Chap 2 Globalization Strategies- Some Facts, Examples and Cases

By: Salim ShirzaiMBAOB Chap 3 Organizational System in the Global Environment 1Introduction

Outline As William F Gleuck and Lawrence say The environment includes factors outside the firms which can lead to opportunity for or threats to the firm. Although there are many factors, the most important of the sector are: socio-economic, technological, supplier, competitors, and government.

IntroductionAs open systems organizations interact with their environment by taking inputs, changing their internal processes and technologies because of environmental requirements and giving output to the environment. Environment includes: Economic Political-legalSocio-culture Technological Global Organizational EnvironmentGeneral and Specific EnvironmentGeneral Environment Includes: Culture forces International forces Political forces Environmental forces Economic forces Specific environment such as: CustomersDistributers/suppliersUnions Compotators

Sources of uncertainty in the Organizational EnvironmentAn organization likes to have a steady supply of resources so that it can easily manage its domain and satisfy its stakeholders. The forces discussed previously create uncertainty for organization and makes it difficult for them to control the flow of resources they need. Following are of high importance: Environmental complexityEnvironmental dynamismEnvironmental richness Lawrence and Lorsch Theory on Environmental Fit: They identified three main sub-environments which is necessary for organizations success: The market sub-environments corresponding to sales The technical sub-environments corresponding to production The scientific sub-environments corresponding to research and development Therefore, most organizations create departments (subsystem) for sales, production and R&D representing the total organization (total system). sResource Dependence Theory Organizations are dependent on their environment for the resources they need to survive and grow. According to resource dependency theory, the goal of an organization is to minimize its dependency on other organizations for the supply of scarce resources therefore organization must: Exert influence over other organizations so that it can obtain resources Respond to the needs and demands of the other organizaions.

Theories of Organizational ChangeManaging Interdependencies in Specific Environment In the specific environment, an organization needs to manage its relationship with suppliers, unions and customer, interest groups. The basic interdependencies that cause uncertainty are; Symbiotic Interdependencies: in this type of interdependency the output of one organization is input another organization. In this kind of interdependency followings are to be considered: Good reputation; develop a good reputation to be trusted Cooperation: strengthens relationship Strategic Alliances: agreements with other parties: Long-term contracts, networks, minority ownership by purchasing minority stakes in other organizations, joint ventures, merger and takeover Managing Competitive Resource Interdependencies: competing for scarce inputs and outputs. This can be managed by collusion, third party linkage mechanism, strategic alliance, merger and amalgamation. Merger Amalgamation: a new company is formed to take over the existing business of all the amalgamation. Amalgamation takes place where two or more companies organizae for a new company with which to consolidate Transaction Cost TheoryAccording to this theory, the goal of the organization is to minimize the costs of exchanging resources in the environment and the cost of managing exchanges inside the organization. Organizations try to find mechanisms that make inter-organizational transactions relatively more efficient. Sources of Transactions Costs Environmental uncertainty and bounded rationality Opportunism and small numbers: opportunity and small number of stakeholders Risk and Specific Assets: specific assets are investments (in skills, machinery, knowledge) that create value in one particular exchange relationship but have no value in any other exchange relationship. In todays context, myriad or countless changes are taking place in business. Most of the developing countries have adopted economic liberalization as a policy and program for their development. The path of economic liberalization is strewn with many dangers. Managing Globalization in Todays OrganizationGlobalization has led to the emergence of the global village in the world economy. The internet along with rapid political and social changes ahs broken down old national barriers to competition. Globalization implies that the world is free from national boundaries and that it is really a borderless world. Managing a Diverse Workforce Ethical Behavior and Personal Integrity Technological Innovation Management Challenges in the Global Marketplace Understanding Cultural Differences: individualism vs collectivism, Power Distance, Uncertainty Avoidance, Masculinity vs femininity, time orientationDeveloping Cross-cultural Sensitivity: Cultural diversity, gender diversity, age diversity, ability diversity, making diversity an asset for the organization, benefits of diversity such as better problem solving, retain best talents, promotes creativity and innovation problems of diversity such as less cohesive, communication problems.

Globalization and the Global Village

P G Aquinas (2013), Organizational Bhaviour- concepts realities, applications and challenges, New DelhiReference Thank You