1.

Trends in international management

The five trends in global management

MAKING SENSE OF CHANGE

The Fourth Industrial Revolution is upon us and is changing even our recent understanding of
today’s increasingly technological environment. As Mark Esposito explains, the breakthroughs in AI,
digitalization and automation are leading to fragmentation and feelings of disillusionment.
And beyond these technological implications, managers have to deal with economic and political
power shifts and resource scarcity. And that’s without forgetting the human factor of your incredible
team.
While it may seem overwhelming, making sense of this change by exploring megatrends and their
implications at every level is a skill all managers should have. We can all get distracted by the day-
to-day realities of running a business but thinking on the macro level is just as important to ensure
success.
It’s not about having your head in the clouds—it’s about getting a birds eye view.

TURNING THE MARKET TO YOUR ADVANTAGE

Technological advancements are affecting everything, and the markets are no exception. As the
world evolves, competition is emerging from previously unexpected areas. Take the now infamous
example of FinTech, which took the banking sector storm—and entirely by surprise.
In many ways we can understand these first victims of technological disruption because they had no
warning. Today’s managers are offered no such consolation.
Now, it’s all about fully engaging with the tools at your disposal to keep your market position secure.
This involves leveraging big data to understand customer behavior, and improve their experience as a
result. Beyond improving current experiences, you should also be aware of how to approach value
creation from new and innovative perspectives to keep your customers engaged and stand out from
the competition.
With new techniques such as endomarketing and neuromarketing, you as a manager should be
empowered to build trust and brand loyalty, mapping out your market for planned, long-term
success.  

BECOMING THE DISRUPTOR

But avoiding the aftershocks of disruption isn’t enough. As an effective manager, you need to lead
the disruption. In a world where customers increasingly demanding, and digital reputations can be
won or lost on a tweet, being on the forefront of disruption means leading the market and setting the
trends that others will follow.
Rethinking your organization’s business model, efficiently turning ideas into reality, and
encouraging creativity will lead you and your team to be the disruptive innovators of tomorrow.
Don’t keep up with the trends—set them.

FOSTERING A CULTURE OF ENERGY

As a manager, your team is your rock. You wouldn’t succeed without them, and they wouldn’t
succeed without you.
The culture you foster within your organization goes a long way to producing lasting results.
Motivation is a nuanced issue that’s a combination of rewards, performance incentives and being part
of a well-thought-out purpose. As every aspect of the market becomes increasingly demanding,
empowering your employees to take part in creating a vibrant corporate culture is paramount for your
business’s success.
However, this also means that you must develop an actionable and measurable implementation plan
to ensure that your organization reaps the benefits of an energetic professional atmosphere in the
short and long term.

NEXT-LEVEL LEADERSHIP
None of these trends in global management can be capitalized on without strong leadership. As a
leader, you need to be able to amplify the impact of your people and your business.
That all sounds well and good—but what does it really mean? The main aspects of amplifying impact
never change. They are: inspiration, engagement, connection, support and task prioritization in the
short and long term. However, the success in fostering these in your organization is less of a science.
We all have our own leadership styles. While there’s no one right way to unlock talent and
performance, there are many wrong ways. Being a leader today involves establishing your own
leadership style, empowering yourself to empower others.

Trends that will shape the future business environment:

Blurring of industry boundaries: Information and other communication technologies have made industry
boundaries less clear. For instance, the South Korean company Samsung now produces products ranging
from televisions to cell phones to microprocessors. This blurring of boundaries makes it much harder to
identify and understand competitors.

Flexibility matters more than size: Recent failures of large companies suggest that being big may no
longer be useful. Consider that many giants such as GM, Microsoft, Dell, and IBM have all hit market
caps. As outsourcing, alliances, and partnering gather steam, companies are finding that they can
convert many fixed costs into variable costs. Such changes make scale less useful

Finding your niche: Multinationals have traditionally strived to be the leaders in their respective
industries. However, such thinking is now changing. Kim and Mauborgne’s Blue Ocean Strategy suggests
that finding those uncontested niches also leads to success. In fact, many companies are finding that
they can do well by finding niches and satisfying the needs in that niche.

Hypercompetition: The new environment is characterized by intense competition coming from

companies located in all parts of the world. Businesses cannot expect to be stable and be around for a
long time. For instance, consider that Haier, a Chinese company that entered the U.S. market in 1999, is
now the topselling brand of dorm fridges. It also is the market leader in home wine coolers and ranks
third in freezers.

Emphasis on innovation and the learning organization: Successful companies are going to be those that
can draw on local knowledge to innovate and compete globally. For instance, many of the successful
South Korean and Japanese companies were able to use their domestic markets as tests to improve and
launch their products globally. To achieve such success, any multinational will need to develop the
appropriate mechanisms and systems to integrate local knowledge to produce value for the company.

2. The role and place of МNCs in the world economy

1. MNEs play an important role in today’s global economy

MNEs and their foreign affiliates account for one third of world output and GDP and two-
thirds of international trade (Figure 1). MNE’s contribution to world GDP was estimated
at 32% in 2016, of which roughly one third was by foreign affiliates abroad and two
thirds by MNE headquarters and domestic affiliates in the home country.
MNEs are found to be relatively more important in terms of exports and imports,
demonstrating the large trading activities of this group of firms. In 2016, foreign affiliates
were responsible for 30 of global exports, as compared to 34% for MNE headquarters.
When looking at imports of intermediate inputs (where we can distinguish the category
of firms on the importing side), we find smaller shares for MNEs, particularly for foreign
affiliates, which only import 13% of all intermediate inputs.

Figure 1 Prevalence of MNEs in the global economy, 2016 (%)

Source: OECD Analytical AMNE database.

Multinational companies play a vital role in the economy of a country in modern world
since many years.
These companies promote the growth of trade due to the bulk investment of foreign
capital in a country.
The direct foreign investment in the industrial sector reduces the amount of commercial
debt of a country.
The knowledge of the latest technologies are transferred with the research wings of
these multinational companies, benefiting the small local industries.

3. Features of МNC management

Features of Multinational Corporations (MNCs):

Following are the salient features of MNCs:
(i) Huge Assets and Turnover:
Because of operations on a global basis, MNCs have huge physical and
financial assets. This also results in huge turnover (sales) of MNCs. In
fact, in terms of assets and turnover, many MNCs are bigger than
national economies of several countries.

(ii) International Operations Through a Network of Branches:

ADVERTISEMENTS:

MNCs have production and marketing operations in several countries;

operating through a network of branches, subsidiaries and affiliates in
host countries.

(iii) Unity of Control:
MNCs are characterized by unity of control. MNCs control business
activities of their branches in foreign countries through head office
located in the home country. Managements of branches operate within
the policy framework of the parent corporation.

(iv) Mighty Economic Power:

MNCs are powerful economic entities. They keep on adding to their
economic power through constant mergers and acquisitions of
companies, in host countries.

(v) Advanced and Sophisticated Technology:

Generally, a MNC has at its command advanced and sophisticated
technology. It employs capital intensive technology in manufacturing
and marketing.

(vi) Professional Management:
ADVERTISEMENTS:

A MNC employs professionally trained managers to handle huge

funds, advanced technology and international business operations.

(vii)Aggressive Advertising and Marketing:

MNCs spend huge sums of money on advertising and marketing to
secure international business. This is, perhaps, the biggest strategy of
success of MNCs. Because of this strategy, they are able to sell
whatever products/services, they produce/generate.

(viii) Better Quality of Products:

A MNC has to compete on the world level. It, therefore, has to pay
special attention to the quality of its products.