The Definition of a Global Corporation

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Global Corporations see foreign markets as an opportunity to get more customers.
Global Corporations see foreign markets as an opportunity to get more customers. (Image: global warming image by Brian Tomlinson from Fotolia.com)

Advances in communication technology have made the world smaller. In the 21st century, corporations manage global campaigns by email, telephone, video conferences and file-sharing applications. A trend rose in the 1990s in which corporate entities traveled beyond their nation's borders to reduce operating costs. In the 21st century the true global corporations abandoned or avoided this trend and saw the value of truly penetrating foreign markets as an investment strategy.

Definition

A global corporation explores and capitalizes on building a customer base and investment strategy in every market possible. Global corporations leverage a network of entities in these markets to work toward maximizing profitability. In the late 1990s, Panos Mourdoukoutas rightly predicted in his book "The Global Corporation; The Decolonization of International Business" that parent companies would learn to "treat each national market as a part of a single, integrated regional or global market"

Products

Global corporations sell the same core product or service in every market they penetrate. McDonald's adds or removes menu items by region, but the core service of fast, hot food is the same in all markets. Levi's sells the same fashionable, comfortable jeans across the globe. Product decisions are made by a centralized management unit for all markets. Julian Birkenshaw, Professor at London Business School said in a "Bloomberg Businessweek" article "What we are seeing is the emergence of global customers that want a single point of contact around the world."

Labor Force

Multinational corporations of the 1990s hired workers in foreign countries to reduce the cost of labor to produce goods that would be sold in the company's home market. Global corporations in the 21st century hire members of their consumer demographic. They invest in the communities they sell to and use the diversification of ideas to their advantage. "Global Corporate Finance" Suk H. Kim and Seung Hee Kim said "Foreign-owned companies in the world's most highly developed countries are generally more productive and pay their workers more than comparable locally owned businesses."

Distribution

Distribution methods set global corporations apart from the rest of the business world. In the book, "Distribution: Planning and Control" David Frederick Ross writes "actual global distribution structures are so closely intertwined with a country's social, cultural, economic, technological, and political conditions" that one distribution method isn't sufficient to serve every market. Corporations have learned to adapt to cultural difference, different governing bodies, and the different ways people live around the world to maximize the impact of their business and manage them through tightly networks..

Expert Insight

In "Distribution: Planning and Control" Ross explains that "Some of the concerns are currency devaluation, political unrest, declining markets and nationalization." The corporation's ability to respond to problems that could arise in multiple markets, at the same time, is dependent on how well they have organized their local networks. Critics oppose the growth of global corporations. Stephen J. Kobrin; University of Pennsylvania says that the financial power global corporations has threatens to challenge the power of regional governments."

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