Global companies
DEFINITION: Global companies are organizations that operate in another country/countries other than the country where the organization is established (Mikler, 2018).
SUMMARY
The increased use of emerging and new technologies has pushed business organizations to grow and expand tremendously (Mikler, 2018). Due to this expansion, many organizations have ended up penetrating foreign markets and various countries hence becoming global companies. When organizations become global, they access more resources, widen their market share, and also a chance of becoming more competitive. Examples of global companies include Amazon, KFC, Coca-Cola, and Samsung, among many others. However, what are the key factors that drive organizations to become global? Among the key factors known to catalyze organizations to become global include the following. First is the technology factor that has made organizations enjoy a broad reach of customers with the use of social media platforms like Facebook and Twitter for marketing and advertising. The second key factor that makes organizations global is intensified competition in the country of origin. The third key factor that drives organizations to become global is increased and growing profitability.
DISCUSSION
Global companies enjoy a wide range of benefits. However, they face several demerits too. The following are some of the critical characteristics of global companies. First is that they have substantial capital resources. Global companies use these capital resources to facilitate their expansion and processes in the different countries where they are based. Secondly is that global companies are known to have foreign alliances. When the company enters a foreign country, they can access new technologies and partnerships that can help them to grow. The third essential characteristic of global companies is that they have and use advanced technologies. Since the company has different branches in various countries, the use of advanced technologies is paramount to ensure that all activities are well coordinated. Another critical characteristic of global companies is that entailing product innovations. Global companies have global teams at various research and development centers that have the obligation of developing new products and making changes to the existing ones to satisfy the dynamic needs and interests of customers. Another key feature that distinguishes global companies is that they have centralized control. This means that global companies exercise a structure of management where the Head Office (HO) is responsible for all operational decisions. The key benefits of global companies include the following. First is that global companies enjoy economies of scope. Secondly, global companies enjoy more comprehensive market access and share since they have branches across the world. The third benefit of global companies is that they experience increased profitability due to their various branches in different countries where they operate.
On the other hand, the disadvantages of global companies are: First is that it can increase the organization’s expenditure since they will be forced to have offices in different countries.Secondly, the organization is likely to incur high technology costs since they have to ensure that their global teams work effectively. Lastly, global companies can suffer management crises because they adopt a centralized structure.
REFERENCES: Mikler, J. (2018). Global Companies and Emerging Market Economies. Global Policy, 4(2), 160-161. doi: 10.1111/1758-5899.12050