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Global Integration: Developments and Implications for Organizations
Introduction
The Global Integrated Enterprise is indeed a recent development emanating from the evolution phase that the Multinational Corporations (MNCs) have gone through. It is also imperative to note that the process of globalization has been necessitated by MNCs as the primary catalyst. Hence, MNCs are better acknowledged as global enterprises rather than multinational corporations (Palmisano, 2006).
In traversing the historical evolution of Corporations, a lot has occurred in transforming the latter bearing in mind that they were initially under the dominion of governments, fully controlled and regulated by the state. However, major advances and growth in these corporations started taking shape in the mid of 19th century. To date, the corporations have fully established themselves as globally integrated enterprises, defying state borders and regulations.
Significant developments in global integration
One of the most significant developments that have been experienced in the last thirty years of the 21st century is the decline of economic nationalization (Tallman, 2009). Accompanying this development is that barriers that have been impeding investment have abated remarkably. The perception by companies on trade liberalization alongside flows in investment has shaped and speeded the process of globalization.
Additionally, the cost of communication at the global level as well as the ease with which business operations have been conducted since the beginning of the 1970s has greatly improved. This has been possible owing to the massive revolution in the Information Technology platform. Consequently, the associated cost of running a global business has by far and large gone down. Even as this development has been taking root, operations in globally integrated business enterprises and technologies are now standardized (Tallman, 2009). Hence, it is now possible for companies to interlink and coordinates their operations effectively and efficiently. Thus, the concept of shared technologies and common standards in running global enterprises is right on course. Moreover, the corporate globalization process is now deeper due to the changed perceptions on how businesses should be operated to maximize gains. As part of the globalization process by the global enterprises, there has been a shift in the center of attention from the end products to the process of production itself. Companies are now laying more emphasis on how to manufacture their products rather than on what to produce (Palmisano, 2006). As a result of this global business integration, state borders have a little definition as companies seek to expand their geographical operations in terms of corporate practice and thought.
Technological implications for organizations
Furthermore, the change in focus from MNCs to globally integrated enterprises has witnessed new dawn on the location where companies manufacture their products as well as who participates in the process of production (Tallman, 2009). Companies have generally been manufacturing goods closer to the target markets before the adoption of globally integrated enterprises. However, recent developments reveal that overseas investments are rapidly taking shape as companies seek to capture the untapped global market. Hence, outsourcing has been instrumental in employing new skills and competencies (Tallman, 2009).
The technology used by organizations in supply networks is greatly influenced by this new business model. For instance, the processes of outsourcing and shared standards of operation require a technological base that can enhance efficient operation within and among different companies. This implies that an organization ought to comply with systemic changes. It is now possible for firms to coordinate their multiple functions; the different pieces can be separated and at the same time combined as part of business strategies (Palmisano, 2006).
Conclusion
To recap, it is vital to note that the globally integrated enterprises are a product of Multinational Corporations (MNCs) of the mid 19th century that have evolved with time. The new model of globalizing business operations has largely transformed the originally known MNCs. For example, companies are now resorting to shared business standards and technologies alongside outsourcing as part of a global business strategy to engage the untapped markets.
References
Palmisano, S.J. (2006). The Globally Integrated Enterprise , Foreign Affairs, 85 (3):127-136.
Tallman, S. (2009). Global Strategy: Global Dimensions of Strategy , West Sussex: John Wiley & Sons.
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