Over the past week, there had been a lot of discussion of the role of the multinational companies in the international market, their impact on developing economies, comparative advantage, and competitiveness. However, the detailed and nuanced discussion of the internal shifts and strategy and structure changes that the company needs to adapt to adjust to the international business environment has been glanced over and discussed only in conjunction with other concepts.
The international market offers many development options to an emerging enterprise. In the highly competitive global market, knowledge and effective use of these structuring of international operations strategies are vital for maintaining comparable advantages and competitiveness. This is reflected very well in the strategies IBM uses to organize and structure its international operations.
IBM fully recognized how volatile its old approaches to supply chains were, and how easily cost and currency fluctuations, disruptions of supply, transportation difficulties could cause the chain to collapse. But, by entering emerging markets, is was able to create new supply chains and reconfigure the existing ones, for the purpose of profiting from the logistic, financial, and political benefits that were offered by different countries.
Coupled with their innovative on-demand approach and their strategy of an integrated supply chain, the company was able to maximize the effectiveness of its globally dispersed manufacturing and service sites (Hammami &.Frein 2014; SupplyChainBrain 2014).
By entering international trade, a successful emerging business can become a part of cross-sector development partnerships. Such partnerships are project-based agreements between businesses, civil institutions, and the government, which support collaboration and goals such as sustainability, economic development, and health and safety education. IBM has a notable involvement in such a partnership with the Ghana Health Service and the Yale School of Medicine.
Their goal is to reduce the rates of mother-to-child HIV spread (2014 IBM Corporate Responsibility Report 2014). The cooperation between these organizations and the government has the potential for successful long-term alliances, with novel agendas and a lot of potential for social innovation (Manning & Roessler 2013).
Another way companies can increase their overall innovative capability, is by cooperation with businesses from emerging economies, who, according to Sun & Lee, have been attracting the attention of researchers and analysts by showing signs of effective innovation (2013). IBM, similarly to other multinational corporations, has attempted to benefit from these new markets by integrating itself in them and enabling joint venture portfolios. Of note is its joint venture with the Abu-Dhabi based Mubadala Development Company, which has led to the creation of the “Cognit Technology Solutions LLC”, which will enable distribution of IBM computing systems to businesses in the North Africa and the Middle East (Mubadala and IBM unveil joint venture ‘Cognit’ 2015).
The structural and social changes that the multinational companies experience can have both negative and positive effects, depending on the approach that the management takes to the adaptation process. Despite the fact that profits are the primary goal of most businesses, Zhao, Park, and Zhou have come to the conclusion focusing solely or mostly on the economic goals of a company in the host county, especially if it is a growing economy, can lead to economic and social crises (2014). In the long term, the most effective approach for maintaining profits and support the host country is by balancing the social and economic adaptation.
References
2014 IBM Corporate Responsibility Report. 2014. Web.
Hammami, R, & Frein, Y 2014, ‘Redesign of global supply chains with the integration of transfer pricing: mathematical modelling and managerial insights’, Journal of Production Economics, vol. 158, p. 267-277.
Manning, S, & Roessler, A 2014, ‘ The formation of cross-sector development partnerships: how bridging agents shape project agendas and long-term alliances’, Journal of Business Ethics, vol. 123, no. 3, p. 527-527.
Mubadala and IBM unveil joint venture ‘Cognit. 2015. Web.
SupplyChainBrain 2014, How IBM Drives Value with Supply-Chain Analytics. Web.
Zhao, M, Park, SH, & Zhou, N 2014, ‘MNC strategy and social adaption in emerging markets ‘, Journal of Business Ethics, vol. 45, no. 7, p. 842-861.