Global Issues in Strategic Management

1. Global Issues in Strategic Management Determinants of Org. Performance Global Issues Prof. Dr Majed El-Farra 2009

2. The key drivers to globalization Global market Convergence Drivers: Similar customer needs, Global customers, Transferable marketing Trade policies, Technical Standards, host government, policies Scale economies, Sourcing efficiencies Countries costs, High product development costs Government Influence Global Strategies Cost Advantages Interdependence, Competitors global High exports/imports, Global Competition Global Issues Prof. Dr Majed El-Farra 2009

3. Advantages & Disadvantages of International Operations • Advantages: • Foreign operations can absorb excess production capacity, the benefits: • Allows firms to establish low-cost production facilities. • May be less competition • Reduce tariffs • Enables firms to learn technology and other cultures Global Issues Prof. Dr Majed El-Farra 2009

4. Advantages & Disadvantages of International Operations • Disadvantages: • Firms confront with different cultures, sometime they cannot understand the rules of game. • Dealing with different monetary systems can complicate international bus. Global Issues Prof. Dr Majed El-Farra 2009

5. Global challenge • How to gain and maintain exports to other international markets. • How to defend domestic markets against imported goods. Global Issues Prof. Dr Majed El-Farra 2009

6. Guidelines for Success as a Global Competitor Robert Allio mentioned guidelines for customer loyalty and market share: 1. Get to know global markets first. 2. Counterattack at home for parent firms (attack them at their homes). 3. Invest in new technology. 4. Consider alternative sources, e.g., establish in low labor cost. Global Issues Prof. Dr Majed El-Farra 2009

7. Guidelines for Success as a Global Competitor (continue) 5. Install the right management at host countries. 6. Sacrifice short-term profit for long-term profit. 7. Join forces with competitors. Global Issues Prof. Dr Majed El-Farra 2009

8. Others advice for going global • Focus on the most important 3 world markets. • Develop new international products. • Glocalize: Think global & act local. • Train people to think internationally. • Open senior ranks to foreign employees. Global Issues Prof. Dr Majed El-Farra 2009

9. The reality of 21st Century • The 20th century was the century of great manufacturing corporation, • The 21 st century will be the time of knowledge businesses. Global Issues Prof. Dr Majed El-Farra 2009

10. Global Driving forces of Change in Org. at 21st Century • Demographic –An aging and Diverse Society: Workers will have longer work lives, and young workers have different expectations. • Globalization of labor: It is expected that 50+% of employees in transnational companies will be from developing countries: requires what to know on management level? Global Issues Prof. Dr Majed El-Farra 2009

11. Global Driving forces of Change in Org. at 21st Century 3. The rise of new consumer: Highly educated, high level of income and familiar of information and communication technology: He will be loyal to value rather than brands. 4. Torrid/extreme Technological Growth: Technology will continue to be a major driver of org. change and transformation. Global Issues Prof. Dr Majed El-Farra 2009

12. Global Driving forces of Change in Org. at 21st Century 5. The Global Separate centers of innovation: International networks. (provides, ideas, capital, people, info.) 6. The new-knowledge-based economy, will be driven by rapid innovation in technology, process. Global Issues Prof. Dr Majed El-Farra 2009