Many companies today face the challenge of global expansion while trying to maintain organizational effectiveness. There are several reasons why companies would want to expand their operations into other countries. If a company has achieved market saturation with its existing customer base, it may want to expand globally to reach a new group of customers. In order for the firm to be considered organizationally effective, it must maintain control over its new global environment (Jones, 2013, p. 16). A company may also want to take advantage of lower production costs, new skills and capabilities or scarce resources that can be found in other countries. These new ways of doing business lead to innovation, the second component of organizational effectiveness (Jones, 2013, p. 16). Finally, a company may want to expand globally in order to enhance their own core competences such as research and development or more efficient production methods. Efficiency is the third element reviewed when companies evaluate their overall effectiveness (Jones, 2013, p. 16). In order to meet these three effectiveness goals, the company must first consider its strategy, design and structure to ensure that these elements are compatible with the countries into which they want to expand.
The first question is what type of strategy will work best for the company’s global expansion. The strategy chosen will depend heavily on the local culture of the country and on what type of product or service the company is providing. It should be noted that a company may not use the same strategy in each country in which it does business. According to Gucharan Das, former chairman of Procter & Gamble in India (2006), “Globalization does not mean imposing homog...
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...vital questions that companies must answer when expanding into the global marketplace. If any of these elements are missing, the company cannot properly service its customer base. Ultimately, increasing sales and effectively controlling costs will allow the company to succeed. As the company expands globally, its management must review the firm’s core competences and decide what type of strategy, design and structure will allow them to be the most effective while staying ahead of their competition.
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General Motors is knocking on the door to world class business performance. Ohmae’s five stages of global operation support General Motors aspirations. From stage one to stage five there are significant differences to becoming a global organization. For instance, stage one, states that a company supports arm’s length customer export activity by a domestic company that links up with local and distributors to function. This stage represents the entry level global corporation. General Motors is at stage 4 of Ohmae’s five stages of becoming a global corporation, because it has exemplified the following traits: Systems and tools used globally not just at headquarters, R&D, Engineering and other business operations have a global focus, and all support functions are applied globally. (MFGO 601, WK. #2 Lecture Notes) An example of Ohmae’s, stage ...
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