Global strategy is an abbreviated word that covers three broad areas. These include global, international, and multinational strategies. Basically, these three areas denote the strategies which are aimed at enabling the organization attain its objectives and goals in regards to international expansion. When developing global strategy, it is helpful to identify between the three types of international expansions, which may arise from a firm’s capabilities, resources, and current international position (De Wit, and Meyer, 2010). When the firm is mainly fixated on its home fairs, then its strategies away from its home fairs might be viewed as international.
There are various implications associated with the three forms of global strategy. These include international strategy. This denotes the firm’s objective that is associated mainly to home market. A high and good competitive advantage, which is significant in the development of strategy is designed from the home market. Multinational strategy is the other aspect. A firm is associated with a number of markets, outside its home country. Global strategy is the other global strategy form. The firm treats the world like one big market and with one supply source having little variation. Additionally, competitive advantage is designed mainly on a global basis.
Various companies claim to be going global when all they are implying is that they are going internationally and beyond their home countries. There are various aspects why global strategy is important and may include the opportunities for profits and sales. This is based on the company’s perspective. This may be caused by poor profitability in the home market and the only option is to go international. There may be other options, which make it expand outside the home markets. For instance, oil companies may expand with a motive of securing resources or else called resource seeking. Several of the clothing companies are also said to expand with a motive of gaining efficiency seeking. Other companies may gain foreign companies to increase their market position versus competitors or else called strategic asset seeking.
The other aspect that global strategy is important is based on the customer perspective. International theory needs to lead to lower services and goods prices since the economies of scope and scale, which will stem from a higher global base. Additionally, there are customers, who wish to purchase good, which are global. The other aspect why global strategy is important based on international government organizations is the current dominant thinking that has to lead to down barriers to world trade while offering some degree of protection to various countries and industries. The other aspect why global strategy is important based on the international non-governmental organization perspective is the fact that some of the global strategies of various multinational organizations are taken to be suspicious. Such organizations have been alleged to exploit developing countries.
There are various benefits associated with global strategy. These benefits include economies of scale where the cost saving designed by a team when it shares transfers or activities competencies and capabilities from one part of the team to another. The other benefit is the economy of scale where the additional cost savings that happen when greater volume production offers the reduction of unit costs. The other benefit associated with global strategy is global brand recognition. The benefits derived from assuming a brand that is known throughout the world. The other benefit is satisfaction of global customer. This is based on the fact that multinational customers demanding similar products, quality and service at several locations around the world. The other benefit is minimal labor and other input costs.
In the 1980 and 1990 big oil reputation was not that good. Exposes of malpractices with regards to the human rights, environment, conflicts, and local communities were rife. Despite this, various American firms decided to embark on a makeover as a way of wining placate enemies and friends. This was not done through the proverbial application of philanthropy and public relations, but also by actively advertising corporate social responsibility. This concept mainly focuses on two ideas. First, corporation need to go clear of both minimalists standards laid in place in law and the piecemeal intervention, which characterize philanthropy by adopting a scope of voluntary initiatives aimed at reducing malpractice and improving heir environmental, social and human rights performance and impacts. Secondly, modern, well-run companies need to be very responsive to the concerns regarding the multiple stakeholders and aspects regarding management, which regards reputation and risk management and organizational learning.
Over the last ten years, BP has gained much acclaim and support for the proactive stance regarding environmental issues, most remarkably for its position regarding climate change and efforts to control emission regarding greenhouse gases. Despite heated debates regarding global environmental issues and corporate responsibilities with that respect, the last ten years has seen the emergence of a potentially much broader and a wider social agenda, many times framed with the concepts regarding corporate social responsibility or corporate citizenship. CSR is said to be the aspect where businesses view and uphold the society rather than the broader aspect of aiming
After the merger with Amoco in 1998, BP entered the scene amongst the world’s top three oil firms. Judging in regards to merit like market capitalization, revenue, and expenses, BP was in 2000 was left only by the other oil majors like shell and ExxonMobil. BP also is ranked third in regards to gas and oil reserves amounting to about 15.2 billion oil barrels equivalent. The products of BP are said to be in sale in almost 100 countries and has good established operation in about six continents. Briefly, BP has received attention, which is moderately negative regarding corporate social responsibility in comparison to the other companies like Shell. BP has in fact received growing recognition in regards to its positive contribution regarding corporate social responsibility through demonstrating leadership and in various ways acting like a catalyst for transformation in the oil industry in whole.
Corporate governance denotes the system of structure, duties, rights, and obligations by which corporation are controlled and directed. The governance structure denotes the distribution of responsibilities and rights among diverse participants in the corporation and states the procedure and rules for building decision in the corporate affairs. Governance offers the structure by which corporations pursue and set their objectives, while dazzling the context regarding regulatory, social and market environment. Governance is a method used for monitoring policies, actions, and decision of corporations. Governance regards the alignment of interests between the stakeholders (De Wit, and Meyer, 2010). There is renewed interest regarding corporate governance practices in current corporations, mainly in regards to accountability, as the high-profile fall of various corporations in 2001-2002, mainly as a result of fraud and then followed by the current financial crisis in 2008.
Corporate scandals regarding several forms have maintained political and public interests regarding regulation of corporate governance.
Like in any industry, the commitment of large oil companies in regards to corporate social responsibility could be judged, to various extents, by their acceptance of reporting practices, codes of conduct, and interaction with important CSR institutions. The aftermath that happened in 1995, made Shell prove to be a first leader by revising its 1976 general business principles statement by including reference to human rights and sustainability. The other oil chief followed suit and have their own firm codes of conduct. Principles regarding human rights and security are mainly relevant to the oil industry. Many of the oil chiefs currently produce CSR or annual sustainability reports. Shell was the first firm in the oil industry to produce this report, which considered community and social responsibility.
The aspect of BP of revealing a website where people could review all its reports is an aspect that shows their communication regarding corporate social responsibility.Shell and BP have an organized way of corporate governance. This is aimed at the retention and protection of human rights an aspect that has been closely monitored. They have been handling their issues in a more specific way as a way even protecting the environment. This is also in regards to CSR where both companies have taken up the aspect of producing CSR reports. This is an aspect that brings credibility as it will show how far they have upheld the issue of human rights and environmental protection.
The pressure on firms to deliver increased efficiency and operational effectiveness is escalating. A period of higher prices, prolonged supply lines and investments in a diversified and expanded infrastructure is adding vital additional costs to the value chain. At similar time, firms can expect prolonged and indeed, higher resistance to costs that are passed on to end-users. Companies are supposed to view various strategies like financial, technological, fiscal, and operational as a way of improving efficiency. Basing on operation aspect, firms should minimize asset security risk, performance availability, serviceability, restoration and reliability after breakdown.
Like a mature company, energy firms should attain enhanced profitability, in larger parts, by best disciplined costs and class performance as market demand is high to their products, but with no fluctuation. Many product price levels are high currently, but management groups know that product price term is cyclical. In the look of changing cyclical and demand pricing, operating an efficient and smooth business, and squeezing costs, is critical. The consolidation of firms has been attained through acquisition and mergers. Aging infrastructure needs to be replaced or upgraded. The compliance costs associated with environmental remediation and enhanced safety standards have trimmed already thin margins. The aspect of CSR is the notion that leads and drives to performance. Attaining operational effectiveness is an aspect that starts from proper CSR practices (Johnson, Scholes, and Whittington, 2005).
Businesses often meet strong competition for capacity in the workforce. Though it is hard to find the finest employees for your firm, it can be even harder to keep them involved so they do not pursue opportunities in another place. The reason most regularly given by employees for parting their jobs is because they are disengaged or detached from their managers or work. Skilled workers basically will not endure to work for a ruthless boss or in poor situations. To preserve employees you must know what is essential to them and have them attached to their work. Related or engaged personnel will be more committed and devoted to the business. Retaining skillful employees is a substantial issue for an industry since a high rate of worker turnover outcomes in a loss of awareness and abilities and can be very exclusive. The cost of dropping an employee involves aspects of lost efficiency and employment effort, you will now have made a substantial investment both money and time in attracting, selecting, training, developing, recruiting, inducting, monitoring, training, mentoring, and rewarding these personnel.
The resulting factors may affect an employee’s verdict to leave their job including poor management, substandard remuneration, problems with instant supervisors or personality dissimilarities, and partial work-life equilibrium. There are various factors that make employees stay in their job including, the work itself or being involved in the work, respectable leadership, and associations with immediate administrators, recognition, and pay. BP has been in the spotlight for paying its employees in more better and in a distinguished aspect. This is an aspect that has made it retain its distinguished workers. This is also an aspect that has made BP pay its employees better payment. BP has also tried to retain its best workers by also looking at the potential and skilled workers who have worked well. This is done through rewarding its best performing workers an aspect that indicates that they motivates their employees so that they can retain them.
Shell has on the other aspect adopted the aspect of retaining its skilled workers. This is because these employees have led to the success of the company. This company has gone ahead to maintain associations with immediate administrators, recognition, and pay as a way of making sure that its employees feel safe and secure. This is an aspect that leads to employees maintaining their work and also increases their performance. Just like BP, Shell has also gone ahead to motivate its employees. This is done through compensation for the most outstanding employee an aspect that leads to competition and thus improvement of performance. Retaining their employees is an aspect that these two major oil companies strive to achieve and in greater aspects as it makes possible to maintain and add the performance of the company.
Question 2
Mergers and acquisitions or M&A are both corporate strategy aspects, management and corporate finance associated with the selling, buying, dividing and combination of various companies and related entities, which can aid an enterprise develop rapidly in its region or locality of origin, or a firsthand field or fresh location, without producing a subsidiary, other child aspects or use of a joint venture (Lynch, 2006). Mergers and acquisitions action can be denoted as a kind of restructuring in that they end in some entity restructuring with the purpose to provide progress or positive value. Consolidation of a firm or sector arises when prevalent M&A activity focuses the resources of many minor firms into a few bigger ones, such as arose with the automotive industry from 1910 to 1940.
The difference among a merger and an acquisition has become gradually blurred in various esteems mainly in terms of the decisive economic outcome, while it has not entirely disappeared in all conditions. From a lawful point of outlook, a merger is a permissible consolidation of two firms to one entity, while an acquisition arises when one firm takes over another and utterly establishes themself as the new proprietor in which case the aim company still survives as an independent legal body controlled by the buyer. Any structure can end in the economic and financial association of the two entities. Practically, a contract which is an acquisition for legal drives may be politely called a merger of equals when both CEOs approve that linking together is in the greatest interest of both firms, while when the agreement is unfavorable that is, when the marked firm do not want to be obtained it is practically always viewed as an acquisition.
BP is one company that is seen as one of the biggest as a result of its merger with Amoco Corporation of US in 1998. BP was mainly registered as the Anglo-Persian corporation in 1909 April 14, but renamed as Anglo-Iranian company in 1935. Later in 1954, it changed its name to BP. After its merger with Amoco in 1998, it changed its name to BP Amoco before it assumed BP PLC in 2000. The company in 1977 saw its journey to private life as some of its shares were sold to the public where in 1980 its remaining is shares were entirely sold to private ownership. There are various advantages associated with mergers and acquisition and the chief aspect is that the synergy that gives a surplus power, which enables cost efficiency and increased performance. When two companies work together they support each other and the firm stands to gain tremendously in regards to profits with regards to work performance and financial gains (Mintzberg, Ahlstrand, and Lampel, 1998).
The other advantage with M&A is cost efficiency. This is attributed by the fact that any merger indeed advances the purchasing power because there is increased negotiation in regards to bulk orders. Also the reduction of staff ensures that there is cost cutting and increased profit margins of the firm. Despite this, increased volume production leads to reduced production costs per unit, which eventually results to increased economies of scale. When in a merger it is easier to maintain a competitive edge as there are many strategies and issues, which could be well known and gained by combination of talents and resources of two or more firms. The other advantage is that when two firms combine, there is enhanced and strengthened business network through improved market reach.
This leads to new sales prospects and new areas to discover the possibility of their company. M&A are also said to be advantageous as they lead to increased market power, which then limits tough market competition severity. These are some of the advantages that BP enjoys after its merger with Amoco. After the merger with Amoco in 1998, BP entered the scene amongst the world’s top three oil firms. Judging in regards to merit like market capitalization, revenue, and expenses, BP was in 2000 was left only by the other oil majors like shell and ExxonMobil. BP also is ranked third in regards to gas and oil reserves amounting to about 15.2 billion oil barrels equivalent. The products of BP are said to be in sale in almost 100 countries and has good established operation in about six continents.
Question 3
The main aim of better management is the provision of services to the society in a more efficient, appropriate, equitable, and sustainable way. This is only attained if the chief resources regarding service provision like human resources, hardware, finances, and process aspects regarding the delivery of services are converged together to a service delivery point and well synchronized (Lynch, 2006). Management and leadership are significant for the delivery of services. The two are similar in various aspects, but they involve different kinds of skills, outlook, and behaviors. Good managers are said to struggle to become good leaders and better leaders, need management abilities to be effective. Leaders are said to have a vision regarding what could be achieved and then talk this others and advances strategies for achieving the vision.
Managers certify that the obtainable resources are effectively organized and smeared to give the best results.
Managers must at all times try to achieve these aspects in regards to the laid down objectives. There are various attributes that a leader should have including charismatic, have the ability to influence to work jointly for a mutual cause, have logic of mission, are decisive, have the ability to create a solution amidst a problem. There are various qualities that managers should possess including good organizational skills, clarity of tasks and purpose, ability to expect results and communicate tasks, ability to negotiate several regulatory and administrative processes, and good delegation skills.
BP in many years has claimed publicly that it was focused on safety. After a closer look in to the company, it was identified that it was focused on cost cutting, but at the outlay of safety. There are also public aspects like the Mexican Gulf accident, which have made the management of BP CEO at stake. There are various aspects that he needs to do so that all these aspects will not affect their performance in the market. There are various aspects that Bob the CEO of BP needs to undertake and some of the big objectives that they have include the aspect of addressing safety, rebuilding trust in the firm, and focusing on creation of value.
Conclusion
There are various implications associated with the three forms of global strategy. These include international strategy. This denotes the firm’s objective that is associated mainly to home market. A high and good competitive advantage, which is significant in the development of strategy, is designed from the home market. Multinational strategy is the other aspect. A firm is associated with a number of markets, outside its home country. Global strategy is the other global strategy form. The firm treats the world like one big market and with one supply source having little variation. Additionally, competitive advantage is designed mainly on a global basis. Companies and firms need to effectively work on their global strategy as a way of attaining excellence. CSR is said to be the aspect where businesses view and uphold the society rather than the broader aspect of aiming. CSR is an aspect that needs to be effectively tried by all firms as it indicates the competitive advantage strategy laid down by firms.
References
De Wit, B. and Meyer, R. (2010) – Strategy Process, Content, and Context International Perspective, 4th Edition, Thomson Learning
Johnson, G., Scholes, K. and Whittington, R. (2005) Exploring Corporate Strategy: Text and Cases, 7th Edition, Financial Times Prentice Hall.
Lynch, R. (2006) Corporate Strategy, Fourth Edition, Financial Times Prentice Hall.
Mintzberg, H., Ahlstrand, B. and Lampel, J. (1998) Strategy Safari, Financial Times Prentice Hall
