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Global Strategic Planning - Coggle Diagram
Global Strategic Planning
Overview
Global planning necessitates an awareness that managers, firms, industries, nations, and regions make decisions in a cross-cultural environment.
Even if the company in question markets its products only domestically, its strategic planning must consider the nature of its industry worldwide.
The company’s external environmental considerations (national trade balance) and internal environment (labor-management relations in the firm) must be factored into the process of planning.
Forming teams from among the divisional structures within the enterprise, forming alliances with suppliers and customers, and forming venture partnerships in other markets all point to innovative operating processes at work.
Serve international customers, shareholders and employees, regardless of the origin of the company.
Global Political Economy: Foreign Direct Investment, Trade, Financial Flow, and Technology Transfer.
FDI Inflows Down
The UNCTAD notes that FDI flows to different regions and countries were uneven.
Worldwide, 111 countries experienced a rise in FDI inflows and 82 a decline.
The share of developing countries in global FDI inflows rose by 8 percentage points, to 31 percent in 2003
FDI flows to developed countries fell by 25 percent
FDI Outflows Up
Unlike inflows, FDI outflows from developed countries rose in 2003
32% increase in outflows in 2003 in the US
Firms from developing countries too are increasingly becoming outward investors.
Ex: Cemex, a Mexican cement giant, took over its main American competitor, Southdown, and made it the largest cement producer in the US.
Dynamic Growth of Services FDI
There is a dramatic shift toward the services sector.
The shift of FDI toward services has gone hand-in-hand with a change in the industry mix of services FDI.
Ex: The equivalent value in telecommunications, storage, and transport rose from an estimated $29 billion to $476 billion and in business activities from $126 billion to $1.1 trillion.
it reflects the ascendancy of services in economies more generally and the non-tradable nature of services.
In 2002 the services sector accounted for about 60 percent of the global inward FDI stock, compared to less than 50 percent a decade earlier.
FDI Prospects
Prospects for global FDI are expected to be positive in both the short term (2004–2005) and the medium term (2006–2007).
The extent and speed will, however, vary by region and industry.
Services are expected to be the sector most attractive to FDI, particularly in tourism, telecommunications, and IT.
The primary sector is expected to see a moderate FDI recovery.
Mergers and acquisitions are expected to resume their popularity in developed economies, while greenfield investments will be preferred in developing countries.
Prospects for Major Host and Home Countries
Top Destinations for FDI
In Asia, India was ranked right behind China.
In Africa, South Africa and Nigeria are the only sub-Saharan countries in the list.
The other destinations are Egypt, Morocco, and Algeria.
In Latin America and the Caribbean, the traditional FDI powerhouses (Brazil, Mexico, Argentina, and Chile) are on top of the list, with Venezuela fifth.
In the CEE region, Poland is placed on top (ahead of the Russian Federation) because of its accession to the EU.
In developed countries, Canada and Japan were designated as the most attractive destinations by respondents, which is somewhat surprising, since Japan had only recently begun to seek FDI actively.
Leading Sources of FDI
China has made the list of the expected top five home countries worldwide in terms of geographical coverage (2004–2005), replacing Japan, which traditionally has been a significant home country.
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.
Social, cultural, and political characteristics are affected by FDI in the host country.
Positive and negative effects in changing lifestyles, consumption patterns, labor force composition, health, safety, and environment cost, and management practices by TNCs.