The expression “global village” must have been inspired by the way business is conducted today. The advancement of communications technology experienced in the last two decades has made it possible to be in more than one place at the same time.
Many companies no longer have obstacles to thinking big, and national borders are no longer a barrier to conducting business today. Expanding the business, not only the product, beyond the borders of a country is to speak of multinational or global companies.
We use the terms global company and multinational company indistinctly, although in reality, according to experts, they are models that differ in autonomy and way of implementing their business strategy.
Any of us when hearing the expression global company , we weigh in a corporation with a presence throughout the world.
Realistically, very few or practically no companies do business in every part of the world, it is enough to implement their business strategy, resources and facilities in several countries to become a global company.
Let’s look at the meaning of a global company, its scope and implications.
The meaning of global enterprise
A global company is basically a corporation or large company with reach to several countries that seeks to maintain its philosophy or business and product strategy. The global company establishes locations, distribution centers and plants in different geographical areas, however it concentrates the management, strategic aspects of its business concept in its headquarters.
Some experts believe that global companies and multinationals differ in the way they implement their corporate strategy, since the latter grant greater delegation in terms of product, production and marketing strategies, allowing greater regionalization or adaptation to cultures and regionalisms.
For the Development Bank of Canada, a global company is a business that operates with facilities such as factories and distribution centers in many nations of the world, it is different from an international company that, although it sells products in several countries, has its facilities only in its country originally.
Corporations such as Coca-Cola and McDonald’s have characteristics of global companies not only because of their widespread presence almost all over the world, but also because of the way in which the business concept and qualities of their products prevail in any part of the globe. Except for minimal adaptations “a quarter of a pound with cheese and a Coca-Cola” are the same in Colombia as in Beijing.
Global company, business concept
The objective of any company is to manufacture and sell its products or services to customers and consumers who are willing to buy them wherever they are, as long as they can afford them.
Therefore, the concept of a global company refers to companies that carry out their operations in more than one country and are represented in several of them. The proliferation of these companies is said to have taken effect at the beginning of the 20th century and they seem to be the order of the day today.
Just take a look at Fortune’s top 25 global companies to work for to find the names of giants like Cisco, Google, Microsoft, BBVA, Marriot, Scotiabank, and AMEX (in non-exhaustive order).
Necessity is said to be the mother of invention. The size of local markets for the products of various global companies must be what led to their proliferation around the world.
A common characteristic of global companies is that the parent corporation often designs and develops a product in-house and then plans to mass-manufacture it close to where the product will be sold.
Rather than exporting finished products, the global company concept prefers to use available local labor as well as raw materials in order to achieve the same goal at the end of the day. Strategy that has ended up becoming something more affordable, which means higher profits for business owners.
Most of the headquarters of global companies are in the developed world, specifically in Western Europe, America, Japan, China. Since these companies help bring foreign exchange to their home countries, they have tax incentives in some of these countries, since they are creating local wealth abroad.
Due to their international influence, one of their harmful effects is that they strongly threaten local companies and their products due to the positioning of the brands they market.
Some people have criticized them for stifling local industries, on the other hand they create employment for the regional population, technology transfer, workforce training, as well as a market for local raw materials.
Even when subject to taxes and other restrictions in some of the countries where they operate, global companies have managed to stay on board and make lucrative profits to ship back home.
The companies that are managed under the concept of global business are successful in their different markets by taking advantage of comparative advantages. It is not strange to find that they establish a base in a country where they know that labor is going to be cheap, that they import raw materials from a different country and that after they have made their manufacture, they even export them to other markets. , including their own countries of origin.
The result is usually that they make a profit that allows them to stay in business. The global companies have become masters of creating wealth not only for themselves, but for all others who are associated with them in one way or another.