Part 3 – Competing in the global marketplace

Synthesis
The essence of international business is competing in global markets. Competitors are becoming highly diverse: individuals, companies of all sizes, governments and hybrid organizations consisting of both private and government owners. Trade, the oldest type of international business, was the starting point of this part. Trade has long been dominated by companies from the economies of the developed world, but they are now being joined – and even overshadowed – by newer competitors from emerging and developing economies. The theme of expanding global markets has recurred in all these chapters, but also in evidence, notably in Chapter 6, has been the continuing influence of national interests in trade between countries. Despite the public support for liberalized trade, the failure of the multilateral negotiations in the Doha round has been a reminder that trade and investment opportunities (and constraints) remain heavily influenced by governments.

MNEs have risen to competitive challenges through a variety of strategies and organizational arrangements, which form the subject of Chapter 7. FDI has taken centre stage in processes of globalization, highlighting the differences in country environments which confront international managers. Organizationally, MNEs have strived to devise structures which both recognize the role of subsidiaries in different countries and retain co-ordination from the centre, with a focus on global operations. For the polycentric organization, this dual focus is perhaps more natural, but many ethnocentric organizations have evolved successful strategies for global-local balance. Theories of the firm, such as resource-based theories and theories of core competencies, have contributed conceptual frameworks for the new global-local outlook and strategies. But how achievable are their aims in practice?

Chapter 8, on marketing, focused on the essential task of all international businesses, which is to win over consumers in differing markets. Again, we have seen that organization and strategy are intertwined. A focus on global strategy, centralized organizational structure and global products are attractive in their simplicity, but MNEs have found that local considerations remain crucial, causing them to rethink global, regional and national markets. In today’s world, the growth in emerging markets, such as China, India and Brazil, is a major trend which presents MNEs with both opportunities and challenges. Marketing strategies for these markets must take into consideration local tastes and local competitors, many of whom are themselves now expanding internationally. The competitive landscape is thus becoming more diverse, compelling MNEs, whatever their origin, to sharpen their competitive edge.

Reflection and discussion

1. Give examples from these chapters where governments have intervened in business activities to promote national interests.


2. Cite examples of the tension between global and local considerations in corporate strategy and structures.


3. In what ways is corporate strategy changing to reflect the rise of emerging economies? Give examples from the chapters.

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