International Business Project; final

Global Enterprise Management vs. Domestic Enterprise Management

Today's business culture is not just global; it is increasingly globally homogenous. Connectivity has shrunk or eliminated the barriers of doing business across borders, yet this new global market has unique characteristics, issues and risks that domestic firms do not face. Yet, in order to remain competitive, even the smallest of Internet retailers needs to have a global platform to effectively compete and expand their profits.

Firms specialize in manufacturing, marketing, and distributing products that are inherently their competitive advantage, generated from their core competencies. To do this, corporations need to build an infrastructure in human resources, technology that is ideally suited to producing their goods with the highest quality at the lowest cost for marketing, and distribution in the global marketplace.

Building the Global strategy at the highest level

As a firm determines the highest quality at the lowest cost, that can mean moving or opening a manufacturing operation, or production facility in another nation where they can manage the quality of goods produced while taking advantage of lower costs of production, such as labor and materials. By streamlining production and creating products that are as standardized as possible for a firm's various markets, companies are able to leverage the economies of scale for large production facilities. The resulting cost advantages create strong competitive advantages, market domination, and maximize profits for shareholders.

By serving a global market at lower costs, global firms place domestic firms are at a distinct disadvantage. Global firms have higher volume sales from multiple markets, and competitive advantages in multiple areas such as access to lower labor and material costs, access to technological expertise, and greater opportunities for marketing.

Through the use of research, as well as competitive intelligence, global enterprise management, when properly assessed, can be successful in maximizing their core competencies to promote profitability.

The Global Enterprise - Operational Issues

We have discussed the various areas of operational functions that impact a firm's ability to conduct business globally, as well the methods for building strategies that address the dynamic nature of the global business environment. However, managing the global enterprise requires global managers to understand the differences between each functional area in the international environment.

Global Enterprise Management of Operational Issues

One way to understand the issues of management of a global enterprise is to differentiate between the risks of an international firm and the risks of domestic firms. The following table indicates the differences between global and domestic corporations considering the risks of establishing a manufacturing facility overseas.

Domestic Risk Considerations	Additional International Considerations
Labor cost, availability, and skills	Cultural differences in the labor force
Material cost, availability and quantity	Management that is not from the home nation
Utility cost and availability	Foreign legal systems
Transportation infrastructure	Foreign accounting systems
Telecommunications infrastructure	Foreign tax systems
Shipping costs of raw materials	Foreign financial reporting requirements
Shipping costs of finished goods	Currency exchange risk
Taxes - income and property	Transfer price and tax consequences
Construction permits	Import/export restrictions and tariffs
Environmental regulations	Political stability
Location - Degree of livability	Remittance restrictions (the repatriation of profits back into the home country)
Community response to the facility
State and local government incentives

Structuring management team oversight

Structuring global enterprise management teams that work seamlessly to execute strategies across borders and cultures to effectively leverage or mitigate the considerations in the above table, is a key to global success. As firms increase in both size and geographic footprint, the risks increase and both business and production operations become increasingly complex.

All functional areas are impacted by the increasing complexity, which in turn increases the risk exposure for the firm.

Strong leadership creates the cohesive management team capable of impassioning staff and teams and keeping a corporation focused on the end goals. In the global arena, that requires maintaining absolutely current information in all markets, but the process of management team unity, begins with talented senior management. Each firm is different, and the lessons are best attained through the case studies of firms that have overcome the obstacles by recognizing the changes in the economy, the markets they serve, the competition, and addressing them with innovative strategies that reinvent the company, a brand, or respond to the changes in its business.

Take some time to review this video on Avon, a global cosmetic firm that has increased its sales and profits through the global recession through strong, clear leadership