This presentation was presented at the Student Scientific Conference 2003 at PUCCU by Svetlana Korobko and Maxim Litvyak and it took the 2nd place. To see the full report and literature used click here (Full Report)
To see the Ukrainian variant click here (Ukrainian)

How Globalization Affects Management
Management and Globalization

If you think you are isolated form global influence, think again. We am sure that globalization has touched everybody and each in the world.

You wake up in the morning, clean your teeth with American Colgate toothpaste, put on a pair of Calvin Klein jeans, take Swiss Rolex watch, turn on your Panasonic TV-set, watch news on what's going on in Australia, while watching TV you are making yoursefl Maxwell House coffee in Moulinex coffeemaker. Then you take Sweden Volvo bus to your place of work, there you turn on you IBM computer and through the Internet you can find out about the weather in Spain, timetable of United Airlines and visit Louvre via net. So in everyday life you experience the influence of globalization. Globalization as well has a great affect on today's management.

No successful organization can operate witout understanding the dynamic environment that surrounds it. A history has shown that organizations that are stagnant and bound by tradition and fading away from the limelight. Why? Because one of the biggest problems in managing an organization today is failing to adapt to the changing world.

Let's look at what was valued in business some time ago and what's important to be successful today. A generation ago successful managers valued stability and predictability. And what common factors characterize the stars of the 2000s? They are fast and flexible. They are dedicated to quality, organize their work around teams and create ethical work environment.

Part of the rapidly changing world that managers face is the globalization of business. To be effective in this boundaryless surrounding, managers need to adapt to cultures, systems and techniques that are different from their own because the world is becoming a global village. This global village is characterized by absence of national borders. BMW, a German owned firm builds cars in South Carolina. Similarly, McDonald's sells hamburgers in China. Toyota makes cars in Kentucky. Technology changes in the way the information is created and shared have made it even more accessible. Population is characterized by cultural diversity. Contemporary international organizations are seeking for leaders at all levels of an organization. Business Challenges

Today's world offers new challenges for managers. One specific challenge is managing in countries with different national cultures. Managers should recognize the differences and percept "foreigners". That is why managers of international business need to have that global vision that helps them to predict problems and difficulties. Global managers must be comfortable anywherel in the world and have global brains. It is sort of willingness to learn from other cultures and learn from people's perspectives.

International businesses have been with us for a long time. For instance, Siemens and Remington were selling their products in many countries in the nineteenth century. By the 1920s some companies including Ford and Fiat had gone multinational. But only in the mid-1960s multinational corporations became commonpalce. These corporations maitain significant operations in two or more countries simultaniously but are based in one home country. Today, companies such as Gillette, Mobil Oil and Coca-Cola are among a growing number of U.S.-based firms that earn more than 60% of their revenues from foreign operations.

The expanding global environment has extended the reach and goals of MNCs to create an even-more-generic global organization called the transnational corporation. This type of organization does not manage foreign operations from home. Instead, decisions in TNCs are made at the local level. Nestle, for example, is a transnational corporation. It has operations in almost every country of the globe.

Many large, well-known companies are moving to more effectively globalize their management structure by breaking down internal arrangements that impose artificial geographic barriers. This type of organization is called bordeless organization. For instance, IBM dropped its organizational structure based on country and reorganized into 14 industry groups. Ford merged its culturally distinct European and North American auto operations and plans to add a Latin America and an Asia-Pacific divison in the future.

Do We Benefit?
Let's sum up the main positions of our presentation. We have compared old and new economies, how the dynamic environment influences managers, what contemporary organizations look like and what factors they should focus on to stay competitive.
In conclusion we would like to say that each of you will have his or her own opinion on whether globalization is a negative or positive phenomenon. We have to remember that it's not a passing trend, but a reality. We must not consider it as something to demonize or worship. But as managers we have to see it as something to mold, shape and manage for the betterment of everyone.

This presentation was presented at the Student Scientific Conference 2003 at PUCCU by Svetlana Korobko and Maxim Litvyak and it took the 2nd place. To see the full report and literature used click here (Full Report)
To see the Ukrainian variant click here (Ukrainian)
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