THE LANDSCAPE OF GLOBAL BUSINESS Chapter 4 Lecture 1

Why are Global Businesses Important to Us: u u Economy is about $40 trillion u u 2003 Snapshot of the Global 500 – –$ trillion in revenues u u Businesses will employ many of you u u You doubtless want to work for a “good” business

What are Business Categories of Global Enterprises? u u Global Giants – –Public ownership – –Private ownership u u Small to medium size firms – –Family owned – –Public ownership – –Global Start-ups u u (Other global enterprises include global nongovernmental organizations, intergovernmental organizations, and global gangs or terrorist groups)

Global Giants u u Global Brand giants—can be public or private, but due to brand awareness, they usually are fairly well monitored by the press – –These are many of the firms we are studying—check Interbrand or AC Nielsen for ratings – –Usually are from advanced economies, but developing economies are trying to buy or build global brands, e.g., Haier u u Hidden giants—companies whose activities are not in the public eye, e.g., cement, building materials, insurance companies, food production, machinery—we also study these because life is not all brand glamour – –Some are not in the public eye because we don’t care – –Some are not in the public eye because the parent company does not want us to know F F Ben and Jerry’s is owned by Unilever F F Coca-Cola owns Odwalla F F General Mills owns Small Planet Foods

Note from SAGE: is this image integral?

Here are Global Firms, Who Owns Them? B. Husky Energy E. Euro-Disney F. Johnnie Walker Scotch Whisky G. Gerber Baby Foods J. All-Clad Metalcrafters K. VP Schickedanz

Small to Medium Size Companies u u The definition of what constitutes small and medium size varies (making it hard to compare worldwide) u u Also can create a global brand (but usually a single brand in a single industry, e.g., Dr Martens) u u Also can be “hidden champions” u u Can be a global start-up – –Logitech—founded by people from different countries, headquartered in two nations, to serve a global market u u Often depend on entrepreneurial behaviors

Brands and Society – –Brands satisfy human needs for belonging and satisfaction – –In nations where standards are low, brands provide assurance of product quality – –Brands also raise public awareness about firm behavior and mediating organizations motivate many F F To pursue social and environmental responsibility within the firm—internal adaptation mediated by NGOs like Greenpeace F F To address issues that occur outside the firm— external adaptations that make firms mediators for others even as others mediate these issues for them – –Suppliers’ treatment of employees or ways they extract raw materials – –Some go on the defensive – –Some focus on values and proactive efforts

The Bottom Line on Global Firms Whether large, medium or small Whether public or privately owned by families or by shareholders or by the government, etc. u u All contribute to and are challenged by characteristics of globalization.

Among Challenges Relevant to Your Studies, Consider the Effects of u u Diverse participants in the industry studied u u Stakeholder and owner activism – –Individuals and institutional u u Competing models of how to manage globally – –The Anglo Saxon model is more “hands off” and encourages shorter run profit motives – –The Rhine model is cooperative and encourages more social engagement for firms

We do Not Know the Outcomes, but We do Know: u u These challenges are altering firm management such that nations are adopting practices from other settings – –Asian collectivism accommodates revised social contracts, e.g., layoffs – –Anglo Saxon traditions are revised to separate the CEO from the Board – –The Rhine model experiences pressures to generate shorter term profits

As a General Statement We Can Say: u u Corporations worldwide are under pressure to consider themselves – –Members of a dynamic community – –Linked by networks of interdependent teams – –Composed of self-managing people with diverse characteristics and talents – –Guided by shared purpose – –Leaders committed to continuous learning and improvement – –In service to maximum long-term customer satisfaction, employee and shareholder enrichment, and the health of the larger society