Discussion Paper

Businesses that want to succeed in their endeavors and to become profitable must meet a variety of challenges, from technology and R&D to HR and global strategy.

In their work, Bartlett et al state that “today, every firm must meet the challenges of managing strategies, organizations, and operations that are increasingly more complex, diverse, and uncertain than during earlier times. In other words, companies must adjust their administrative heritage to meet the growing complexity of business needs and to make their companies truly competitive. Really, business challenges are more complex today than they used to be a decade ago: globalization, diversity, and technological advancement impose new requirements on businesses, with which they have to comply. However, it is at least wrong to say that companies must confine their strategies to their administrative heritage: rather, the growing diversity of strategies and solutions opens the gateway to using new, more efficient global resources that have been unavailable before.Today, firms must meet challenges that are more complex than they used to be a decade ago: globalization and the growing pace of technological advancement change the conditions of business performance and impose new requirements on businesses.

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It would be fair to say that businesses are not expected to minimize the emerging global complexity but must be able to manage it (Schneider & Barsoux). One of the most difficult challenges is in how companies view their own multinationality and what they can do to use this multinationality as the source of their strategic competitive advantage. The difficulty of the task is in that there are no specific criteria for multinationality and every company would tend to have its own narrow view of how multinational it is (Perlmutter). Some companies will consider themselves multinational simply because they distribute their products in more than 100 countries, while others will be confident that the number of nationalities presented in their headquarters is the definitive element of the company’s belonging to the cluster of multinational firms (Perlmutter). Yet, the truth is in that the success of postmodern businesses is in the extent to which they can adopt the global, or geocentric mindset: the core of business success is not in how many nationalities the company has presented in its headquarters but in how successful the company is in thinking about its business as a global entity.

Perlmutter is correct, and his ideas fully support those of Bartlett et al in that both the headquarters and the subsidiaries must learn to think about their business as a worldwide activity. Needless to say, the image of a worldwide business is much more complex than the conventional vision of international business that was relevant just a decade ago. Today, for a company to adopt a worldwide approach to its business activity, it must learn and use the forces that drive geocentrism in business and understand how to overcome the existing and emerging barriers to globalization. For example, technological know-how, international customers, the growth of global markets and the increasing integration of technologies and telecommunications contribute to the development of the geocentric mindset in business (Perlmutter). Simultaneously, economic and political nationalism, military secrecy and distrust of big companies, the lack of experience in global management and resistance to letting foreigners into companies’ power structure hinder the process of adopting geocentric principles in business and throw companies back to the premature times (Perlmutter).

As a result, and according to Bartlett et al, companies must be able to learn and accept the new geocentric vision of the business reality and to transfer their capabilities and talents to the new geocentric business environments.Bartlett et al write that companies must learn to deal with the new business complexity within the limits of their administrative heritage. This assumption, however, seems incorrect and does not reflect the reality of business activity today. Under the influence of globalization and technological advancement, businesses acquire unique opportunities to expand their administrative heritage and to use the resources and achievements that have been unavailable before. Just take a look at culture and the recent findings regarding the impact of national culture on organizations: like never before, global organizations have a unique chance to learn from these findings and to adjust their policies to the unique national and cultural considerations of various stakeholders.

Schneider and Barsoux provide a brief description of the four emerging cultural profiles, which may help companies address the challenge of diversity and to resolve the emerging organizational conflicts. The growing availability of the cultural knowledge and the increasing openness of the cultural borders make it possible to expand significantly the administrative heritage of each particular firm and to adopt the new principles of cultural performance, which are more compatible with the new global conditions of doing business worldwide.It should be noted, that despite the growing diversity of cultural practices and norms, the transferability of knowledge results in the development of several universal principles which businesses, regardless of their cultural specificity, must accept and use for the sake of their profitability and continuous success. These include the eroding importance of traditional hierarchy and bureaucracy, the shifting emphasis from ‘boss’ to ‘coach’, and the growing role of negotiation and persuasion (Schneider & Barsoux). All these, however, will lose their relevance unless businesses can expand their business worldview and look beyond the limited borders of their administrative heritage.Bartlett et al write that businesses must learn to cope with the growing complexity of business challenges within the limits of their administrative heritage.

While the first part of this assumption reflects the complex reality of the postmodern business environment and requires that businesses adopt a new, geocentric mindset, the vision of the limited administrative heritage seems at least outdated. Globalization and the integration of markets open new administrative frontiers and provide companies with a unique opportunity to learn from other environments and cultures. Companies must use the increasing availability of the cultural knowledge to expand their administrative worldview and to use the new cultural heritage as the source of their competitive advantage.Globalization and the growing integration of international markets change the nature of the international competition in business. Today, everything is different from the way it used to be 10-20 years ago, and for a firm to be competitive, it must “gain competitive parity in terms of efficiency, flexibility, and learning, and it must also achieve differentiation on at least one” (Bartlett et al).

In simpler terms, the company must learn its capabilities, develop and use inimitable resources and talents, and turn them into the source of their competitive advantage. To improve their efficiency and to achieve differentiation on at least one element of business performance, companies must have a clear vision, hire professional human resources, integrate individual thinking into broader clusters of mental and organizational processes, and promote flexibility, to be able to timely adjust their business practices to the new conditions of competitiveness in global markets.A wealth of literature was written about how global markets change, what requirements they impose on businesses, and why businesses must learn to comply with these requirements. However the current state of knowledge about HOW to make businesses more efficient and competitive in conditions of globalization leaves much room for improvement. Bartlett et al writes that companies must be flexible, efficient, and learning and achieve differentiation in at least one of these criteria. Here, Bartlett et al are certainly correct, for the inimitability of talents, resources, and capabilities predetermines the success of business in global markets.

What Bartlett et al does not discuss is how businesses can achieve the desired level of differentiation and what they can do to adjust to the new conditions of global competition. Here, Bartlett and Ghoshal add to the existing knowledge about global competition and provide a comprehensible list of recommendations companies are to follow to become more efficient in global markets.First, companies require developing a clear shared vision: more often than not, managers in large corporations will tend to cling to their limited responsibilities and will exercise a relatively narrow view of their business reality (Bartlett & Ghoshal). Shared corporate vision is the best way to break the chains of the limited administrative and business knowledge. Shared vision is the direct prerequisite for making the goals and objectives of business performance, clear, consistent, comprehensible, and continuous (Bartlett & Ghoshal).

The development and implementation of the shared vision must be followed by effective development of human resources. It should be noted, that postmodern companies often apply to human resources as the source of their uniqueness and competitive advantage – today, the fight for talents is no longer a surprise and the number of talents a company was able to attract usually predetermines its chances to outperform its competitors. If Bartlett et al speak about achieving differentiation in at least one business areas, human resources, for sure, will become one of the primary differentiation targets: because human resources are scarce, unique, and virtually impossible to imitate, they can readily improve the competitiveness of any product or any company. This is possible only if companies do have a clear idea of how to recruit and select, train and develop their personnel (Bartlett & Ghoshal). Yet, that modern companies shift their resource-based views away from traditional tangible resources to human talents reflects the strategic changes that are currently taking place in global business.

It should be noted, that when Bartlett et al refer to the need for the modern companies to become flexible, efficient, and learning, they imply that the present day conditions of competition are dramatically different from the state of competition a decade ago. However, it is at least incorrect to say that the state of business competition today and ten years ago are the two absolutely different phenomena. Obviously, some principles and norms of competition display remarkable continuity and do not change over time. This is exactly the case of location: despite the growing intensiveness of globalization and market integration, location, like many years ago, continues to play one of the dominant roles in every business’s success. The role and significance of location in business remains relatively stable, but globalization opens geographical borders and lets businesses and entrepreneurs access and use locations that had been unavailable before.

As a result, the meaning of location in business success slightly changes: globalization results in the formation of the so-called business clusters, and businesses that seek to achieve differentiation in at least one business dimensions can readily apply to these clusters.Porter writes that “clusters are geographic concentrations of interconnected companies and institutions in a particular field”. Clusters are organized around linked industries and related entities that are critical for their successful performance. The California wine cluster and the Italian leather fashion cluster are the two good examples of how business clusters fit into the postmodern business reality (Porter). However, this is where the ideas presented by Bartlett et al acquire the new meaning: it appears that not always significant differentiation in one business dimension can suffice to make the company truly competitive. Clusters alone cannot guarantee that companies working in them will achieve their business objectives.

Rather, the choice of the particular location must be effectively supplemented by shared vision, effective human resources, and efficient leadership. The more differentiation the company can achieve in this areas the more likely it will be to preserve and expand its business niche in the global markets.Bartlett et al write that for modern companies to be competitive, they must be flexible, efficient, and learning and must be willing to achieve differentiation in at least one of these dimensions. Certainly, the new conditions of competition require that companies are more flexible and more learning than they had been a decade ago. To succeed in global markets, companies must have a shared vision, talented personnel, and efficient leadership. More often than not, companies apply to human resources as the major source of their competitiveness and uniqueness.

However, achieving differentiation in only one dimension cannot always suffice to bring companies to the desired business goal. Rather, companies must adopt complex thinking to develop systemic strategies and approaches to doing business globally.In his book, Yip evaluates the impact of the Internet on various elements of global business performance. Globalization drivers, market participation, and global location altogether create a new vision of the digital world, which is impossible without the Internet and which turns the Internet into one of the basic business resources. Whether competitive globalization drivers are more important than global location or global products is difficult to define.

It would be fair to assume that the Internet produces a complex impact on the state of global business and imposes new requirements on companies that choose to go global.Needless to say, the Internet facilitates the development of the global business ties, improves business performance and increases business competitiveness. The Internet produces a complex impact on various elements of business performance, from globalization drivers to global location. Globalization drivers are, probably, the first to perceive the pressure of the Internet expansion in the business world. The Internet increases the global commonality in customer tastes and needs, enables and facilitates global customers, enhances global sourcing efficiencies and speeds up global logistics, sidesteps trade barriers and accelerates the needed speed of business move (Yip).

The Internet leads to the substitution of physical activities and makes it easier for businesses to participate in foreign markets (Yip). The Internet enhances businesses’ ability to globalize and localize, and to customize their products and services to meet the most sophisticated customer needs (Yip). As a global network, the Internet reinforces the process of business and market consolidation: with the Internet, companies can choose how much of their value chain to duplicate physically in the foreign market and what activities they are to conduct on the Web (Yip). These are the ways in which businesses can benefit from using the Internet and its solutions as they choose to go global. However, not everything is perfect with the Internet. The most important impact which the Internet produces on globalization drivers, global participation, and global consumers and products is in that it imposes new requirements on businesses and makes them comply with these requirements to succeed in their global endeavors.

The fact is in that to benefit from the Internet, companies must have resources and capabilities to use it. For example, the speed of the Internet solutions must be high enough to ensure that global customers are satisfied with the quality of the online product and service delivery: Yip is correct in that in the era of the Internet, even 24 hours are too slow and companies’ failure to extend into new markets allows rivals to take a more advantageous business position. Furthermore, companies must be able to balance the needs of globalization with the uniqueness of the local customer needs – the development of global needs and products does not necessarily imply that local customers no longer want unique products or unique web solutions. Finally, the Internet allows businesses to reach global customers at a speed of light, but are businesses prepared to target and serve these customers? This is the question they must answer before they decide to go global and use the Internet as the source of strategic competitiveness. The Internet provides numerous benefits but requires a lot, too.

Only businesses that can learn and comply with these requirements have a chance to benefit from the Internet.The Internet produces complex influences on the state of global business and global competition. The Internet changes the nature of globalization drivers, global customer products and needs, and global location. The Internet facilitates global products and customers, foreign market integration, and global market expansion. The Internet results in the development of global products and needs and reinforces the process of market consolidation.

However, the Internet also imposes new requirements on businesses: businesses must be able to balance globalization with uniqueness of local customers, guarantee high speed of the Internet connection, and be prepared to target foreign customers at the speed of light. Only businesses that can comply with these requirements will readily benefit from the use of the Internet solutions in process of going global.