Most important is that the identification of the general skills needed to be
effective in international marketing have not been previously studied and are especially
needed at a time of a rapidly changing global economy. Second, available research
indicates the level of importance attached to each of the identified skills. Third, it
provides information on the degree to which employees in exporting companies
typically have these skills. Finally, if there is a gap between the skills employees in
exporting companies have and the skills they need to be effective in international
marketing, there must be studies that will provide information on types of training
modules needed to develop the skills identified as necessary.
Conversely, the most prevalent industry driver, which is often an uncontrollable
form of market or business trend determination, is the combination of market, cost,
government, and competitive drivers (Yip, 1995). This is established by the fact that
each feeds off of the other and when one driver is affected the whole group tends to be
affected. Market drivers can be associated and affected by many phenomenons.
When large nations began to have per capita income convergence such as Japan
overtaking the United States or Hong Kong overtaking New Zealand we began to see a
shift in the drive towards market growth. Other examples are the convergence of life
styles and tastes, increasing travel creating global customers, organizations beginning
to behave as global customers, and establishment of world brands such as Coca-Cola,
Levi’s, etc.(Yip, 1995). Cost drivers can be affected when there is a continuing push
for economies of scale and accelerating technology innovation with advances in
transportation and emergence of newly industrialized countries. Likewise, government
plays an important role and can be an effective protagonist or antagonist by reducing
tariff barriers (NAFTA), creation of trading blocs, and decline in the role of governments
as producers and/or customers (Yip, 1995). Finally, we examine competitive drivers
and reveal that they are associated with a continuing increase in the level of world
trade. The overall effectiveness of this driver will either increase or decrease based on
scenarios such as the incident of a rise in new competitors intent upon becoming global
competitors and when there is increased formation of global strategic alliances (Yip,
1995). Together, these four sets of drivers cover all the critical industry conditions that
affect the potential for globalization. While other groupings are possible, these four
distinguish among the sources of the drivers and, therefore, help managers to identify
and deal with them more easily.
Global Organization and Human Resource Management
It seems as though a day cannot go by without reading about the growing
revenues multinational organizations are generating from their international sales.
Recently, there was a flurry in the press of the flattening of McDonalds’ sales in the
U.S., and how the company was going to lower the prices of their burgers to get more
competitive and recapture a larger market share. Buried in those stories were statistics,
such as the fact that McDonalds generates 54% of its profits from its 20,000-plus
Golden Arches in 100 countries, and that it was opening restaurants in four or five new
countries each year (Shepherd, 1999). So, while domestic sales were flat, the
company’s income was still growing. Also buried in those stories was the fact that
McDonalds restaurants are kosher in Israel, are made without beef in India, and
represent gourmet dining in Moscow (Shepherd, 1999). The company is a master at
tailoring to local tastes. While the McDonalds story is interesting, it is not
extraordinary. It serves as an example of what most companies are doing in adapting
product for the global marketplace. Organizations are also focusing on building global
management skills as well as tailoring products. The process of business globalization
is not a one-shot event, and needs to represent an ongoing effort by companies to
position themselves for success in the international arena. That is why Windham
International likes to refer to globalization, not as a process, but as a cycle (Solomon,
1994). The dividends of having a globally competent workforce and business culture,
are enormous. In fact, in the coming millennium, global business skills will become a
prerequisite for corporate management. Understanding how to shift between cultures
and intuitively adjust management behavior will be essential if a company is to ensure
success and maximize the potential from its core businesses in a global, competitive
environment (Solomon, 1994).
Creating a globally coherent corporate culture requires weaving cultural
awareness into the corporate fabric. Companies do this by integrating the cultural
lessons learned through actual practice into all of their human resource development
and training programs (Van Wachem, 1994). Furthermore, the importance of
conducting global awareness programs cannot be overemphasized, especially in an
American environment which has been insulated from international competition by the
depth of its own marketplace and resources. Global Awareness programs can last
anywhere from one day to several weeks (Van Wachem, 1994). Programs focus on
providing participants with an understanding of how culture impacts lives and creates a
set of values, how cultures are different, and how some of those differences manifest
themselves. The objectives of these programs is to build intercultural fluency (Van
Wachem, 1994). In their most basic form, global awareness programs provide
participants with greater understanding and new skills to operate more effectively in the
international business arena. They enable employees to better understand and
implement the company’s global strategies and appreciate the importance of the global
market in the vitality of the company. A typical program might instruct participants how
to (Van Wachem, 1994) :
? Appreciate cultural diversity.
? Recognize the impact of culture on business.
? Master global management skills.
? Understand how culture impacts business issues.
. Impart knowledge about challenges faced by business people around the world,
including significant concerns and motivations of business people.
? Develop a framework for understanding cultural differences.
? Master strategies for cross-cultural problem-solving and negotiation skills.
? Learn decision-making strategies that work across cultures.
? Explore ways to build business relationships.
But the business globalization cycle doesn’t end with a one-shot program. It then
becomes important for organizations to continue to integrate these global awareness
exercises into their ongoing training efforts, and by developing a continuous flow of
information and knowledge, be able to build global business skills, and enhance global
understanding (Van Wachem, 1994). Obviously those programs need to be different for
different levels of the company. While senior managers need to learn to think and act
globally, individuals at other levels of the organization must learn to communicate by
phone, fax, and e-mail. Thus, ongoing training is crucial. Intercultural training and
global business awareness workshops are, quite simply, the next logical step in
companies that are active learning organizations, those that adapt and learn what the
marketplace presents (Van Wachem, 1994). Understanding culture and global markets
and acquiring competencies about what is appropriate in different parts of the world is
central to the development of any corporate culture that is going into the international
marketplace. These kinds of skills and learnings must be integrated throughout. Within
this context, repatriation is part of the continuing effort to globalize the corporate
culture. Repatriated employees play a crucial role in the globalization process. First,
they add invaluable knowledge to the global wisdom of a company as a result of their
international experiences and they continue to broaden the scope of global vision and
general global awareness within the corporation by sharing their experiences, both
triumphs and failures (Van Wachem, 1994). Second, they serve as role models and
mentors for others who may consider expatriate assignments (Van Wachem, 1994). In
order to succeed, repatriation programs must address the expatriate’s need to return to
the home country with minimal emotional turmoil. Reentry to the home country can be
traumatic, and many experts agree it is a time requiring as much cultural adaptation as
the initial international move. Not only is the expatriate and family returning to an
environment that is quite different from the one they left, but they don’t expect it to be
altered.
Good repatriation programs also recognize that expats are an important asset to
the business because of their accumulated knowledge and experience (Van Wachem,
1994). What better and more visible role model could future expats have than someone
who has been in the trenches and returned–having done the job successfully? If the
organization recognizes and values the contribution, it sends out a profoundly different
message than a firm where employees return to no job, passed over for promotion or
slotted into a dead-end position. The way returning expats are treated in an
organization sends out clear and strong signals to others who are considering taking
such assignments. Keeping in mind that the talent pool for potential expats is not great
even in the largest and most successful global companies, retaining the wisdom of
returning employees and institutionalizing it is critical for the message it sends to future
expats as well as the ability to retain global wisdom (Van Wachem, 1994). Finally,
when you think about it, few roles for the human resource manager are as consistent
with an organization’s global business mission as providing a globally astute workforce
throughout all levels of the organization who will implement that mission.
Globalization Process and Strategy: A Time Line
Globalization has become an increasingly fashionable term and in fact it is still
the economic buzzword. Despite much loose talk about the “new” global economy,
today’s international economic integration is neither unprecedented nor is it an
innovation of the past. The shrinking of distance and the increase in interplay and
interdependence has been a subject of the whole century, and longer (Emmott, 1999).
Basically it all started when men crossed the border of their caves in order to exchange
supplies with someone else. Phoenician traders roamed the known world with goods,
twenty-five centuries ago, during the Golden Age of Greece, collecting market specific
data and bringing information as well as products to customers (Lewis 1999). Seven
hundred years ago, the Medicis became what may have been the first “vertically
integrated global operator”, buying raw materials and converting or manufacturing them
(Lewis, 1999). The Medicis eventually operated some 100 branches in France, Naples
and Turkey, with trading offices in London and many other capitals, and to this day may
be one of the most efficient and profitable “international” companies ever developed
(Lewis, 1999).
The difference in our century is the speed of change. A decade ago no one
would have anticipated the collapse of communism in the Eastern European countries,
dismantling of apartheid in South Africa, Berlin becoming the capital of a reunited
Germany, Czechoslovakia, Yugoslavia and the USSR broken up into over 20 states, or
150 countries backing a climate convention. Economic historians like to argue that
trade and capital flows were more global in the late 19th century, a laissez-faire era
that came to abrupt end with the outbreak of World War I. Although barriers and other
government interventions were practically non-existent, capital took a week or more to
cross the Atlantic and much longer to reach Asia (Shepherd, 1999). The capital
exporting countries were mainly Britain, France and the Netherlands. The hot
emerging markets during this period were in the United States, Japan, and Argentina
and trade was, by today’s standards, minuscule and corporations were tiny (Shepherd,
1999) .
After World War I the world moved into a period of fierce trade protectionism and
tight restrictions on capital movement (Eiteman, 1999). During the early 1930’s,
America sharply increased its tariffs, and other countries retaliated, making the Great
Depression even greater (Eiteman, 1999). The volume of world trade decreased
significantly and international capital flows virtually dried up in the inter war period.
Capital controls were maintained after World War II, as the victors decided to keep
their exchange rates fixed – an arrangement known as the Bretton Wood System
(Eiteman, 1999). But the big economic powers also agreed that reducing trade barriers
would be vital for a recovery. They set up the General Agreement on Tariffs and Trade
(GATT), which organized a series of negotiations that gradually reduced import tariffs.
GATT was replaced by the World Trade Organization (WTO) in 1995 (Eiteman ,1999).
In the early 1970s, the Bretton Woods System collapsed and the currencies were
allowed to “float” against one another at whatever rate the market set. This was seen
as a signal for the rebirth of a global capital market. America and Germany quickly
stopped trying to control the inflow and outflow of capital. The United Kingdom
abolished capital controls in 1979 and Japan in 1980. However, France and Italy did
not abandon the last of their restrictions on cross border investment until 1990
(Eiteman, 1999). This is part of the reason why continental Europeans tend to worry
more about the power of global capital markets. (Eiteman ,1999) From a historical
point of view, globalization can thus be seen as a long and more or less constant
process. Nevertheless, we will see that there are new different ways, in which economy
was and is becoming faster and more internationally integrated.
Global capital markets are growing at a remarkable rate. A decade ago, about
190 billion dollars passed through the hands of currency traders in New York, London
and Tokyo every day (Blecker, 1999). By 1998 daily turnover had reached almost 1.5
trillion dollars (Blecker 1999). These bold figures confirm that the world’s capital
markets have been transformed. Ever larger sums of money are moving across
borders, and ever more countries have access to international finance.
The international flows of capital are a major channel of globalization and their
importance can be assessed by the development of foreign direct investment (FDI),
which is directly concerned with the emergence of international production networks.
Over the whole period since 1980, FDI constantly increased as exports did as well
(Blecker, 1999). During 1980-97 in particular, global FDI outflows increased at an
average rate of about 13 percent a year, compared with average rates of 7 percent
both for world exports of goods and services and for world GDP (at current prices)
during 1980-96 (Blecker, 1999). The increase in direct investment flows has laid the
foundation for a marked expansion of international production by globally operating
corporations, which now have an estimated 3.4 trillion dollars invested in about
449,000 foreign affiliates throughout the world (Mallampally, 1999). But over the past
few years, the movement of goods and services across national boundaries has
become the subject of intense public attention all over the world. To the public at large,
trade is the most obvious manifestation of a global world economy (Boltho, 1999).
World trade flows more freely than it ever used to. This is due mainly to international
agreements under which governments agree to forswear trade barriers – most notably,
the General Agreement on Tariffs and Trade (Boltho, 1999). There have been eight
rounds of GATT talks since 1947, in which countries have cut their import tariffs. Tariffs
on manufactured goods, for example, are now down to around 3.8% in industrial
countries (IMF, 1999).
The most recent GATT round, the Uruguay round, ended in 1993. The Uruguay
round did much more than cut tariffs on goods. It heralded a big institutional change,
creating the World Trade Organization, which now boasts 134 members (as of
February 1999), as a successor to GATT (IMF, 1999). It also made big changes to the