American companies dominated the corporate scenario in the early 90's, then Asian and European companies rose and challenged the mighty American corporation at global scenario. In the last decade also, we have seen various mergers, acquisitions, and takeovers by companies in a bid to salvage their businesses. Economic theories related to trade like absolute and comparative advantage have further helped companies to manage their global businesses under fierce competition. Corporations have adopted corporate governance models like Anglo Saxon model of corporate governance focused theoretically on accountability and reporting, but the continental European model stressed concentration of economic capital. Also, the chapter will provide an insight as to how stakeholder management approach in light of redefining the businesses makes changes to stay relevant to the market. The time of turbulence is also one of the great opportunities for those who can understand, accept, and exploit the new realities.
TopMini Case
A leading pharmaceutical company XYZ, having formidable presence in the cardiovascular, endocrinology segment, commands a market share of 34% in each of them. The company plans to grow at a pace of 10% for the next 7-10 years. The CEO of the company has been doing various round table conferences with all the shareholders to pave the path for the future growth of the business. Some of them are asking them to expand the existing product portfolio by citing logic that it will help them garner more market share and the others are pressing for entry into new therapeutic categories as the competition is heating up in the existing categories. After all the deliberations, the CEO has formulated the pathway of the company’s futuristic business portfolio. CEO wants to bring the drug in the female contraceptive market which has been growing at 16% from the last 8 years and the future looks quite optimistic.
CEO has suggested:
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To reduce the price of those drugs which are growing at stagnant pace
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Launch new molecules in the existing therapeutic categories
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Launch new molecules in the new therapeutic categories
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Recruit new sales representatives
Do you think all these options are right? The answers to the foresaid questions will be continued in the forthcoming sections of the chapter for better application oriented learning.
TopIntroduction
Globalization became the buzz word much before the giant conglomerates such as Amazon, Tesla, General Motors and Google existed. Corporations have scaled their businesses through protectionism, liberalization and financial crisis. American and Chinese companies have taken the definition of globalization to newer heights. With the advent of E-commerce owing to better penetration of digital accessibility, the entire global business regime has undergone a paradigm shift with trade witnessing no boundaries.
Globalization involves the integration of technology, markets, politics, cultures, labor, production and commerce (Contractor F. J., 2021). So, the corporations need to ensure their business philosophy stay relevant to the dynamic environment, for this the corporations need to consider: -
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Politics and Laws-Type of government, stability etc.
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The Environment- Accessibility to resources, labor, climate change etc.
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Macroeconomics-GDP, inflation, employment level, income inequality etc.
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Human rights- labor laws
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Cultural differences and language barrier- Religion, sub-culture, dialect etc.
Globalization has brought more agility to company’s operations with the decision making needs to be carried out to be in the interest of all the stakeholders in the volatile times. Stakeholder is “an individual or group who can affect or is affected by the actions, decisions, policies, practices or goals of an organization.” (Freeman, R. E., 2010). Moreover, only those corporations who have brought shift in their businesses have stayed relevant and others have vanished from the market. Modern concepts like ‘smart globalization’ which asks the companies to think locally and act globally, which links their spirit of adopting themselves to the need of the local markets.