Introduction
There are many multinational companies in the modern world. However, they have not always been that popular. To become global, they implemented specific strategies that made their services or products important for people from different parts of the planet. The following paper is intended to discuss and identify why multinational corporations must stick to set rules and standards in their business activities.
Discussion
Pankaj Ghemawat developed three articles that will be analyzed and discussed below. The context of these pieces of literature explains what challenges and limitations might be met while making any company global. To begin with, it is necessary to state that the author reconsiders the meaning of distance in one of his works by classifying it into four different categories (cultural, administrative, geographic, and economic) (Ghemawat, “Distance Still Matters” 139). All these aspects must be accurately assessed by a business person who wants to make his or her organization global. For instance, the company called McDonald’s planned its globalization strategy by overcoming various cultural distances in different countries by hiring local people, economic distances by shipping all the necessary products to retailers, and so on. In general, distances are not that enormous as people used to perceive them (Suwandi and Foster 114). Instead, it is necessary to have a well-structured plan to make the expansion successful.
Another article describes the strategy directions beginner companies must adhere to at the first level of their globalization processes. There are also four elements that must be considered (markets and products; operations and innovation; identity and reputation; organization and people) (Ghemawat, “Finding Your Strategy in the New Landscape” 58). Also, there is one central point or even goal that is called strategy and competition. All of the secondary strategies must be accomplished and resolved until the corporation starts to expand and compete with other businesses. For instance, Coca-Cola drinks are known in every region of the world today. However, the corporation had to organize the ideal work of its factories and retail stores to supplant all other local soft drink manufacturers.
The last article by Pankaj Ghemawat accents on the importance of arbitrage in the development of any multinational company. According to the text, all companies that started to expand at the beginning of the industrial revolution followed the primary standards and rules of what the author calls arbitrage. “The challenges facing companies pursuing economies of scale through adaptation or aggregation are fundamentally different from those that companies face when pursing absolute economies through arbitrage” (Ghemawat, “The Forgotten Strategy” 83). For instance, the company called Toyota Motors focused on narrowing the difference between its services and products available in various countries. As almost every model of their cars is known in every part of the planet, customers are aware of the production quality and their safety.
Conclusion
Pankaj Ghemawat analyzed several global companies, compared them, and found some similarities that were described as arbitrage in his works. Young companies must adapt their global strategies based on the specific arbitrage elements presented by the author in his works because the models he considered were efficient for brands that are popular at the present moment. Also, it is important to understand that the offer has to be in the first place before becoming global and competing. Otherwise, all the tremendous financial investments will be useful if people from all over the world do not receive anything unique and important for them and their everyday lives.
Works Cited
Ghemawat, Pankaj. “Distance Still Matters. The Hard Reality of Global Expansion.” Harvard Business Review, vol. 79, no. 8, 2001, pp. 137–162.
“Finding Your Strategy in the New Landscape.” Harvard Business Review, vol. 83, no. 1, 2010, pp. 55–60.
“The Forgotten Strategy.” Harvard Business Review, vol. 81, no. 11, 2003, pp. 76–139.
Suwandi, Intan, and John Bellamy Foster. “Multinational Corporations and the Globalization of Monopoly Capital: From the 1960s to the Present.” Monthly Review, vol. 68, no. 3, 2016, p. 114.