Globalization Corporate Structuring

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Globalization

‘Globalization’ is the process of corporate structuring that focuses a company’s core competency on a single worldwide market, creating growth and profit opportunities […] It affects employees, customers, and suppliers. The fundamental precepts of the vision are free flow of commerce, labor and capital, and belief in the ability of an individual to significantly and favorably impac(The Quadral Group of worldwide business advisors, 1996, p. 1)

India and China are two of the world’s most ancient surviving civilizations. The Chinese built the 4000-mile Great Wall some 2000 years ago, about the time of the birth of Jesus Christ. As an awesome marvel of engineering, most of the wall still stands intact, the only man-made object visible from the outer space. They invented bureaucracy even earlier, thousands of years before Max Weber brought it eloquently to the attention of the western world (Gerth and Mills, 1958). There is not a single country anywhere that bureaucracies do not govern, manage or mismanage, corrupt and plunder, redeem or reform. The Terracotta Army built by Emperor Qin in the 3 rd century BC is in almost perfect state of preservation to this day. Some of the greatest inventions that we live by even today came from China, including the gun powder – the most infamous of them all, the paper, paper money, printing, viaducts, dams, clocks, the compass, astronomical observatories, and countless other inventions (Needham, 1954).

Taxation policy

Issues surrounding the impact of local taxation are a key concern of a wide range of economic literatures. We can identify three questions that emerge from this literature.First, all else equal, how elastic are location decisions with respect to tax differences across jurisdictions? This question has been the particular focus of the ‘race to the bottom’ literature where competition between jurisdictions for a mobile tax base, leads to mobile factors paying a sub-optimally small tax burden (Gordon, 1983; Zodrow and Mieszkowski, 1986; Wilson, 1986; Wildasin, 1988). More recent theoretical contributions have suggested that allowing for agglomeration may prevent this race to the bottom (Baldwin, Forslid, Martin,

Ottaviano, and Robert-Nicoud, 2004).

government policies

Foreign trade regulations

Social welfare policies

Economic factors

home economy situation

home economy trends

overseas economies and trends

Historical impact of multinationals than about the causes and determinants of multinational growth. There are serious problems faced by researchers on this topic, including great uncertainties about the distribution of FDI before the 1960s, the large number of host economics, and the methodological problems in assessing impact. A full consideration of the impact of foreign firms on a host economy requires business historians to move beyond the archives of those firms into a greater engagement with the economic and other features of that country.( Jones, Geoffrey,2003).

general taxation issues

taxation specific to product/services

seasonality/weather issues

market and trade cycles

specific industry factors

market routes and distribution trends

customer/end-user drivers

interest and exchange rates

The external discipline on government economic policy. A system of fixed exchange rate provides the stability of exchange rate, but it has some disadvantages: 1 The stability of exchange rate may be too rigid to take care of major upheavals such as wars, revolutions, and widespread disasters. 2 Central banks need to maintain large international reserves to defend a fixed exchange rate

international trade/monetary issues

Social factors –

lifestyle trends

demographics

Societal development and sociodemographic changes have always had an impact on mobility and migration. This is not likely to be different in the twenty-first century (Rojek, 1997; Opaschowski, 2001).

consumer attitudes and opinions

media views

law changes affecting social factors

brand, company, technology image

consumer buying patterns

fashion and role models

major events and influences

buying access and trends

ethnic/religious factors

advertising and publicity

ethical issues

Technological factors relate to new developments in technology

Competing technology development

The Internet makes it possible for small businesses throughout the world to compete for market share on an even footing with market leaders (Willmott and Graham, 2001). This is particularly advantageous in the tourism industry where overwhelmingly, small firms dominate industry numbers. Tourism and hospitality firms must meet the challenges and opportunities offered by technological advances if they are to achieve and maintain a competitive advantage.

Research funding

associated/dependent technologies

replacement technology/solutions

maturity of technology

manufacturing maturity and capacity

information and communications

consumer buying mechanisms/technology

technology legislation

innovation potential

technology access, licencing, patents

intellectual property issues

global communications

The Global Economy and Globalisation

The networked global economy will be driven by rapid and largely unrestricted flows of information, ideas, cultural values, capital, goods and services, and people (i.e.Globalisation). Dynamism will be strongest among so-called emerging markets—especially in the two Asian giants, China and India—but will be broadly based worldwide (NIC, 2000). Economic rowth is the main determinant of tourism flows. The projected dynamic world economy will provide the basis for increased outboundm and domestic tourism. Tourism is now seen as an ffordable commodity to be enjoyed by all who choose to engage in a variety of leisure pursuits. The prospects for continued economic growth underpin the World Tourism Organization (WTO) 2020 forecasts of sustained tourism growth in South America and the Asia Pacific in excess of the world average (World Tourism Organization, 1999).

Strength and weaknesses of Bureaucratic Organisations

What is Bureaucratic?

Bureaucratic administration means fundamentally the exercise of control on the basis of knowledge (Weber, 1947). For the sociologist, power is principally exemplified within organizations by the process of control. Max Weber distinguished between authority and power by defining the latter as any relationship within which one person could impose his will, regardless of any resistance from the other, whereas authority existed when there was a belief in the legitimacy of that power. Weber classified organizations according to the nature of that legitimacy:

 

Strength of Bureaucratic Organisations

1. The most important strength is that decisions result from a thorough "mixing" of the intelligence found throughout the organization. For that reason one would expect the decisions to be better, especially in the long tun.

2. The second major advantage is more commonly cited: Interactive structures create a framework for greater responsiveness to environmental changes. Because those closest to the work or the customer have the tools to make decisions about change, they do not need to refer things "up the line" and wail for decisions

3. Closely related to these points is the probability that an interactive structure is better for the creation of evolutionarily new forms.

4. It is worth citing again a negative criterion: The superiority of interactive structures does not lie in increased satisfaction and commitment by employees. Bureaucratic structures, as indeed tribal or patriarchal or most others, are perfectly capable of achieving these.

Weaknesses of Bureaucratic Organisations

The main problem lies in the mass of offices and function created ,and their interaction and relationships. At worst, this lead to proliferation of the papers, systems and procedures that govern every aspect of work and which is turn require and supervision.(max weber 1864-1920)

Cost

It is often believed that non-bureaucratic systems arc more costly, for two reasons: There is no clear and organized locus for cost control

Slowness

It would certainly appear that the development of consensus is slow compared to the potential for swift and decisive action by a bureaucratic leader

Mediocrity

We have all had the experience that consensus processes tend to wear down bold ideas and to pull everyone toward safe and noncontroversial positions

Faction

This is a variant of the previous argument—a concern that without a stable hierarchy of offices "interest-groups" will take over and make coherent action impossible.

3. Alternative forms of organizational development

For some time now the notion of the network-form of organization has been associated withfar reaching changes in contemporary economy and society ( Castells 1996, 2000, Fukuyama 1997, Malone & Laubacher 1998, Dahlbom 2000). Increasingly, networks are supposed to challenge central principles of the organizational order of modernity, notably the boundary-maintaining practices of modern organizations and the institutional principles or conventions sustaining such practices, i.e. the standard labour contract, rule following and hierarchical stratification. The popularity the term has recently obtained owes undeniably very much to Castells’ work “The Rise of the Network Society” (Castells 1996). Its portance notwithstanding, this book obtained a striking popularity thanks to its timely arrival. Soon it became the springboard of the idea claiming the network-form of organization to be a basic organizational form of the emerging informational mode of production that pushes increasingly aside one of the central economic institutions of the industrial age

Kaizen

One translation of the term Kaizen from Japanese is "to take apart and put back together in a better way". One will immediate recognize that we have a term that relates to quality, as Kaizen relates directly to improvement. This definition even comes with a recommendation on how to accomplish the improvement. Note that the definition does not have a subject, which means that it can be applied to any matter, such as processes, resources or people.

What is Business process reengineering?

“Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic improvements in critical, contemporary measures of performance such as cost, quality, service and speed[4].” The key words in the preceding definition are the italicized ones. In today’s ever-changing world, the only thing that doesn’t change is ‘change’ itself. In a world increasingly driven by the three Cs: Customer, Competition and Change, companies are on the lookout for new solutions for their business problems. Recently, some of the more successful business corporations in the world seem to have hit upon an incredible solution: Business Process Reengineering (BPR).

Some of the recent headlines in the popular press read, “Wal-Mart reduces restocking time from six weeks to thirty-six hours.”” Hewlett Packard’s assembly time for server computers touches new low- four minutes.”

“Taco Bell’s sales soars from $500 million to $3 billion.” The reason behind these success stories: Business Process Reengineering!

Total Quality Management

TQM is the way of managing for the future, and is far wider in its application than just assuring product or service quality – it is a way of managing people and business processes to ensure complete customer satisfaction at every stage, internally and externally. TQM, combined with effective leadership, results in an organisation doing the right things right, first time.

(Department of Trade and industry UK)

Production versus Communication: The Practice of Networks

There are currently certain less encompassing managerial developments that have a bearing on the organizational patterns associated with networks. Developments of this sort are intimately related to the increasing organizational involvement of ICTs, the growth of the internet and the extensive use of subcontracting and outsourcing as important organizational practices (Malone & Laubacher 1998, Castells 2001).

The Institutional Order of Organizations and Markets

The trends described above are difficult to deny. Yet, they are open to different and often widely divergent interpretations. Despite the significance attributed to networks, there is a remarkable lack of precision in the literature as to what network forms of organization really involve and how they differ from the two basic institutions of the modern economy, namely formal organizations and markets. In its current use, the term ‘network’ encompasses thing from informal groups and virtual communities sharing norms (Fukuyama 1997)

Bibliography

Article : India and China: Conflict, Competition, and/or Cooperation in the Age of Globalization

Aqueil Ahmad
Faculty College of Management & Technology, Walden University Minneapolis, MN. USA

European Financial Systems in the Global Economy
Reszat, Beate.
Publication: Chichester, West Sussex, England, Hoboken, NJ John Wiley & Sons, Ltd. (UK), 2005.
A Globalizing World?: Culture, Economics, Politics
Introduction to the Social Sciences
by Held, David.Publication: London Taylor & Francis, 2004.
Global Corporate Finance: Text and Cases
6Th Ed.
by Kim, Suk H.; Kim, Seung Hee.
Publication: Malden, MA, Oxford Blackwell Publishing Ltd., 2006.
Weber, Max (1947) The Theory of Social and Economic Organization. Translated by A. M. Henderson & Talcott Parsons,The Free Press.

Gordon, Roger. 1983. An optimal taxation approach to fiscal federalism. Quarterly Journal of Economics 98(4):567–586.
Theobald, William F. 2005. Global tourisum, Burlington, MA Elsevier.
Research in Oigamiational Behavior, K, 53-111 Zuckerman, H., & Merton, R. K. (1981). Patterns of evaluation in science Institutionalization,

Castells, M (1996), The Rise of Network Society. Blackwell, Oxford.

Fukuyama, F (1997), The End of Order. Centre for Post-Collectivist Studies, London.

Weber, M (1947), The Theory of Social and Economic Organization. Free Press, London.

Manganelli, Raymond.L., Klein, Mark.M., (1994), The Reengineering Handbook: A Step-by-Step Guide to Business Transformation., American Management Association, New York.
www.dti.gov.uk/quality/tqm

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