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Global Strategic Planning - Coggle Diagram
Global Strategic Planning
Overview on Global Strategic Planning
Global planning necessitates an awareness that decisions taken by managers, firms, industries, nations, and regions are made so in a cross-cultural environment.
Competitiveness is now a global fact of business life, and all companies must think internationally and plan globally.
Strategic planning must take into consideration the nature of its industry worldwide, the policies of its national government on international issues
External and internal aspects affect its competitiveness is core to strategic planning and, therefore, is more than acquiring a competitive advantage.
Over time, management theorists have been frequently caught in self- contradictions. Yesterday big was beautiful; today small is sensitive.
With some theorists the stress is on generic strategies of a given industry, while with others the emphasis is on each enterprise taking an independent strategy to success.
Global strategic planning should point to processes achieving that objective.
Global Political Economy: Foreign Direct Investment, Trade, Financial Flow, and Technology Transfer.
FDI Outflows Up
FDI outflows from developed countries rose in 2003, albeit marginally.
It is important to mention here that the most recent entrants to outward FDI are China, India, Brazil, and Mexico.
Some examples of such international expansionary activities by businesses from emerging markets are:
Haier
Household appliances Chinese company, has established manufacturing plants in South Carolina, USA.
TCL
A leading electronics business in China, bought the television arm of France’s Thomson SA as well as the handset operations of France’s Alcatel, SA.
Lenovo
The largest manufacturer of PCs in China, acquired IBM’s PC unit in December 2004, for US$1.2 billion.
China Minmetals
Proposed to buy Noranda, a leading Canadian mining and metals company, for US$5.74 billion.
Cemex,
Mexican cement giant, recently took over its main American competitor, Southdown, and made it the largest cement producer in the United States.
FDI Inflows Down
FDI flows to different regions and countries were uneven.
Worldwide, 111 countries experienced a rise in FDI inflows and 82 a decline.
Flows to developing countries as a group rose by 9 percent
There was an increase in flows to 36 countries and a decline to 17.
After a record year in 2002, when inflows reached $31 billion, FDI flows to countries of Central and Eastern Europe (CEE) fell sharply in 2003
Dynamic Growth of Services FDI
The shift of FDI toward services has gone hand-in-hand with a change in the industry mix of services FDI.
FDI has traditionally concentrated on trade and finance, since 1990 FDI in several other service industries has shown dynamic growth.
What drives the shift of FDI toward services?
Partly, it reflects the ascendancy of services in economies more generally and the non-tradable nature of services.
Countries have liberalized their services FDI regimes, including through the privatization of state-owned utilities.
Service firms invest more and more abroad as they seek new clients and exploit their own ownership advantages, frequently spurred on by competitive pressures.
FDI Prospects
Prospects for global FDI are expected to be positive in both the short term (2004–2005) and the medium term (2006–2007).
Despite the FDI recovery, competition for FDI is expected to remain fierce in the years to come.
Corporate profits of TNCs are also rising, as are stock valuations.
Services are expected to be the sector most attractive to FDI, particularly in tourism, telecommunications, and IT.
Asia and Central and Eastern Europe are viewed as the most attractive regions for FDI, while relatively weaker FDI recovery is expected in Western Europe and Africa in 2006–2007 and in Latin America in 2006–2007.
These generally positive trends may be counterbalanced by a number of risk factors, including oil price volatility, the rise of new protectionism impeding trade and outward FDI, regional conflicts, and increased threats from terrorism.
Prospects for Major Host and Home Countries
Top Destinations for FDI
Responses suggest that a country’s natural resources, rather than its level of economic or political stability, determine the likeliness of receiving increased FDI in the future in the region.
The largest recipients of FDI flows in each region are expected to be the most likely destinations of FDI in the future too.
The results point to the business opportunities for firms in their respective industries, even if their scale of operations in those developing countries is smaller.
Leading Sources of FDI
The phenomenon is particularly significant because it underscores China’s growing importance as regards FDI, not only as a host but also as a home country.
The Strategic Planner in a Global Multicultural Environment
Moving into the twenty-first century, managers around the world will be faced with additional challenges.
The latter seems to be the most appropriate multicultural management strategy, for the private and/or nonprofit sectors.
For global competitiveness and success, organizations of today need the multicultural manager who must possess the necessary cultural sensitivity and skills to enable their organizations to adapt to the foreign countries’ overall environment.
These multicultural managers should be able to do:
Adapt readily to new and unusual circumstances and lifestyles.
Welcome and facilitate transitional experiences.
Reprogram their mental maps and constructs.
Envision transnational opportunities and enterprises.
Prepare for new mind shifts while eliminating old mindsets.
The Role of the Transnational Corporations
Transnational corporations are envisioned as engines of growth partly because of their role in providing capital and training, stimulating trade, and generating and transmitting technology and innovation.
Thus crucial to any global strategic planning approach is the awareness of the linkage FDI provides among trade, financial, and technological flows.
International production as an economic stimulant has led to increased attention to factors that influence FDI, such as host country geopolitical position, human and material resources, and values
FDI can be seen as instrumental in human and material resource development, and trade development.