Managing Global

Business
Unit V
Managing Global Business
• Managing global business involves coordinating operations across
international borders, requiring a strategic approach to navigate
diverse markets, cultures, and regulations.
• This includes understanding global opportunities, leading
international teams, managing complex global operations, and
adapting business strategies to local contexts.
Key Aspects of Managing Global
Business
• Strategic Thinking: Global business managers need to think globally,
understanding the nuances of diverse markets, cultures, and
regulatory environments to tailor strategies effectively.
• International Team Leadership: Leading international teams requires
navigating cultural differences, fostering collaboration, and driving
performance across borders.
• Identifying Global Opportunities: Successful global managers spot
emerging trends and untapped potential in new markets, expanding
their organization's reach.
Key Aspects of Managing Global
Business
• Managing Complex Operations: This involves overseeing supply chains,
logistics, and international partnerships with confidence.
• Adapting to Local Contexts: Global businesses must balance global
consistency with local responsiveness, adapting their core business
strategies to each national market.
• Navigating Cultural Differences: Understanding local customs,
professional life, and regional policies is crucial for successful
partnerships.
• Risk Management: Identifying and mitigating potential risks associated
with currency fluctuations, political instability, and other factors is
essential.
Strategy and Global Organization
• A global business strategy is a plan that outlines how a company will
expand its operations beyond its domestic market to become a global
player.
• The primary objective of a global business strategy is to increase
revenue, profitability, and market share by taking advantage of
opportunities in the global market.
• It involves identifying potential international markets, analyzing
cultural differences, and developing a competitive advantage in those
markets.
Global Strategy
• Global strategy looks different from one company to the next. A
company’s global strategy is always focused on expanding in one of the
following ways:
• International: International companies export to and sell product to
foreign markets.
• Multinational: Multinational companies, unlike their international
counterparts, invest in the foreign markets they want to enter.
• Transnational: Transnational companies operate in different countries by
coordinating local subsidiaries with their main business operations.
However, unlike multinational companies, transnational companies
make decisions on a regional/local level for each foreign market.
Global Strategy
• The strategy focuses on the entire organization and is used by management as an
operating guide. All decisions made by business leaders will support the global
business strategy.
• Some of the considerations covered in the business strategy include:
• Local regulatory environment
• Specific goals about market share, cost-efficiency, growth, and sales
• Financial regulations
• Distribution systems
• Infrastructure
• Talent/labor acquisition
• Culture, local customs, and political and business customs of the foreign market
Global Strategy
• A global business strategy is best organized by considering the following:
• Corporate strategy
• Competitive strategy
• Operating strategy
• Corporate Strategy: Corporate strategy details the company’s vision,
mission, and values. This strategy defines how the business wants to be
viewed, the purpose it intends to fill, and the core values it intends to
operate under. This strategy defines the organization’s internal
environment and trickles down to keep everyone working toward the
same goals, under the same principles, and aligning with the same values.
Global Strategy
• Competitive Strategy
• Competitive strategy details how the company will gain a competitive edge
in the foreign market. This plan defines how the business will compete and
gain market share using sustainable measures. For example, simply cutting
profit margins is only a temporary measure and not a sustainable plan for
long-term success. The competitive strategy include steps that focus on
dominant market share, profitability, and sustainability on a global platform.
• Operating Strategy
• Operating strategy focuses on areas like talent acquisition, human resource
management, and productivity. It focuses heavily on the day-to-day
operations of the business.
Global Strategic Planning
• Global Strategic Planning refers to the comprehensive planning
developed by a company to operate and compete in international
markets.
• This strategy integrates various aspects of business operations,
including marketing, production, finance, and logistics, to achieve global
objectives and leverage opportunities in multiple countries. The goal is
to create a competitive advantage on a global scale.
• It involves analyzing global markets, developing strategies for market
entry, and coordinating operations across different countries to achieve
specific objectives like increased revenue, market share, or
diversification.
Key components
• Market Selection: Identifying and evaluating potential international markets
for entry.
• Competitive Analysis: Understanding the competitive landscape in each
target market.
• Entry Strategy: Determining the most appropriate mode of entry, such as
exporting, joint ventures, or wholly-owned subsidiaries.
• Adaptation vs. Standardization: Deciding whether to adapt products and
marketing strategies to local preferences or standardize them across
markets.
• Global Coordination: Ensuring effective coordination and integration of
operations across different countries.
Situations where strategic planning
is done
• Companies seeking to expand their market presence internationally
• Businesses looking to diversify their revenue streams
• Organizations aiming to capitalize on growth opportunities in
emerging markets
• Industries facing saturation in domestic markets
• Companies with products or services that have global appeal
Global strategic planning
• 1. Define Mission & Vision
• Start by establishing:
🔹 Mission – Why does your organization exist?
🔹 Vision – Where do you want to be in the future?
🔹 Core Values – What principles guide your decisions?
• 2. Conduct a Situational Analysis
• Analyze internal and external factors that impact success. This may include any
number of analytical exercises, such as:
SWOT Analysis – Identifying Strengths, Weaknesses, Opportunities, and
Threats.
Market & Competitor Analysis – Understanding trends and industry
positioning.
Global strategic planning
• 3. Set Strategic Goals & Objectives
• Define clear, measurable goals that align with your vision. Objectives
should be defined and mapped to the goals. Taken as a strategy, the
goals / objectives should be:
✔ Specific – Clearly defined.
✔ Measurable – Quantifiable progress indicators.
✔ Achievable – Realistic given resources.
✔ Relevant – Connected to the organization’s purpose.
✔ Time-Bound – Have clear deadlines.
Global strategic planning
• 4. Develop & Implement Action Plans
• Break down goals into specific initiatives and projects, assigning
responsibilities, timelines, and resources to ensure execution.
• 5. Monitor, Measure, and Adapt
• Success requires ongoing performance tracking. Organizations
should:
• Use Key Performance Indicators (KPIs) to track progress.
• Adjust strategies based on data and evolving priorities.
Going Global and Implementing
Strategies
• Expansion into foreign markets can be achieved through:
• Exporting
• Licensing
• Franchising
• Joint Venture
• Mergers & Acquisitions
• Direct Investment, etc.
Strategic techniques used
• SWOT Analysis
• PESTEL Analysis
• BCG Matrix
• GE nine-cell matrix
• Porter’s Five Forces Model
• Value Chain Analysis
• Balanced Score card
SWOT & PESTEL ANALYSIS
• SWOT Analysis: This widely used tool helps assess an organization's
Strengths, Weaknesses, Opportunities, and Threats. It provides a
structured way to evaluate internal capabilities and external factors
that can impact success.
• PESTEL Analysis: This tool examines the external macro-environment
by considering Political, Economic, Sociocultural, Technological,
Environmental, and Legal factors. It helps identify potential
opportunities and threats arising from these external forces.
BCG Matrix or Product Portfolio
 BCG Matrix or Product Portfolio
• This model was proposed by Boston Consulting Group.
• Two factors involved:
• Relative market share
• Market Growth Rate
BCG matrix model involves four scenario:
• Star
• Cash Cow
• Dogs
• Question Mark: also called problem children
 GE Nine Cell Model
• It is also called McKinsey Matrix or General Electric’s 9 Cell
Model.
• This is a Strategic management tool similar to the BCG
matrix.
• Two factors involved in nine cell GE model:
• Industry attractiveness
• Business Strength
• Three Segments in 9 cell matrix model
• Invest (Expand, Grow)
• Select (Earn, Hold)
• Harvest (Divest)
Michael Porter’s Five forces model
Value chain analysis & Balanced
Scorecard
• Value Chain Analysis: This technique examines the activities that a
company performs to deliver a valuable product or service. It helps
identify areas where the company can create more value and
potentially gain a competitive advantage.
• Balanced Scorecard: This framework evaluates performance across
four perspectives: financial, customer, internal processes, and
learning and growth. It provides a holistic view of organizational
performance and helps align activities with strategic goals.
Strategic Implementation
• Strategic implementation is a dynamic, iterative and complex process.
• Strategic implementation is a process of turning plans into action
using a specified strategy.
• Process of strategic implementation:
• Building an organization with capability to put strategies into action
• Supplying resources, to strategy-essential activities
• Developing policies which encourage strategy
• Policies and programs are employed
• Combining reward structure
• Using strategic leadership
Strategic implementation
• Structural implementation
• Functional implementation
• Behavioural implementation
Structural Implementation
• To implement its strategy successfully a firm must have an appropriate
organizational structure.
• An organizational structure is a set of formal tasks and reporting relationships
which provide a framework for control and coordination within the organization.
• Organizational structure is a tool that managers use to harness resources for
getting things done.
• An organizational structure fulfils two fundamental and opposing requirements:
• Division of labour into various tasks
• Coordination of these tasks to accomplish effective control of an organization.
However, as an organization grows and becomes more complex, it needs
appropriate changes in its design
Functional implementation
• Functional Strategies help in implementation of grand strategy by
organizing and activating specific subunits of the company to pursue the
business strategy in daily activities
• Restricted plans designed to meet objectives in a specific functional area
• Allocation of resources among different operations within that
functional area
• Coordination among different functional areas for optimal contribution
and achievement of business and corporate level objectives
• A very important task of strategy implementation is to align or fit the
activities and capabilities of an organization with its strategies.
Functional level strategies
• Marketing plans and policies
• Financial plans and policies
• Operational plans and policies
• HRM plans and policies
• Information management plans and policies
Behavioral implementation
• It involves ensuring that the new strategies and changes are
effectively executed and that employees adopt the desired behaviors
and attitudes to support the change
• It focuses on changing the mindset, values and behaviors of
employees to align with new strategic goals and objectives
• Increases the likelihood of successfully implementing new strategies
and changes
• Creates a culture of continuous improvement and innovation that
drives long-term success
Key steps in behavioral
implementation
• Communication
• Training & Development
• Incentives and rewards
• Performance management
• Leadership support
• Managing change
• Managing conflict
Intercultural Communications
• Intercultural communication in international business refers to the
process of exchanging information, ideas, and meaning across
different cultures in a global business context.
• It involves understanding and navigating the diverse perspectives,
values, and communication styles of individuals from various cultural
backgrounds to build effective relationships and achieve business
objectives.
• Effective intercultural communication is crucial for success in today's
globalized business environment.
Intercultural Communications
Key aspects of intercultural
communication
• Understanding cultural differences:
• Recognizing that different cultures have varying communication patterns,
customs, and social norms is fundamental.
• Verbal and nonverbal communication:
• Awareness of both verbal language and nonverbal cues (body language,
gestures, etc.) is essential, as these can vary significantly across cultures.
• Building relationships:
• Intercultural communication emphasizes building trust and rapport with
individuals from diverse backgrounds, which is crucial for successful
business partnerships
Key aspects of intercultural
communication
• Negotiation and conflict resolution:
• Effective communication skills are vital for navigating negotiations, resolving
conflicts, and finding mutually agreeable solutions in international business
settings.
• Adapting communication styles:
• Being flexible and adaptable in communication approaches to suit the
specific cultural context is important for effective interaction.
• Cultural competence:
• Developing cultural competence involves understanding and respecting
cultural differences, which enables individuals to interact effectively and
appropriately with people from diverse backgrounds
Importance of intercultural
communication
• Facilitates smooth business operations: Effective communication ensures clear
understanding, reduces misunderstandings, and promotes efficient collaboration
among international teams.
• Enhances business relationships: Building strong relationships with international
clients, partners, and stakeholders is crucial for long-term business success.
• Improves decision-making: Diverse perspectives and insights gained through
intercultural communication can lead to better-informed decisions and more
effective strategies.
• Promotes innovation and creativity: Exposure to different cultural viewpoints can
foster innovation and creativity by encouraging new ideas and approaches.
• Avoids misunderstandings and conflict: By fostering awareness and respect for
cultural differences, intercultural communication helps minimize misunderstandings
and potential conflicts.
Examples of intercultural
communication
• Scenario 1: Cross-Cultural Client Interaction: A sales representative from a U.S.-based company
was preparing for a meeting with a potential client from Japan. Understanding the importance of
cultural norms, the representative researched Japanese etiquette, learning that exchanging
business cards with both hands and a slight bow shows respect. This attention to cultural details
impressed the client and led to a successful business deal.
• Scenario 2: Multicultural Team Meetings: In a marketing department with employees from
various cultural backgrounds, meetings were initially dominated by more outspoken team
members. The team leader introduced a “round-robin” format, where each member had an equal
opportunity to speak. This approach ensured that quieter team members from cultures that value
modesty and deference had their voices heard, resulting in more diverse and innovative ideas.
• Scenario 3: Navigating Language Barriers: In a global customer support center, employees often
communicated with customers who spoke different languages. The company implemented
language training programs and provided translation tools to help employees better understand
and respond to customer inquiries. This investment in intercultural communication skills led to
higher customer satisfaction and loyalty.
Things to be avoided in IC
• Abusing the traditions.
• Slangs, idioms, and other regional sayings.
• Insensitivity and unempathetic to other cultures and habits.
• Not giving due consideration for language barriers.
Intercultural Human Resources
Management in Global Context
• Intercultural Human Resources Management (IHRM) in a global
context involves adapting HR practices to effectively manage
employees across diverse cultural backgrounds.
• It focuses on understanding and navigating cultural differences to
ensure fair, efficient, and inclusive human resource practices globally.
• This includes adapting recruitment, training, performance
management, and compensation strategies to align with local norms
and regulations while maintaining consistency with the organization's
overall goals
Key aspects of IHRM in a global
context
• Cultural Sensitivity: Recognizing and respecting cultural nuances in
communication, work styles, and ethical considerations is crucial for
effective collaboration and productivity.
• Adaptable HR Policies: Developing flexible HR policies that can be
adjusted to different cultural contexts while maintaining fairness and
consistency.
• Global Talent Acquisition and Management: Identifying and
attracting diverse talent from around the world, and managing their
careers effectively within a global framework
Key aspects
• Cross-Cultural Training: Providing training programs that equip
employees with the knowledge and skills to work effectively in diverse
cultural environments.
• Expatriate Management: Supporting employees who are assigned to
work in foreign countries, including pre-departure training, relocation
assistance, and repatriation support.
• Compliance and Legal Frameworks: Ensuring compliance with local
labor laws and regulations in each country of operation, while also
adhering to global standards
Key aspects
• Performance Management: Implementing performance appraisal
systems that are fair, transparent, and culturally appropriate.
• Communication Strategies: Developing effective communication
strategies that bridge language barriers and cultural differences.
• Building Inclusive Workplaces: Creating a work environment that
values diversity and inclusion, where all employees feel respected and
supported.
• Examples of intercultural challenges: Different communication styles,
Varied attitudes towards authority, Differing approaches to teamwork