Sunderland Business School

Lecture – Global Organisations?

Derek Harwood
Email derek.harwood@sunderland.ac.uk
Tel 0191 515 2331
Room 103e

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Rationale
• There is quite a good probability that at some
stage in your career you will be employed by a
global company
• Herewith is an insight into the strategies and
operations of a global company.

Drivers of internationalisation (1)

Source: Adapted from G. Yip, Total Global Strategy II, Financial Times Prentice Hall, 2003, Chapter 2. Cited in
Johnson G., Whittington R., Scholes K., Angwin D., Regner P., (2014) Exploring Strategy Text and Cases Pearson 3
Publishing Ltd
 International Strategy: main themes

Johnson G., Whittington R., Scholes K., Angwin D., Regner P., (2017) Exploring Strategy Text and Cases Pearson
Publishing Ltd
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Modes of international market entry

Johnson G., Whittington R., Scholes K., Angwin D., Regner P., (2014) Exploring Strategy Text and Cases Pearson Publishing Ltd
http://www.mcdonalds.co.uk/ukhome/People/Franchising.html/
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International strategies

Johnson G., Whittington R., Scholes K., Angwin D., Regner P., (2017) Exploring Strategy Text and Cases Pearson Publishing Ltd

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 The Porter-Dunning Diamond

Firm strategy Multinational

Chance structure and business
rivalry activity

Factor Demand
conditions conditions

Related and
supporting Govt
industries

Source: Dunning, The Globalization of Business, P.105, Routledge (1993)

CCB Model Country Company Bargaining

Global Organisations
• Four factors determine an organisation’s ability to
formulate & implement a global strategy
– Organisation structure
• Reporting & relationships
– Management processes
• Planning & budgeting
– People
• From the worldwide business
– Culture
• Values & rules that guide behaviours
– Global companies – Google (Alphabet), General Electric,
Volkswagen

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 Elements of a Global Company
• Global Strategy Information system • Integrated Global Authority
• Cross-country coordination • Absence of Domestic/
• Global Knowledge sharing International split
• Global Strategic Planning • Strong Business Dimension
Organisation
• Global budgeting
Structure
• Global Customer Management Can be very
• Global Performance review & expensive!
compensation

Management Ability to develop

and implement a People
Processes
Global Strategy

• Global Identity • Use of Foreign Nationals

• Commitment to worldwide • Multicountry Careers
(v Domestic) Employment Culture • Frequent travel
• Interdependence (v Autonomy) • Statements & actions of Leaders
• of Businesses • Global boards of Directors
Source: Adapted from Yip G.S. & Hult T.M. (2012), Total Global Strategy 3rd edition Pearson
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Cultural Interaction / development

• No matter which strategic route is taken a very
important aspect is the mix of cultures “melting
pot”
• Consider the mix of cultures of say Chinese
employees with American (USA) employees
• The following graph identifies some of the
areas for consideration

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International cross-cultural comparison

Source: M. Javidan, P. Dorman, M. de Luque and R. House, ‘In the eye of the beholder: cross-cultural lessons in leadership from Project GLOBE’, Academy of
Management Perspectives (February 2006), pp. 67–90 ( Figure 4: USA vs China, p. 82 ). (GLOBE stands for ‘Global Leadership and Organisational Behaviour
Effectiveness’.) Cited in Johnson G., Whittington R., Scholes K., Angwin D., Regner P., (2017) Exploring Strategy Text and Cases Pearson Publishing Ltd
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 A Global Geographic Scope
Organisation Management People Culture
Structure Processes
Centralised Global Extensive Multicountry Global identity
authority coordination careers
processes
No domestic – Global sharing of Foreign nationals in Interdependence
international split technology home and third
countries
Strong geographic Global strategy Extensive travel
dimension relative information system
to business and
function
Global strategic
planning, budgets,
performance review
and compensation

Source: Adapted fromYip G.S. & Hult T.M. (2012), Total Global Strategy 3rd edition Pearson
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Encourage Global Careers

• Companies set tough rules for promotion:-
– No further advancement until after 2 years outside the
home country
– Transfers are made early in careers
– Ten percent of positions only open to non nationals
– Best performers have best opportunities
– Transferees are guaranteed a position back home
– Veterans are given job preference
– The careers of foreign nationals is tracked by HR
• Eg General Electric company of the USA

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GE International Training & Development

OUR GLOBAL LEADERSHIP INSTITUTE
Crotonville is at the forefront of thinking in leadership, culture, strategy &
innovation. Some of GE’s best-known initiatives — Lean, Six Sigma,
WorkOut, Simplification & FastWorks — took shape here.
GE 2014 ANNUAL REPORT P13

“We develop leaders.

The cultural backbone for GE … remains our leadership institute at
Crotonville. We invest $1 billion in learning and development each year,
and we train 40,000 employees in Crotonville courses each year. Around
the world, we offer “capability building” to countries where we invest, as an
additional benefit to a “GE job.” We train customer executives, invest in
schools, develop small business and bring higher standards. This unique
cultural edge allows us to beat global competitors far from home.”
GE 2014 ANNUAL REPORT P11

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 Linkages - Regional & Global Strategies

• A clear Global Strategy that integrates the regional

strategies
• Regional Strategy
– Which regions shall support growth or profits for Global
development?
– Which Region shall be the cash cow to support the
developing Region

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A Global Company - Volkswagen

“The Group comprises twelve brands from seven European countries:
Volkswagen Passenger Cars, Audi, SEAT, ŠKODA, Bentley, Bugatti,
Lamborghini, Porsche, Ducati, Volkswagen Commercial Vehicles, Scania
and MAN…………………………………………The Group operates 119
(May 26, 2015) production plants in 20 European countries and a further
11 countries in the Americas, Asia and Africa. Every weekday, 592,586
employees worldwide produce nearly 41,000 vehicles, and work in
vehicle-related services or other fields of business. The Volkswagen
Group sells its vehicles in 153 countries.

The Group’s goal is to offer attractive, safe and environmentally sound

vehicles which can compete in an increasingly tough market and set world
standards in their respective class.
December 31, 2014

http://www.volkswagenag.com/en/media/videos.html Date accessed 21 August 18

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An adaption of the BCG Matrix

Growth
HI ? JAPAN
¥
+veSPAIN
or -ve €
ITALY

Potential COUNTRIES Cashflow € COUNTRIES

of Business in
Country $ USA
LO
COUNTRIES Large +ve +ve -ve COUNTRIES
£ orUK
Cashflow Cashflow
LOW HIGH
Competitive Strength of Business in Country

Source: Adapted fromYip G.S. & Hult T.M. (2012), Total Global Strategy 3rd edition Pearson
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 So Which Strategy?
• Regional or Global Company?
– Presently many arguments as to which is the best
– Have regional blocs stunted globalisation?
• Regional
– Home base strategies
– Portfolio Strategies
– Hub strategies
– Platform strategies
– Mandate strategies

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References

Yip G.S. & Hult T.M. (2012), Total Global Strategy 3rd edition Pearson

Ghemawat P., (2005) Regionally Strategies for Global Leadership, Harvard

Business Review December 2005, pp98-108

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