STAGES OF GLOBALISATION
Normally, a firm passes through different stages of development before it becomes a truly global corporation. Typically, a domestic firm starts its international business by exporting. Later it may establish joint ventures or subsidiaries abroad. From an international firm it may then develop into a multinational firm and finally into a global one.
Ohmae identifies five different stages in the development of a firm into a global corporation. The first stage is the arm’s length service activity of essentially domestic company which moves into new markets overseas by linking up with local dealers and distributors. In stage two, the company takes over these activities on its own. In the next stage, the domestic based company begins to carry out its own manufacturing, marketing and sales in the key foreign markets. In stage four, the company moves to a full insider position in these markets, supported by a complete business system including R & D and engineering. This stage calls on the managers to replicate in a new environment the hardware, systems and operational approaches that have worked so well at home. It forces them to extend the reach of domestic headquarters, which now has to provide support functions such as personnel and finance, to all overseas activities. Although stage four, the headquarters mentality continues to dominate. Different local operations are linked, their relation to each other established by their relation to the centre.
In the fifth stage, the company moves toward a genuinely global mode of operation. In this context Ohmae points out that a company’s ability to serve local customers in markets around the globe in ways that are truly responsive to their needs as well as to the global character of its industry depends on its ability to strike a new organisational balance. What is called for is what Akio Morita of Sony has termed global localisation, a new orientation .that simultaneously looks in both directions.
Getting to stage five, however, means venturing onto new ground altogether. Ohmae argues that to make this organisational transition, a company must denationalise their operations and create a system of values shared by corporate managers around the globe to replace the glue a nation based orientation once provided.
Ohmae further observes that today’s global corporations are nationalityless because consumers have become less nationalistic. True global corporations serve the interests of customers, not Governments. They do not exploit local situations and then repatriate all the profits back home, leaving each local area poorer for their having been there. They invest, they train, they pay taxes, they build up infrastructure and they provide good value to customers in all the countries where they do business. IBM Japan, for instance, has provided employment to about 20,000 Japanese and over the past decade has provided three times more tax revenue to the Japanese Government than has the Japanese company Fujitsu.“
Many firms across the world has ambitious plans to become global.
Department of Commerce
Periyar University, Salem-11
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Source by C.Pavithira