Wednesday, April 26, 2006

Companies That Are Truly Global

In an article by Gordon Redding, the director of INSEAD's business school’s Euro-Asia Centre, he debunked myths about how a present day truly global MNC should look like. The thing is they come in many different forms now. Culture and historical economic evolution of respective countries have played a big part in shaping what can be termed as global MNCs of today. One main thing about a global MNC is the internationalisation of the brand/image - it has to lose its distinct domestic beginnings. He classifies these truly global MNCs which dominates global business into six broad groups:

1 The large multi-divisional, multinational firm found in Britain and the United States
2 The continental European large-scale business, such as Volkswagen and Nestlé
3 The European industrial “cluster”, such as the textile firms of Emilia Romagna
4 The Japanese keiretsu, the networks of interlinked firms still predominant in the world’s second-largest economy (although the links have been weakened substantially due to the prolonged recession of much of the 90s)
5 The Korean chaebol, unique combinations of government and family firms, such as Samsung and LG (their links have been heightened and sharpened with the government's vigilence in clearing corruption and mismanagement from the chaebols - these companies should come out stronger than before)
6 The Chinese private company— the “clans” of vertically integrated small firms that work so well in what is now “the workshop of the world” (an outsourcing web of relationships but this is the weakest of the so called global MNCs category)

In defining who is truly global, Redding have identified only nine companies that are truly global—in the sense that less than 50% of their business is in their home territory and more than 20% is in each of the other two out of the three major regions: America, Asia and Europe. They are: IBM; Sony; Philips Electronics; Nokia; Intel; Canon; Coca-Cola; Flextronics and LVMH, the French luxury-goods business. A couple of the more interesting companies which I think will make the list over the next 5 years owing to their defined corporate strategy include Samsung and Goldman Sachs. Food for thought!

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