Today's organizational environment is proving to be markedly different from that of the past. As pointed out in all studies, global competition, information technology, the quality service revolution, and diversity and ethics are forcing management of all types of organization to totally rethink their approach to both operation and human resources. Because of this paradigm shift, new organizations are emerging that are more responsive to both their internal and external environments (Luthans, 1995).
For managers at Levi Strauss, General Motors and other organizations, the challenges of continued personal and professional development will have to be met in increasingly dynamic circumstances. The business world at large is embarking on an exciting and unpredictable path toward the future - a path along which both opportunities and risk will be plentiful. Among the many forces of managerial significance, workforce diversity and a changing environment - social, political, economic, and technological - have been especially important. (Schermerhorn, 1993)
New century and new paradigm of business world
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In business world each decade seems to bring a new way of thinking about the business environment (a paradigm) and new ways of acting (corporate strategies) (Belohlav, 1996):
According to the Growth Share Matrix, products and businesses could be classified in one of several ways:
Stars -leaders in rapidly growing markets.
Cash cows- leaders in slowing or maturing markets.
Question marks- minor players in growth markets.
Dogs - minor players in slow growth markets.
During decade of 1980s Porter presented new rules of competition in two works, competitive strategy (1980) and competitive advantage (1985). Porter's approach begins with an analysis of an organization's competitive environment. The relevant forces are the threats of new entrants, bargaining power of suppliers, bargaining power of buyers; threats of substitute products or services and rivalry or jockeying for position among industry firm. Porter's believes these forces govern the state of industry competition, which must be properly addressed if organizational decision-makers are to formulate effective strategy.
Strategies are chosen to give the organization a strategic advantage relative to its competitors. Porter identifies three generic strategies organizations may pursue to gain this strategic advantage.
Overall cost leadership: Corporate decision making concentrated on developing functional policies that could exploit plant scale, the experience curve, overhead and labor costs, and other cost - related factors.
Differentiation: The products and services of a company were viewed across the industry as distinctive. Differentiation could come from a variety of sources: brand image product development, customer loyalty, distribution networks and so forth.
Focus: The two preceding strategies developed low-cost or differentiation advantages across an industry. In contrast, the focus strategy revolved around serving around serving specific segments more effectively than competitors. It tried to take advantage of competition that was over performing or underperforming within market segments.
According to Porter, successfully executing each generic strategy involves different resources, strengths, organizational arrangement and managerial style. Rarely is a firm suited for all three.
Within the current business setting however the new, evolving rules of business competition now emphasize (Belohlav, 1996):
Value: Tough companies are often viewed in terms of the products of and services they sell, those products and services are really only purchased for the value they provide. Successful firms know both how and why their products and services are being used.
Continuous renewal: Improvement of products and services, business operations, and even organizational processes has become the basis for continually creating greater value for the customer while also increasing company productivity.
Core competence: In successful companies, core competence can cut across functions and division, allowing a business enterprise to compete-perhaps in vastly different competitive arenas - based on its distinct skills.
Time: Using customer value as a focal point for action companies now increasingly stress
swift response to customer demands. Through continuous innovation and decreasing cycle
times, they are rapidly bringing new products and services to the marketplace. However,
companies will also use time creatively because under some conditions simply
compressing time is not necessarily an advantage - and in fact may increase or create
Building network. Internal networks are being formed to create new products, such as Motorola using distinctive skills from five of its seven business sectors to create a two way data transmission terminal for IBM field personnel. Companies are also creating value by forming external networks with customers and suppliers and uncommon business sense now also has companies collaborating with their competitors as a means to enhance performance. In today's business environment, collaboration better exploits time, creates process improvements, and magnifies the existing competence of the organization in creating value.
Always on Time
Marked to Standard
Portfolio views of strategy reigned during the 1970s. Generic strategies took over in the 1980s. Quality management replaced generic strategies in the 1990s. All of the different strategic perspectives have led to successful results. However, all views have also been modified to more effectively create competitive advantages.
The four surviving strategies followed by the companies are
For local companies, however, the influx often appears to be death sentence. Used to dominant position in protected markets, they suddenly face foreign rivals wielding a daunting array of advantages: substantial financial resources, advanced technology, superior products, powerful brands, and seasoned marketing and management skills. Often, the very survival of
local companies in emerging markets in stake. (Dawer & Frost, 1999). According to Dawer and Frost's study successful companies have adopted in their battles with powerful multinational competitors. Vist in Russia and Shangahi Jahwa in China, for example, have managed to successfully defend their home turfs against such multinationals as Compaq and Unilever. Others, including Jollibee Foods in the Philippines and Cemex in Mexico, have built on strength at home and launched international expansion strategies of their own strategic options.
For defender the key success is to concentrate on the advantages they enjoy in their home market. In the face of aggressive and well endowed foreign competitors, they frequently need to fine tune their products and services to the particular and often unique needs of their customers. Defenders need to resist the temptation to try to reach all customers or imitate the multinationals. They'll do better by focusing on consumers who appreciate the local touch and ignore those who favor global brand. (Mezuláník, 1999).
In some cases, companies in local industries can go beyond defending their existing markets. With right transferable assets, these extenders can use their success at home as a platform for expansion elsewhere. A selective policy of international expansion carefully tied to the company's key assets, can reap added revenue and scale economies, not to mention valuable learning experiences. Extenders can leverage their assets most effectively by seeking analogous markets - those similar to their home base in terms of consumer's preferences, geographic proximity, distribution channels, or government regulations. Expatriate communities, to take simple case, are likely to receptive to products developed at home.
In industries where pressures to globalize are strong, managers will not be able to simply build on their company's local asset - they'll have to rethink their business model. If their assets are valuable only in their home country, then the best course may be enter into a joint venture with, or sell out entirely to, multinational.
Dodging may be the most difficult of the four strategies to execute because it requires a company to revamp major aspects of its strategy - and to so before it's swept under by the tide of foreign competition. But by focusing on carefully selected niches, a dodger can use its
local assets to establish a viable position.
Despite the many advantages of their multinational rivals, companies from emerging markets should not always rule out a strategy of selling at the global level. If their assets are transferable, they may be able to full - fledged multinationals themselves. The number of these contenders is steadily increasing, and a few such as Acer of Taiwan and Samsung of Korea, have become household names. The reasons for their success are similar to those of any thriving company that competes in a global industry. However, contenders often have to take into consideration a different set of opportunities and constraints.
Liberalization is now making the structure of many industries much more fluid, and managers exposed to new kinds of competitors need to realize that they can respond by positioning their companies in a variety of ways.
By better understanding the relationship between their company's assets and the particular characteristics of their industry, managers can also anticipate how their strategies may evolve over time. As more and more companies learn to compete in global markets, we are bound to see a growing number of aggressive contenders.
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But few are likely to make the jump soon, in part because globalization pressures in many industries will continue to be weak. We suspect that many of the most successful companies will remain focused on their local markets, strengthening their main sources of competitive advantage. Others will build on a successful defense of their home base and for opportunities abroad, but they may never make the final step up to global competition.
Managers will need to revisit their assumption and conclusion as the capabilities of their companies to develop.
Not only will managers find their strategies likely to evolve over time, but the nature of their industry may change as well. A Company in a predominantly local business may prosper because of its superior service and distribution. But a competitor may make a move that changes the industry fundamentally, giving advantages to global players.
In many emerging markets around the world today, we've found a fundamental dynamic. Multinationals are seeking to exploit global scale economies while local enterprises are trying to fragment the market and serve the needs of distinct niches. The former brings an array of powerful resources that can intimidate even the most self -assured local managers.
"The nineties will be a decade in a hurry, a nanosecond culture", said Northern Telecom's David Vice. "There'll be only two kinds of managers - the quick and the dead". So what have we done for getting success in harsh business world? Let hears Peters advise to Peters we've built a model. A rational model of tomorrow's (today's) business organization (Peters, 1994):
Its cornerstone is coldly logical, the market - driven case for craziness: Crazy times call for crazy organization. The design concept for model, the idea that would influence its eventual shape, was the inexorable fact that most / all value in a business, regardless of its size or industry, is generated by the energy from two sources - the intellect and the imagination. Next, we deconstructed the old corporation and turned, as the new engine of progress, to the immoderately independent, modest - size sub-unit. Why? Simple. How else are you going to bring that intellect and imagination to bear whenever an unexpected opportunity pops up.
Most of company can participate in global arena on variety of levels, and the process of globalization typically through different stage now there is not any doubt that we live in global stage of business world.
This development transcends any single home country. These corporations operate in true global fashion, making sales and acquiring resources in whatever country offers the best opportunities and lowest cost. Particularly at this stage, ownership, control, and top management tend to be dispersed among several nationalities.
The world of global business is changing rapidly. One of the primary reasons is that increased foreign investment and trade are bringing managers from one country into ongoing contact with those in other countries. Over the past three decades, industrialized countries have made major investments throughout the world. Much of this money has been placed in other developed nations. For example, U.S. companies have invested approximately 400 billion dollars, of which 60 percent in Canada, the EU or Japan. Similarly, foreign investment in the U.S. now stands at about 410 billion of which 84 percent comes from Canada the EU, and Japan. At the same time, newly industrialized nations and less developed countries are becoming focal points for investment by economically advanced nation, and many of them, in turn are investing in industrialized countries. Simply stated, all nations are becoming more
financially interdependent. For example, it is very common for, say, a Japanese investor to buy shares in a Canadian company on the Hong Kong stock exchange.
Banks are our largest and most diversified intermediaries. Commercial banks hold a special place in our financial system because of the key roles they play in the world economics payment system, their large business financing role and their global activities. Generally the financial performance of commercial bank in the world over the last decade has been very poor. Commercial bank profit has been very low.
Recently banking has become a global industry, and it is important to consider the world financial system in its global context. International banks play an important role in the foreign - exchange market. Banks help transfer-purchasing power from buyers to sellers and from lenders to borrowers. They also provide credit to importers, and reduce the risks associated with exchange rates. World financial system is currently going through a period of great change. Worldwide, the banking industry is also experiencing changes resulting from deregulation, mergers, and increasing competition for global business (Boone & Kurtz, 1993)
Some of worldwide giants resulted from mergers. And some of the apparent growth in foreign banks is misleading because it reflects conversions of foreign bank assets into U.S. dollars for comparison. The depreciation of the U.S. dollar relative to some other currencies, such as the Japanese yen and British pound, raised the dollar value of foreign banks' assets For global operation there are some Turk ones, some Mexican ones, some Greek ones, some Japanese ones. But one certain factor is quality.