organizations belonging to the U.S and other developed countries had to move their production units to these developing countries to counter the growing disparity in price and sustainability. Adapting and succeeding in their new environment meant that these organizations had to reconsider their existing principles and policies.
Comparison
The United States has lost ground in the manufacturing sector to China, Mexico and India than official government statistics currently indicate, says the U.S.-China Economic and Security Review Commission. “In the first quarter of 2004, researchers from Cornell University and the University of Massachusetts Amherst registered 48,417 job losses, of which 23,396 went to Mexico, 8,895 went to China, 5,511 went to India, and 4,419 to a few Latin American countries and the rest, 2,933 went to countries in Asia” (TMA, 2004). The figures speak for themselves and clearly show why and how these jobs left the shores of America. All these countries offered lower cost labor, abundant raw materials, skilled workforce and determination to succeed. Mexico topped the list due to its proximity to the United States, but China and India were preferred to most other countries due to their skilled and cheap workforce. America fails on most of these counts, with the exception of skilled labor. The minimum pay for labor in the U.S is $9.00/hr, whereas a Chinese would work for 9 hours for $9.00. The same is the case in India where labor is as cheap as in China or other developing countries. A U.S Dollar is about 60.00 Indian Rupees and there are those who work for Rs.300.00/day which is equivalent to $5.00/day.
However, relocation has its share of difficulties. Problems associated with managing labor changes, political and cultural alienation, and localization were predominant. These organizations had to shift their focus to match varying cultural differences (Pantano and Cardew-Hall, 2007), government rules and regulations, corporate social responsibility (Maplecroft, 2005), and employee needs. In order to create market presence, these organizations had also to reconsider their marketing strategy; “emphasis shifting from one of functional management to strategic roles,” (Furrer, Sudharshan and Thomas, 2001).
Article Summary
Today, countries like China, India, Brazil, Vietnam, Russia, and Mexico attract the major multinational companies from across the globe. This is so because these countries provide these organizations multiple benefits in the form of tax rebates, subsidized land for infrastructure development, cheap labor and raw material, currency convertibility and favorable import-export regulations. This is evident as BusinessWeek conducted an online roundtable in 2005 in which some of the comments made by experts mentioned that, “Microsoft, Oracle, and SAP have established R&D bases in India,” and “the Chinese leadership has been keen in its efforts to modernize the Chinese economy and to catch up to the West” (BusinessWeek, 2005).
Corporate Social Responsibility is an area of immense importance to organizations that does business globally. In oil and gas exploration, the ecological imbalance it causes can have serious repercussions on flora and fauna and in order to safeguard them, Shell has looked at addressing the concerns of native habitants and governments alike. In addition to safeguarding nature, Shell acknowledges that the displaced natives would be provided with job and business opportunities. This is a positive development to win the support of the local populace that is displaced from their habitat due to exploration (Maplecroft, p.3-4, 2005).
An OEM in the automotive sector based in the Asia-Pacific region studied the implications and difficulties of implementation of a knowledge management system (KMS) in its Australian and Indian stamping facilities. The initiative to study the implications and differences were many. There had been a downsizing of personnel earlier in one of their facilities and this had led to loss of valuable know-how within the stamping area of the organization, which inadvertently affected product launch deadlines and increased development costs. This OEM wanted to study elaborately the breakdown of the manufacturing stages (which included tooling, stamping, and assembly), and pass on this information to their engineering, product development, and design team for further process improvement. This way they could rectify or modify some or all of their existing manufacturing processes at the design/engineering stage and also help curb expensive tooling problems that occurred on a model-to-model basis.
The study found that, for the relatively young Indian manufacturing firm, KMS could be used to improve the company's local production capability and convert it to a part of its global operation. The design and development sector could be centralized to their Australian facility, and with this as their regional knowledge base, Indian manufacturers could communicate directly with Australian designers and engineers for inputs.
Krick et al (2005), looked at the major issues of protection of the local populace against relocation and environmental hazards that could be caused due to extraction activities, how would a mining company restore its employee’s morale if an accident took place at the workplace that left fellow workers amputated or dead (Krick et al, p.4, 2005)
Application
Most MNCs have today, changed their business focus from sheer profit-making to understanding and applying cultural differences, political changes, government rules and regulations, and encompass corporate social responsibility to their management practices. With the emphasis shifting from functional management to strategic management, these MNCs have been successful in meeting global challenges head-on and most importantly, have been able to identify their presence with the natives of these countries.
Annotated Bibliography
- Furrer, O, (2004), Marketing Strategies, Article, Research Paper, Accessed January 14, 2013, from http://www.academia.edu/1279139/Marketing_Strategies p.2
This article looks at the three most important dimension of a multinational corporation (MNC)’s worldwide marketing strategy. These include the standardization or adaptation of marketing programs, configuration and coordination of a firm’s value chain activities across countries, and finally, the strategic integration dimension, where organizations competitive battles are planned and executed across country markets. Furrer (2004) focuses on these three worldwide marketing strategy dimensions and how they are combined by MNCs from different regions of the world to gain a competitive advantage.
- Bloomberg BusinessWeek, (2005), Expert Roundtable 5, Can China and India Innovate? Magazine, Accessed January 14, 2013, from http://www.businessweek.com/magazine/content/05_34/b3948425.htm
A report in BusinessWeek brought together 13 experts from different countries for an online roundtable on the past, present and future of China and India for eight days. On each of eight days, new questions were posted and the discussions were moderated by Economics Editor Peter Coy. The experts communicated on everything from geopolitics to generation gaps
- Pantano V. Dr. and Cardew-Hall, M, (2007), Stamping, How Western attitudes can be a disadvantage: Competing with global sourcing in a 'knowledge economy, Journal, Accessed January 22, 2014, from http://www.thefabricator.com/ShopManagement/ShopManagement_Article.cfm?ID=1592
In order to understand the importance of cultural differences and its effectiveness, a study was conducted to understand the effectiveness of KMS in tooling, stamping, and assembly lines, and how it could be passed on to their engineering team for further improvement if possible. For this, the culture of two organizations, especially those which operate in different countries; Australia and India in stamping facilities were analyzed.
- Maplecroft, (2005), Maplecroft.NET Limited, Company Report Review, Shell Foundation, Enterprise Solutions to Poverty, Journal, Accessed January 14, 2014, from www.maplecroft.com/pdf/Shell_review2005.pdf accessed on 11.09.2007
This report looks at the CSR initiatives of The Shell Foundation in India. It talks about the role of Shell in the campaign to make poverty history. Shell explores ways to question how donors and large companies can most effectively catalyze pro-poor enterprise-based solutions to poverty. It states that a flourishing private sector, one in the SME sector included, could bring economic growth to the poor through employment opportunities and better salaries. This will ultimately pull the poor out of poverty and meet the headline goals of the current campaign, including the Millennium Development Goals, fairer trade and debt relief.
- Krick, T, Forstater, M, Monaghan, P, and Sillanpää, M, (2005), The Stakeholder Engagement Manual, Volume 2: The Practitioner’s Handbook on Stakeholder Engagement, AccountAbility, Accessed January 14, 2014, from http://www.accountability.org/images/content/2/0/208.pdf
This elaborate manual looks at serious concerns involving the environment and human life and address what is needed to be done to support such initiatives. The authors believe that to find a path towards sustainable development will require the pooling of diverse perspectives, knowledge and resources, and that no single individual or organization can identify these by themselves. It is therefore necessary for each stakeholder to engage each other to solve these problems.
