Part 4 – Managing in the global environment

Synthesis
The ultimate test of international strategy is whether it can be effectively implemented to deliver successful products and services in all the firm’s targeted markets. This is the challenge faced by international managers, and is the focus of Part 4. Each of the four chapters takes up a vital area of management, highlighted for particular relevance in the changing international environment. A theme running through all these chapters is that managers must develop both an inward and outward focus, engaging with people and ideas both internally and through network and stakeholder ties. Chapter 9 concerned managing people, presenting a variety of differing organizational and cultural contexts in which the modern MNE operates. While HRM was once dominated by Western theoretical and cultural perspectives, international HRM (IHRM) now recognizes the need to adapt HR policies and practices in differing national environments.

More than ever, MNE global strategies seek to realize the advantages of differing locations for all stages of production, from sourcing raw materials through to the final stage when the product reaches the end consumer. Globalized production has transformed supply chains, as we found in Chapter 10. Firms now visualize the entire supply chain in network terms, involving co-ordination and interaction among numerous organizations in different countries. Consumers worldwide have benefited from unprecedented choice and quality of products and services, but international managers remain keenly aware of the continuing challenges posed by changing circumstances in extended supply chains, where a failure in one link can disrupt global production. Flexibility and efficiency are now central challenges for supply-chain management.

Globalization has also transformed finance and accounting, the subject of Chapter 11. Here we found that the rise of global markets, combined with more open national economies, have presented both opportunities and risks for organizations and individual investors. MNEs can draw on a variety of equity and debt financing arrangements, benefiting from global financial markets and national location advantages. But, as we have seen, market volatility poses risks, which can rapidly develop into financial crises. Market turbulence can quickly envelop organizations and governments in the increasingly integrated global economy. Sound and transparent financial management have become crucial for MNEs, which face ever greater scrutiny from national regulators, shareholders and other stakeholders.

A rapidly changing environment presents MNEs with opportunities for products and new ways of organizing production, which are the focus of Chapter 12, on innovation. In a world of fast-changing technology, MNEs are constantly challenged to match and outshine competitors. Even star products will soon be superseded by new technology and designs, compelling firms to sustain innovative capacity over the long term. Entrepreneurial firms, both SMEs and large companies, now drive innovation, much of which involves co-operative endeavours. A trend is the focus on new products and adaptations for emerging and developing economies. Managing innovation has moved beyond R&D departments, to embrace the entire organization and supply-chain partners in diverse locations.

Reflection and discussion

1. In what ways do these chapters show the need for MNEs to draw on external links as well as internal resources?


2. Give examples of successful adaptation of products and operations in differing national environments.


3. In what ways do these chapters show the risks associated with globalization? Cite examples which you feel show successful management of these risks.

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