Leadership in Managing a Global Business: the Training and Development Programs - Essay Example

Assignment Before critically analysing the functions and management issues in a global business to identify ways to reduce risk and improve organisational effectiveness, I first would like to throw light over what we mean by efficiency and effectiveness. Efficiency: Organisational efficiency refers to the capability of a business enterprise to produce maximum output with the help of same available sources. In other words, it could be defined as an ability to produce same level of output with fewer sources. Effectiveness: On the other hand, organisational effectiveness can be defined as the degree to which a business accomplishes its defined goals and objectives. Introduction: The world has become a global village after the contemporary developments and advancements in information technology and communication networks. These recent advancements and improvements in media networks and advertising have greatly affected the attitudes, beliefs, behaviours, lifestyles and perceptions. At the same time, this has also created many business opportunities for enterprises. In fact, many businesses have gone global and have become transnational, multinational or supranational corporations with operations all across the world. Companies today are expanding their operations all across the globe to target a large group of potential customers who are heavily exposed to media, and who now have relatively similar lifestyles (inclination towards a white collar job, brands, facilities, luxuries etc). On the other hand, customers have also become very demanding, since they seek value and are inclined towards new and innovative products. In short, it could be said that businesses have to deal with a large diverse group of customers who have both willingness and ability towards different innovative and existing products. Businesses usually have many different international market entry strategies such as include Joint ventures, Contract Manufacturing, Exporting, Licensing, Franchising, Turnkey project, Management contract and Cross Border Mergers and Acquisitions. Each option has its own merits and demerits; however, in this paper, I will discuss the management issues that corporations or entities face in their global operations and how they reduce risks to ensure inter organisational efficiency and improve their effectiveness. Issues in Managing a Global Business: The first major issue in running and managing a global business is control over costs of doing business. The strategic managers of a global firm can face problems such as raise in miunimum wage rate in their host country, inflation, power failures and breakdowns, changes government regulations related to corporate taxes and custom duties, surge in utility costs, increase in discount rate, fluctuations in exchange rates of host country and other miscallaneus costs. The changes in minimum wage rate can be due to rising food and consumer product inflation that in turn forced a global manufacturer to abide by the laws, rules and regulations of their host country. Similarly, increase in international oil, gas and coal prices may lead to surge in power and gas tariffs that results in overall increase in total cost of doing business. Also, this increases the per unit cost of production. In addition, it is worthwhile to mention that frequent power failures and electricity breakdowns lead to halt in production / manufacturing / assembling process that will then increase the depreciation expense of a large firm though with enormous financial resources. Moreover, the changes (mainly the increase) in interest rate by central banks also disrupts the entre production, supply and distribution chain since it results in an increase in financing costs that are sometimes a significant portion of an enterprise’s total expenses. It must also be pinpointed that changes or frequent fluctuations in exchange rates (either undervaluation or overvaluation) greatly affects the strategic management of a global business because it can sometimes result in mammoth financial losses or in results completely opposite to those initially forecasted by the executives of that business. In addition to above mentioned issues, there is another major issue of changes in corporate tax rates (direct taxes) and in custom duties for import of machinery, raw material and other inputs (indirect taxes). These changes, especially those related to inputs and production, affect the production costs that then become a headache for a corporation or business firm. (Nejati, Shafaei and Mostafa, 2008) Second, a business can not run without having accurate, timely and updated information regarding business potential and scope in a new market. This information includes the economic costs and benefits of initiating and managing a global business, Gross Domestic Product of host country, unemployment rate, growth rate, changes in lifestyles , tastes and preferences, availability of infrastructure and raw materials (communication, rail, road and air networks), utilities (power and gas), financial system, business and tax policies, media power, size of market, industry competitors (both domestic and foreign), purchasing power, labour and environment laws, imports / exports, currency changes, “political risk, racial strife, religious freedoms, civil strife, corruption, nepotism, nationalism, war, bureaucracy” and others. (Price, 2007) Failure in conducting an effective Marketing Research may lead to information mismanagement, incorrect forecasting, unrealistic assumptions and expectations and finally in an ultimate failure of global business operations. (Price, 2007) Another major issue in managing a global business is that strategic planners and top management has to design, fomulate and implement a new selection and recruitment Human Resource programme to ‘hire and train’ an entriely new group of overseas employees (including production, management, marketing and sales staff) who may match an organisation’s requirements and who are capable to ‘produce and sell different organisational products’. In fact, this is the most challenging issue in global management since managers have to deal with a large diverse group of employees with different backgrounds, experiences, perceptions, values, norms, societal standards and taboos, attitudes, beliefs, behaviors and lifestyles. Top Foreign managers (from home country) may find it quite difficult to deal with local employees if they are not aware of their instrumental values, behaviors, norms and other personality traits. In addition, employers should also have to focus on creating shared organisational values and a relatively flexible culture to improve their employees’ normative commitment. Failure in fulfilling above mentioned leads to greater employee / employer conflicts, high employee turnover rate (that later increases the costs of hiring, recruiting and training), reduction in competitiveness, and thus adversely affects organisational productivity, efficiency and effectiveness. (Cherrington and Middleton, 1995) Other challenges in managing a global business include ‘learning new business practices’ applicable in host countries, dealing with non-availability of modernised and sophicticated technology that could fulfill the need of outstanding capital assets of greater capability, and establishing partnerships with domestic businesses such as raw matrial / inputs suppliers and distribution channels members (dealers, wholesellers, retailers and transporters). Also, sometimes a business may require to collaborate with other firms in the same industry to ensure its survival. In these circumstances, adversarial approach is not viable. (Price, 2007) Managing Risks: Every problem has a solution. Risks in managing global businesses can also be managed by first conducting effective market research. This would enable a business get complete know how of a new market and what is the actual potential. The analysts and policy makers can then use this information to decide whether to initiate operations in a global destination or to consider it an option for future. Not only new businesses may benefit from marketing research but also the existing businesses, since they could update themselves on the scope of their current marketing and business strategy, in making decisions, in formulating and implementing new growth or survival strategies and tactics. In addition, global business risks could be managed by providing proper training to both top and middle level management about business practices applicable in host country. Training managers about norms, values, standards, attitudes, and behaviours of consumers and employees of a foreign country would reduce the probability of inter organisational conflicts, especially the lack of trust among employees / employers and their disputes. This training would compel strategic management to devise and ensure shared organisational values and a flexible culture that emphasises open communication, coordination, cooperation and mutual benefits. In fact, a type of ‘we-feeling’ could be restored that in turn could be effective in improving productivity and efficiency while reducing the total costs of operations. Example of Coca Cola: Coca Cola also faced global management issues such as those related to language, employee hiring, societal interests, tastes, beliefs, attitudes, perceptions and preferences of customers, advertising costs in host countries and others etc. These issues were handled by adopting and implementing a multi-domestic strategy so that executives could make decisions after considering the differences in cultures, demographics and other social factors. (Coca Cola Case Study, 2009) Example of Toyota: Toyota’s management is currently facing an unexpected challenging situation when its leading automobiles such as Prius, made up of highly sophisticated technology and that were famous for safety and reliability, observed a technical failure in brakes and accelerator pedals. This has put a serious question mark on company’s claim that it masters in producing safe, secure and reliable vehicles for its customers. Raddick (2010) mentioned that Toyota had already recalled its 8.5m vehicles across the globe, including 1.7m in Europe and 180,000 in United Kingdom. This recall has sabotaged the reputation and goodwill of Japanese largest producer while it has also shattered the consumer confidence especially those who have not tried any Toyota’s models before. The management has decided that it would improve its service quality from excellent to outstanding and will try its best to make customers satisfy through effective decision making and offering fool proof vehicles to its potential market. (Lehman, 2010) and (Raddick, 2010) The role of leadership and its impact on issues of global organisational effectiveness: Leadership refers to the ability of accomplishing one’s defined goals and objectives in an allocated time period. According to Gandz (2005), ‘leadership is about getting satisfactory results’ for your shareholders and employees who are directly related to an organisation. This concept has certain essential pre-requisites such as focus on innovation, focus on continuous learning, vision, risk taking, information sharing, self confidence, effective planning and others etc. Basically, a manager doesn’t necessarily be a good leader, but a good leader with charismatic qualities would definitely be a good manager. In short, leadership is all about viewing an opportunity in the market, conducting research over that available lucrative business option, involving oneself in devising viable plans to tap that market and finally taking the risk to get the most out of that prolific opportunity. A leader makes use of his or her skills, education and training to make the most of available options and to compete effectively and competitively even in tough economic conditions and in an absolutely uncertain, unstructured, unexpected, unpredictable and unclear business environment (for example in recession, economic turmoil, political unrest and instability, financial crisis and others etc.). (Gandz, 2005) Leadership is extremely important in managing a global business where executives have to compete with many international and domestic companies and organisations in a host country. Indeed, a leader who handles a global business ensures continuous learning and experimentation across the corporation so that everyone in that chain takes part in some risk taking and greater economic well being of a business. Also, a leader ensures that employees are part of decision making process (basically giving value), which in turn restores harmony, peace and unity among employers and their subordinates. In addition, a leader focuses on managing diversity and on principle of affirmative action. This is done to come up with new innovative ideas from a highly diverse group of workers who share their personal experiences and ideas that could provide great insight over many feasible but covert business opportunities. Secondly, ensuring equal opportunity to all for entrance in a firm and advancing based on their strictly merit based performance, regardless of their culture, cast, race, religion, language and gender strengthen the inter organisational relationships and reduce turnover rates that saves costs. Also, a leader focuses on building long-term strategies and relationships, since he or she believes that a business is a continuous entity. In addition, there is more emphasis on creating value for customers and building loyal relations in order to reap long-run benefits than small and temporary short term gains. Also, a leader emphasises continuous innovation and differentiation, improvement and development so that it could maintain the interest of its international consumers and entice them towards different market offerings. This is all done to obtain clear, unique and distinctive image in the minds of potential customers. (Dreachslin, 2007) and (Kumar, 2009) The next section will throw light over leadership qualities and skills of great Bill gates, who has been chosen by me as an example. Example of Bill Gates: Bill Gates, the co-founder and former chairperson of the most famous Microsoft Corporation, was a drop out of Harvard University who established his own software company in 1975 based on his idea that personal computers would be a coming thing and that every office and household will soon be inclined towards desktop PCs. He along with Paul Allen then dedicated all his energy in developing software for personal computers that later gained enormous consumer acceptance, fame and popularity and broke all records. As far as leadership qualities of Bill Gates are concerned, he is a man full of commitment, dedication, motivation and energy. He primarily focuses on principles of entrepreneurship that talks about “risk taking, innovation, passion, intelligence and receiving criticisms”. His continuous efforts and dedication towards development of and improvements in existing and new softwares helped Microsoft in earning colossal financial benefits, market reputation, goodwill and profits. He remained as the world’s richest for successive years after establishing his corporation. Unequivocally, Bill Gates adopted the democratic style of leadership rather than autocratic style because he believed in information sharing, communication and cooperation among his employed workforce. He constantly focused on retaining the most talented pool of workers who are open and innovation, besides having potential and ability to compete and meet challenging assignments in any situation. This is open evidence that he was a genuine leader and a fighter who could accomplish whatever he dreamt and planned. In addition, he had a clear vision and mission that in real sets a threshold for workers. Also, he never lost hurt from any of his failures by taking into account the fact that this is not an end of world. Indeed, this is essential for a genuine leader since a business may face multiple ups and downs for any internal or uncontrollable external factors. It is worthwhile to mention that Bill Gates was also a leader with excellent technical skills and had glib expertise and proficiency over his area of expertise. This is, in fact, one of the most important leadership qualities since personal qualifications of a chief play a vital role in determining a firm’s survival, growth, success and sustainability. (Kumar, 2009) Conclusion: Global businesses often observe some cross border issues and problems that are considered as impediments to survival, growth and sustainability. These businesses therefore take various steps such as initiating the training and development programs, formulating multi-domestic and global strategies etc. to cope with these management issues. Leadership also plays an important role in managing a global business. A leader can use his or her vision, innovation, technical know-how and education to develop a flexible culture with shared values. This, in turn, reduces the burden of managing a global business. Sources: Nejati, Mehran, Azadeh Shafaei and Mostafa Nejati (2008) “Issues in Global Business and Management Research” Universal Publishers Florida Available at http://www.bookpump.com/upb/pdf-b/9429446b.pdf Brakman, Steven, Harry Garretsen and Charles van Marrewijk (2008). “Cross-border Mergers and Acquisitions” Tinbergen Institute Discussion Paper Available at http://publishing.eur.nl/ir/repub/asset/11079/2008-0132.pdf Cherrington, David J. and Laura Zaugg Middleton (1995). “An introduction to global business issues” Available at http://findarticles.com/p/articles/mi_m3495/is_n6_v40/ai_17191274/ Price, Robert (2007). “What are the challenges to managing a global business?” Global Entrepreneurship Institute. Available at http://gcase.org/2007/11/24/what-are-the-challenges-to-managing-a-global-business/ Gandz, Jeffrey (2005). “The leadership role” Ivey Business Journal Available at http://www.iveybusinessjournal.com/view_article.asp?intArticle_ID=532 Dreachslin, Janice L. (2007) “The role of leadership in creating a diversity-sensitive organization (DIVERSITY)” Entreprenuer.com Available at http://www.entrepreneur.com/tradejournals/article/164594509.html Kumar, Dhananjay (2009). “Report on Leadership Style of Bill Gates” Scribd.com Available at http://www.scribd.com/doc/16315025/Leadership-Style-of-Billgates (2009). “Strategic Management Issues of Multinational Companies (MNCs): A Case Study on Coca-Cola Company” Scribd.com Available at http://www.scribd.com/doc/17320694/Strategic-Management-Issues-of-Multinational-Companies-MNCs-A-Case-Study-on-CocaCola-Company Lehman, Jean-Pierre (2010) “Calling for openness in new Toyota culture” Shangai Daily.com Available at http://www.shanghaidaily.com/article/shdaily_sing.asp?id=434557&type=Opinion&page=0 Ruddick, Graham (2010) “Toyota boss: We can win back the customers confidence. We are doing a better job” Telegraph.co.uk Available at http://uk.finance.yahoo.com/news/toyota-boss-we-can-win-back-the-customer-s-confidence-we-are-doing-a-better-job-tele-92251ce4fd60.html?x=0 Read More