Global Company Management
1 - Global Company Management introduction. Compare & contrast International Mentality with Transnational Mentality. International to transnational is like a process for evolving. MNEs will face different operate method. International Mentality means management sees overseas operations as appendages to a domestic operation. The operation method and the technologies overseas company use are normally same to the parent company. The administration system is also related to the parent company. Transnational Mentality means complex process of coordination and cooperation in an environment of shared decision making. The overseas company just likes a new company which is a little different from the parent company. They follow the parent company’s administrate but do the local-to-local business. It makes overseas operation more localize and flexible. The mentality the company uses relate to the industry. Different companies have their own business strategy position. A company might reasonably operate with any one of these strategic mentalities (International, Multinational, Global and Transnational).
2. Define both scale and scope economies and discuss their impact on a company’s attempts at global integration and coordination. Scale economies refer to the cost advantages that an enterprise obtains due to expansion. There are factors that cause a producer’s average cost per unit to fall as the scale of output is increased. It is a long run concept and refers to reductions in unit cost as the size of a facility and the usage levels of other inputs increase. Scope economies refer to reductions in average cost associated with increasing the scale of production for a single product type. It makes product diversification efficient if they are based on the common and recurrent use of proprietary know-how or on an indivisible physical asset. Economies of scale offered by the new technologies, the intermediate processes into single plants and the developing process technologies can make company achieve lower cost volume products. Companies should seek outside markets make more competitive in global business because when the scale economy more and more effective, the profit is related to the sales level. The company also should try to make their different departments in different country to low down the cost. For example, if the company need lower labor cost, they should make the manufacturing components in China or Taiwan. Scope economies make company focus on one or two product so that the productions and technologies will be more professional, not only in domestic, but also in the global competition. Focus on one product is kind of business protection. It can cause company get more competitive in the market. Like Intel, focus on chip production. So the company will get greater volume and lower per unite cost.
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3. Identify and describe the 3 strategic tasks involved in gaining worldwide competitive advantage. The 3 strategic tasks are defending worldwide dominance, challenging the global leader, and protecting domestic niches. Defending worldwide dominance, there are two simple principles in balancing act of protecting existing advantages while building new ones required companies to follow: Concentrate at least as much on defending and reinforcing their existing assets and capabilities as on developing new one; Looked for ways to compensate for their deficiency or approximate a competitor’s source of advantage, rather than trying to imitate asset structure or task configuration. Challenging the global leader should step by step approach to building competitive position: Developed an initial toehold in the market by focusing on a narrow niche; expanded their toehold to a foothold by limited and carefully selected expansion along both product and geographic dimensions. Protecting domestic niches, there are three ways: defend against the competitor’s global advantage, offset the competitor’s global advantage, and reach the competitor’s global advantage.
4. Describe the Matrix Organization. Are you in favor of it or opposed to it and why? Matrix organization means people with similar skills are pooled for work assignments. For example, all engineers may be in one engineering department and report to an engineering manager, but these same engineers may be assigned to different projects and report to a different engineering manager. They work together to get the work done. I don’t like this method for organization. Even though the work split to pieces and each one focus on their own work can save more time and money, the projects can be difficult to monitor if teams have a lot of independence. Sometimes, costs can be increased if more managers are created through the use of project teams. There is another problem is it is easy get conflict of loyalty between line and project managers from allocation of resources. Communication is very important in MNEs, if a company has bad communication ability, the operation will face many problems, and it is harmful to the company. So, the Matrix Organization is failure in MNEs.