What Is global strategic complexity?

• The global strategic complexity :

challenges faced by organizations
doing global business are: Foreign
law, compliances and regulations
Each host country has its own set of
laws, compliances and regulations.
Before entering any foreign market,
business should undertake .
What Is global strategic complexity?

Even for firms operating in a single market,

strategies and strategy development can be a
complex process. This complexity is typically
created by ever‐increasing levels of
technology, markets where segments
multiply, internal and external supply chains
meshed with other businesses, and a volatile
economic and political environment.
The global strategic complexity

Organizational communication involves the

interaction of individuals in a business,
association or organization of people.

Perhaps the most basic challenge generated by

globalization in organizational communication is
the simple idea of communicating with other
people from different cultures with whom you
have contact.

Cultural differences can also influence market

demand for your product or service.
The global strategic complexity

“Miscommunication could have a direct impact on

profitability”

language barriers causing problems during face-

to-face meetings and conference calls, language
barriers can interfere with email communication,
create misunderstandings and irritations, and
often lead to huge mistakes.

They can also introduce feelings of loss of

respect, so it is essential that these issues are
addressed and overcome, especially during the
early stages of business.
The global strategic complexity

• Effective communication with colleagues, clients,

and customers abroad is essential for success in
international business. And it’s often more than
just a language barrier you need to think about —
nonverbal communication can make or break
business deals too.

• such as shaking hands — can and should

influence the way you communicate in a
professional context.
The global strategic complexity

Issues related to the rules of etiquette in new global

meetings may be the most common challenge, but the
challenge is greater when you consider social differences
in such sensitive areas as gender and religion.

Culture

The shared set of beliefs, values, and patterns of

behavior common to a group of people.

Culture shock

Confusion and discomfort a person experiences in an

unfamiliar culture.
The global strategic complexity

• Ethical issues for MNCs:

• Corruption — illegal practices that further

one’s business interests.

• Sweatshops — employing workers at low

wages for long hours and in poor working
conditions.

• Child labor — full-time employment of children

for work otherwise done by adults.

• Sustainable development — meeting current

needs without compromising future needs.
The global strategic complexity

political Challenges:

Issues such as ill-defined or unstable policies and

corrupt practices can be hugely problematic in
emerging markets. Changes in governments can
bring changes in policy, regulations, and interest
rates that can prove damaging to foreign
business and investment.

Political risk- the political decisions or events in

a country will negatively affect the long-term
profitability of an investment.
The global strategic complexity

Technical Challenges:

• One of the major difficulties organizations faces

nowadays is the lack of technical skills and
approaches for staffing, it is obvious to know that
when business moves to a global environment and
open branches and factories in different countries,
it is essential to select the right staff.
And technical challenges is shown when a
country lack of the required skills to operate the
business in the same country.
The impacts of international trade law.

1. Shipping Customs and Duties

International shipping companies like FedEx, UPS

and DHL make it easy to ship packages almost
anywhere in the world.

However, one of the disadvantages of

international trade is that most of these destination
countries' customs agencies charge extra fees on
items shipped to them.
The impacts of international trade law.

Tariff: a tax collected on goods shipped across

national boundaries.

Quota: a limit on the number or value of goods

that can be traded.

Export restraint agreements reached by

governments in which countries voluntarily limit
the volume or value of goods they export and
import from one another.
 The impacts of international trade law.

Economic system: most countries today are

moving toward market economies.

Natural resources: different countries have

various availability of natural resources.

Infrastructure: the schools, hospitals, power

plants, railroads, highways, ports, communication
systems, air fields, and commercial distribution
systems of a country.
The economics of globalisation and the environmental impacts of globalisation.

• Economic Challenges:
• One of the fundamental impacts of globalization on economic
Currency rates

• While price setting and payment methods are major

considerations, currency rate change is one of the most
challenging international business problems to navigate.
Monitoring exchange rates must therefore be a central part
of the strategy for all international businesses.
Complexity in the world’s top 5 economies*

Germany: Complexity is high, driven mainly

by a challenging accounting and tax
landscape. Strict adherence to European and
global regulations can wrong-foot foreign
investors unfamiliar with the requirements.
Fines from the Federal Office of Justice for
missing deadlines are high and can escalate
quickly.
Supply chain management

Primary activities are directly concerned with the

creation or delivery of the product or service.
Can be grouped into five main areas:
• Inbound logistics
• Operations
• Outbound logistics
• Marketing and sales
• service
The complexities of the international supply chain management

A local supply chain is a chain that only operates

within national boundaries ,domestic new ventures
differentiated themselves by their focus on
production expansion strategy and customer
specialization.
the strategy of production specialization focuses on
limited geographical markets.

The global supply chain is an extension of the local

supply chain, a company in a global supply chain
deals with multiple countries .
The complexities of the international supply chain management

The benefits that a firm can gain of working in global

supply chain are reduced costs; increased revenues
and improved reliability because they use
international manufacturing sources .
companies gain advantages of cost savings
because of switching manufacturing from the
developed world to emergent economies in other
countries. Firms can save costs due to fewer
regulatory controls and significantly lower wages .
The complexities of the international supply chain management

The benefits that a firm can gain of working in global

supply chain are reduced costs; increased revenues
and improved reliability because they use
international manufacturing sources .
companies gain advantages of cost savings
because of switching manufacturing from the
developed world to emergent economies in other
countries. Firms can save costs due to fewer
regulatory controls and significantly lower wages .
The complexities of the international supply chain management

Besides the advantages of global supply chains they

also deal with the disadvantages. The flow of the
supply chain is more difficult to coordinate than in a
single country supply chain. A company deals with
different taxes and duties, exchange rates, trade
barriers, transfers prices, the uncertainty of
government stability and the infrastructure .

Also different local cultures, languages, and

practices effect the effectiveness of business
processes like demand forecasting and material
planning
The complexities of the international supply chain management

The global businesses face Logistics and Transport

Challenges due to the increases of tariff barriers, It
has prevent in trade flows between countries.

So the trade barriers such as tariffs and quotas

should be eliminated and bureaucratic procedures
are reduced in the hope of attracting new business
and foreign investments.
The risk of diversification strategy

Diversification strategy

A company can diversify in several ways, including

acquiring a new business, adding a new market
segment or selling new products or services.
The risk of diversification strategy

Two types of diversification:

Related: when the supply chains of two businesses that are managed within the
same firm (i.e., the same company or company group) share cross-linkages that
provide opportunities for superior performance than when they are managed by two
independent firms.

Unrelated: when the supply chains of two businesses do not share any linkage, i.e.,
they are completely different and they do not offer any opportunities for competitive
advantage if managed within the same firm
Diversification strategy

Instance of related diversification: Johnson & Johnson

Consumers products

Baby care Wound care

Women's care Medicines

Skin and hair care Oral care

Nutritionals Vision care
Diversification strategy

Instance of unrelated diversification: General Electrics

Aviation Healthcare
Appliances

Financial services
Consumer products Energy
Diversification strategy

Instance of unrelated diversification: Virgin

Railways

Radio

Travel agent
Megastore

Airlines

Telecom and media

Soft drinks
The risk of diversification strategy

• Operational Stress and Brand Damage

If customers want your new product or service, You might reduce productivity among
employees who must now multitask.

Short-term capital needs and debt expense to fund the diversification might be too high.

If you produce, store and ship products, your supply chain might not be able to handle the
burden.

When you consider a diversification opportunity, analyze the affects it will have on your
human resources, information technology, production, finances and marketing.
 The risk of diversification strategy

• Brand Damage

• KFC has resisted selling hamburgers, fish and tacos,

even though it might be able to sell those products,
because it would damage its brand message of being a
leader in fast-food chicken.

• Diversifying into new areas using the same brand name

can confuse your customers or convince them you are
no longer a leader in your area because you don’t
specialize.
 recommendation an organization can apply to solve and overcome challenges

• Language Barriers

• Despite the availability of online translators, language is still one of the major disadvantages of
international trade. While tools like Google Translate and SDL can be used to formulate instructions
and communications in another language, they are far from foolproof.

• The marketplace is filled with examples of poorly translated products with names that got
misconstrued in another language. To solve this, consider using a marketing agency in the targeted
country or region to review all the company's materials before rolling out the product or service.
 recommendation an organization can apply to solve and overcome challenges

• Legal factors

• These factors that influence business strategies are related to changes in government laws and
regulations.

• For a successful business operation it is important that the businesses consider the legal issues
involved in a particular situation and should have the capability to anticipate ways in which changes
in laws will affect the way they must behave. Laws keep changing over a period of time.

• From the point of view of business it is important that they are aware of these changes in the areas
of consumer protection legislation, environmental legislation, health & safety and employment law
 recommendation an organization can apply to solve and overcome challenges

• Technical Challenges

• The lack of technical skills and its challenges can be solved through many approaches, global
business can achieve its vision through the suitable staffing, to do so in the situation of lacking of
technical skills, global organizations can take its trained and skilled staff to be supervisors or
managers and lead the technical issues in the hosted country where the organisation wants to
expand.

• Transferring staff can be effective ways to overcome the issues of technical challenges