Leadership Essay

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Chapter 4 The Transnational Corporation “Building a global presence is never exclusively the result of a grand design. Nor is it just outcome of a sequence of opportunistic and random moves. The wisest approach which might be called directed opportunism maintains opportunism and flexibility within a broad direction set by a systematic framework that addresses four major issues: choice of products, choice of markets, mode of market entry and speed of global expansion.” Anil Gupta and Vijay Govindarajan Introduction In their famous book ‘Built to last,’ authors James C Collins and Jerry I Porras mention that many visionary companies did not have a clear idea of what to do, when they started their operations. Yet, they thought big, defined their corporate purpose in terms of a broad overarching set of loosely defined objectives and set themselves Big, Hairy & Audacious Goals (Bhags). Similarly, the evolution of many of today’s transnational or truly global corporations has in more cases than not, been shaped by circumstances, rather than deliberate strategies. However, these companies typically nurtured big ambitions right from the start and had strong leaders to facilitate their global expansion. In this chapter, we look at how companies globalize. The process of globalisation Historically, it has been observed that the process of globalisation evolves through distinct stages. In the first stage, companies normally tend to focus on their domestic markets. They develop and strengthen their capabilities in some core areas. A strong core capability acts as the launching pad for globalisation. For example, Sony developed expertise in miniaturization of consumer electronics products. Toyota perfected its lean production system based on its ‘Just in time’ philosophy. The UK retailer Tesco, learnt how to respond to market trends, perfected its

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