These questions also highlight the issues of competing in an international marketplace. When companies extend beyond their national borders, they are faced with new challenges. Their financial systems must adapt to multiple currencies, taxing mechanisms, inflation rates, and accounting policies. Their manufacturing system and strategy must consider country-to-country cost variations, host country trade policies and restrictions, and quality concerns. Their distribution system must cope with import and export regulations, international gateways, and customs. Their infrastructure must be configured to variations in power supply, communications access, and possibly older and obsolete hardware. Their organizations must be structured to accommodate a diverse world of languages, cultures, and business practices.
Another issue is the type of international competition. Some industries may vary widely from country to country in terms of industry and economic conditions, buyer expectations and preferences, and end-market culture, style, and distribution patterns. Firms that use a multi-country strategy may choose to operate subsidiary operations in each country, with the activities of such operations tailored to the host country conditions.
In contrast, organizations that use a global strategy seek to gain competitive advantage by deploying supply chain business units on a global basis. Plants may be located in a single low-cost country, or geographically located based on distribution patterns. Customer service centers can be located in close proximity to major customers. Global companies are well positioned to exploit the "strategic fit" among their business units by encouraging the transfer of technology, resources, capacity, and core competencies. Global companies can achieve greater purchasing power at the corporate level, and can provide a unified marketing, sales, and service mechanism to their customer base.
Global organizations can also benefit from the opportunity to "internationalize management" . The exposure of the firm's managers to the languages and cultures of the global world of suppliers and customers can positively affect the organization in a number of ways. In particular, a firm with an internationalized management can better understand and manage differences within its own ranks, can better relate to and serve customers and suppliers from different cultures, and can create a culture of diversity and internationalism that can help to attract and retain employees, customers, and suppliers.
Clearly, we believe that globally integrated organizations have significant advantages that can be leveraged to achieve "dominating depth."
To Be Continued
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