Quantitative Research on MNC’s Global Integration – from a mobile phone service company’s subsidiary perspective
A lot of business organisations and companies engage in and focus on global integration, with the desire for more profits, sales and recognition from consumers. Global integration also allows business organisations opportunities for further development and improvement, in terms of their products, services, strategies, systems, and operations. This is because global integration offer vast business opportunities for firms with a product or service in high demand, in line with newness, cultural adaptation, attractiveness, and appropriate marketing strategies that can assist them particularly (“Global Marketing and Supply Chain”, 2008). In addition, when multinational companies focus on global integration, they are given the chance to gain more knowledge and information in their industry, thus, having the opportunity to provide more innovative services and products to their consumers.
Nowadays, the global integration has become one of the most important ideas that affect the operations of many organizations and companies worldwide. The changes happening in the society, including changes in terms of communication and technology have led to the modification of business and marketing processes and strategies, with the aim of coping with the mentioned changes. Due to the existing fact that along with the changes that happen in the society is the event of observing global markets becoming more homogenous. With this, companies and business organizations, especially multinational companies, continuously develop and improve their marketing programs and projects to meet the standards of consumers and serve them across national boundaries. The development and improvement of such marketing programs, strategies and projects lead many researchers and analysts to evaluate and assess the effects or impacts of global integration.
More often, the MNC’s global integration is being perceived by several challenges. The global integration effort by most MNC’s, has obtained significant emotive strength. For most organisations, global integration endeavour is a beneficial process which is considered a key to the potential world economic progress and also expected and permanent. However some viewed it as a threat since it might increase unfairness within and between organisations and nations, intimidates employment and living standards and foils social advancement.
Actually, businesses’ global integration effort has its unique style of giving extensive opportunities for genuine global development but it is evident that it is not progressing equally. There are some organisations becoming integrated into the global economy quicker than the others. Organisations or nations that have been able to assimilate are seeing progress and reduced poverty. With the enduring pressure of globalisation to the world, there are many organisations that are motivated to adjust with these impacts. Thus this paper will tackle about global integration effort by MNCs, mainly from a mobile phone service company’s subsidiary perspective, its benefits and costs, the key challenges that it posed to mobile phone industry and its impact for the overall business development of the industry.
This study shows the detailed information of background of the study. The research questions were also presented. In addition, the study’s hypothesis with research instruments and key variables were discussed. Basically, vital concepts, methods, samples, and analysis procedures are declared. Aside from this, the study’s limitation and its scope are discussed.
Research Questions and Background of the Study
As seen in the study of Doole & Lowe (2006), the strategies used by most companies in different markets allows them to predict the future of their business. Actually, these different modes of strategies will helped the organisation to have a good understanding of how the market operates. Moreover, the diverse markets will help in introducing to the organisation the cultures and characteristics of the markets thus it became knowledgeable with how to amend in the different setting. Actually, Doole & Lowe (2006) justified that the diverse strategies contributes in lessening the impact of business factors in starting up a business.
In a multinational market, the level of assimilation, and also the simplicity and rate of stream of supplies, are small, while public and local governments are influential and institutional investors are frail. Although for many products the world economy represents one market, saturation, together with a large number of competitors, cultural differences, and local government barriers and business practices, make competition around the globe rather complex.
The transformation of the world economy from a multinational to a global market has unleashed unprecedented competitive forces across national borders and local markets, dictating a new competitive paradigm and organizational structure for international businesses (Mourdoukoutas 1999).
Businesses are continuously developing. Multinational companies recognized the similarities between international markets and most of them tried it to integrate into the overall global strategy. Such changes actually affect the overall performance of a certain business. With this regard, this paper will be discussing the impact of global integration to a mobile phone service company. Global integration simply corresponds to the identification of similarities between international markets and integrates it to overall global strategy. Meaning to say, different variables in global perspective should carefully assessed by businesses who wanted to adopt global integration.
The primary drive of companies and firms to integrate globally is their intention or desire to expand and widen their target markets. The expansion and widening of the target markets of international firms indicates that the firm has enough resources to sustain and maintain its operations and production. Expansion of the company also indicates that the company has acquired enough knowledge in maintaining the operation of the company, thus, more learned and experienced in its own industry. This is a major factor to recognize, for with the desire to expand, the company aims for more profit and sales, which would enable to company to become more established in its industry. Second major factor to recognize and emphasize is the role of diversification, which is related to the presence of different cultures and races in the company. Several positive effects are attributed to diversification, and includes efficient resource allocation through internal capital markets, the increase in the ability of firms to internalize market failures, and increase in productivity (as cited in Li & Jin, 2006). In addition, diversification can also increase the generation of ideas, for more individuals become involved in the processes of the firm. Employees are also exposed to more cultures, practices and knowledge, thus, developing its organizational culture. Third major influence is the open opportunities for firms to engage in new business ventures, which would provide them with chances for more profit and prestige. New business ventures involve the production of new products or the innovation of a specific product or service. Fourth major influence or drive is the fact that firms may achieve fame or prestige if it globalize. The establishment of name, product/service, and reputation in specific countries and continents gives the business organization a chance to be regarded as one of the most successful business organizations in the whole world, thus, becoming more established in its own industry. Last major influence is the possibility of attracting new and more talents and skills in the company, which would give the organization the edge of performing well over other companies.
One of the perceived impacts or effects of global integration are the establishment of international alliances or coalitions, which link firms of the same industry based in different countries (Agnihotri & Santhanam, 2003). With international alliances, international policies and agreements will be established and reinforced, thus, effecting an increase in the establishment of harmonious relationships among companies. In addition, international alliances strengthens the industry where specific companies belong to, thus, reinforcing their bond that would enable them to come up with strategies for further improvement and development. Second impact of globalization is the development and improvement of the whole organization in order to address challenges or problems, for in line with the participation in globalization is the increase in the number of problems to be encountered (Agnihotri and Santhanam, 2003). With this, it can be understood that along with global integration is the need to develop, improve, innovate, and adopt new strategies and methods in relation to systems modification to enable adjustment to the changes and challenges being encountered by the organization. Modification and restructuring in the organization is needed because along with the company’s intention to expand and widen its target market is the need for additional workforce and management processes and styles that would enable the company accommodate the increase in changes. Restructuring and remodeling of the company, thus, serves to be a good way of adjustment.
Third impact of global integration is the establishment of government dealings. In the globalized era, the choice of foreign marketplace to go in and the style of entrance will largely depend on the dialogue with the foreign governments concerned (Agnihotri & Santhanam, 2003). This is because the international business must be able to make negotiations and agreements with the government concerned, in order to comply with necessary requirements and encourage harmonious relationships. In addition, the ‘muscle power’ of a multinational firm can be very important in choosing the shift of power equilibrium, such that it must control its association with the foreign government to its improvement (Agnihotri & Santhanam, 2003). Establishing a good and manageable relationship with the government concerned ensures a lasting relationship with the firm, thus, extending its operations in the foreign country. Last major impact of globalization is the increase in competition among other firms in the same industry. A firm may be in a improved position to contend with its global competitor, as it can enhance its possessions globally (Agnihotri & Santhanam, 2003). Being able to participate in its foreign target market makes the global firm more advanced and more developed compared to its rivals in the same industry, for it is able to meet the standards and demands of its foreign customers. From this perception, major suppliers and stakeholders would prefer the global firm to other firms.
For this research paper, the focus on the integrated global industry environment from the subsidiary perspective of Mobile Phone Service Company is presented as research context for two reasons. First, the importance and relevance of this environment as the operational context of multinationals have greatly increased in recent years. Many global industries have recently become integrated in nature as the environmental pressures of both geographic dispersion and global integration mentioned above have intensified over the years (Makhija et al., 1997). Second, the incorporated global industry environment gives a suitable research framework for this study, which examines the feat repercussions of global integration of business tasks that are disseminated geographically. Thus, this paper will respond to the next queries:
- With reference to business management, do business performance appraisal and management development of Mobile Phone Service Company significantly affect its progress?
- What are the variables that significantly affect the perception of the respondents regarding global integration of Mobile Phone Service Company?
- Does global integration significantly affect the progress of Mobile Phone Service Company?
- What are the recommended solutions to the problems of Mobile Phone Service Company in accordance to global integration?
With respect to the research questions, this project works out on the following hypotheses:
Ø Global integration has no significant effect to the marketing process of Mobile Phone Service Company.
Marketing involves activities related to notifying current and potential customers of the product and services and inducing them to purchase it. Such activities include promotion, advertising, branding, market research, pricing, and channel selection.
With the pressure of integration, Jain (1989) justified that the activities of marketing need to be connected across borders through information flows and communications to enhance global marketing innovation and learning. Basically, information systems can satisfy this need (Carpano & Rahman, 1998). Information technology can efficiently transport information on market trends, pricing, competitor behaviour, sales trends, and changes of regulations and local laws, and can be a significant means of impersonal communications. Nevertheless, without mutual understanding and trust, managers are less willing to accept and/or less able to attach meaning to the information transferred from other units. Hence, as in R&D and manufacturing, shared strategic objectives, shared values and norms, and trust-building among members through socialization are desirable for effective integration of marketing worldwide.
For businesses like Mobile Phone Service Company operating in integrated global industries, unifying important decision issues in marketing such as brand names, product positioning, packaging, and pricing is effective (Laroche et al., 2001). The business head office, with a broader picture of worldwide processes, can make more organized marketing decisions. For instance, central coordination of service allocation and positioning permits for the transfer of a service that has been tested in other markets. Ultimately, the method of performing promotion seems to be comparatively amorphous because it engages subjective judgment, trial and error, and various contingencies. This recommends that it tends to be complex to codify its procedure into well-specified measures, policies and manuals. Therefore formalization is likely to be moderately less efficient in integrating marketing actions globally.
Ø There is a significant relationship between global integration effectiveness and business management process of Mobile Phone Service Company.
As revealed in the study of Hitt & Ireland (1985), the effective management of business functions contributes positively to firm performance. For multinational companies in integrated global industries, a vital part of the management of business functions is their efficient global integration, which fundamentally necessitates the employment of an ideal usage outline (configuration or pattern) of combining modes. This ideal outline signifies the extent to which companies should use the modes to efficiently incorporate a business function globally.
Key variables and Instruments to be used
As discussed previously, this research study aimed to assess the perspective of Mobile Phone Service Company in accordance to global integration. With respect to this, this paper will consider the following Key Variables:
1. Integration effectiveness – Integration effectiveness will be measured on a five-point scale ranging from 'strongly agree' to 'strongly disagree' by asking how effective in general the use of integrating modes was in globally coordinating and controlling the chosen function.
2. Marketing performance – Similarly, a five-point Likert scale ranging from 'strongly agree' to 'strongly disagree' will be use to measure marketing performance by asking the current stance of marketing approaches performed by Mobile Phone Service Company.
3. Business management performance – This variable will be considered using a five-point scale ranging from 'strongly agree' to 'strongly disagree' by asking the current stance of overall business management approach performed by Mobile Phone Service Company.
Basically, the subjects needed to fill out the survey questionnaires. As indicated in the paper of Barnett (1991), the subjects will grade each statement in the survey-questionnaire using a Likert scale. These Likert scale will be consisted of with a five-response scale.
The corresponding values for responses will be:
4.50 – 5.00 Highly Satisfactory
3.50 – 4.49 Satisfactory
2.50 – 3.49 Uncertain
1.50 – 2.49 Unsatisfactory
0.00 – 1.49 Highly Unsatisfactory
The researcher selected the questionnaire as a tool because it is easy to construct and followed by the respondents. Aside from this, the copies of the questionnaire could get in to a significant number of respondents either by personal distribution or by mail. In general, the responses to a questionnaire are standardised and objectified and these could make tabulation simple. But the most important is that the respondents’ responses are of their own free will since there is no interviewer to pressure them. This is one way to avoid biases, mostly the interviewers’ bias. The researcher will also use charts and figures for data presentation.
The overall sample for this study is composed 30 administrative staff of Mobile Phone Service Company. Actually, these respondents are asked regarding the current status of global integration and the current stance of Mobile Phone Service Company in global market and their individual views about it.
In the paper of Guilford, J.P. & B. Fruchter (1973), they advised to the formula of Slovin in choosing sample sizes. Therefore, the sample size of the population in this paper will be determined by the formula of Slovin. The Slovin’s formula is given as follows:
n = a sample size
N= population size
e= desired margin of error (percent allowance for non-precision because of the use of the sample instead of the population).
Research Methods and Data Collection
The research described in this document is partly based on quantitative research methods. This permits a flexible and iterative approach. During data gathering the choice and design of methods are constantly modified, based on ongoing analysis. This allows investigation of important new issues and questions as they arise, and allows the investigators to drop unproductive areas of research from the original research plan.
And since this study intends to investigate the current stance of the perspective of Mobile Phone Service Company regarding global integration, then this study will survey 30 administrative staff in the said business regarding the effect of global integration. For this study, primary research and secondary research will be used. Moreover, the descriptive research method will be utilised. In this method, it is possible that the study would be cheap and quick. It could also suggest unanticipated hypotheses. Nonetheless, it would be very hard to rule out alternative explanations and especially infer causations. Thus, this study will use the descriptive approach. This descriptive type of research utilises observations in the study. To illustrate the descriptive type of research, Creswell (1994) guided the researcher when he stated: Descriptive method of research is to gather information about the present existing condition.
For primary research, the researcher will be conducting surveys to 30 administrative staff. At this point, the questionnaires will be used to gather quantitative data. On the other hand, secondary data will be based from the recent literatures related to global integration, marketing and business management.
As indicated previously, this paper will initially base its findings through quantitative research methods because this allows iterative and flexible approach. All throughout of data collection the choice and design of methods are persistently modified, based on partial analysis.
Data Analysis Procedures
In global integration context, there are some instances that the used were classified on the basis of intervals of time constitute vital information in the control of business activity, since this the most effective method of showing the changes that are taking place in the business, an industry or in total economic activity. Closely related to the problem of measuring changes in business activity is the making of forecast of future activity. The management of operation requires a continual making of decisions regarding the future and the basis for such forecasts is the record of the past performance.
Data on debt, sales, income, assets, economic indicators or even firm valuation are important in determining the possible future of a certain business. The said data are of interests chiefly in order that the figures for one period maybe compared with similar figures for other figures.
When observations of this kind are arranged in a time sequence and separated by (or represent) more or less regular intervals of time (months, years, decades, etc.), the progression of values is known as a time series. The concept of trend in economic time series rests in large part upon the secular growth of population, capital and resources.
In addition, it would be very helpful in the application of business cycles to business forecasting if we knew, more completely than we do the causes of the different characteristic lengths of the different industry cycles. The vast amount of study that has been devoted to the theory and behaviour of business cycles over the past 30 years has been directed mainly to the discovery of the causes of periodic behaviour of the general business cycle. These studies have been designed to show why there is a periodic movement of some regularity instead of long, slow, and random periods of increase and decrease, in other words, why a fairly regular cyclical fluctuation of business activity is superimposed on the long-term growth or decline in the level of business or why these periodic increases and decreases in activity appear to be self-generating and cumulative. Booms seem to feed on themselves and then destroy themselves.
Apparently, all these changes--trend, seasonal variation, and cycle--can be explained as fluctuations of the rate of spending. The causes of business change are as numerous and as varied as the causes of the variations of the rate of spending. Broadly considered, business cycles are caused, just as other changes in business activity are caused, by changes in the effective demand for goods and services of various kinds, by the three groups of spenders--consumers, business firms, and government bodies. At times, effective demand is so large and so persistent that capacity to business fluctuations touches the periodicity or regularity of recurring movements. For these different periodic characteristics of different industries we have no adequate and satisfactory explanation, and it is these characteristics of different periodic industry cycles which possess the most interest for the business forecaster. It is necessary, as in so many other fields of experimental, empirical knowledge, for the forecaster to use the behaviour of cycles to predict the future whether or not he fully understands the causes of the behaviour we uses. From these details of the behaviour of data, this study will consider collection of information from the staff of mobile phone service companies.
To gather pertinent data, this study will be using survey questionnaires. Particularly, the study arranges to distribute the questionnaires to the mobile phone service companies. In addition, the researcher will also consider the previous studies and contrast it to its existing data in order to give conclusions and proficient recommendations. In accordance to this, the use of IPO model will be considered to give study direction. A process is versioned as a sequence of boxes (processing elements) linked by inputs and outputs. Information or material objects flow in the course of a sequence of activities based on a set of rules or pronouncement points (Harris & Taylor, 1997). Harris & Taylor, (1997) pointed out that flow charts and process diagrams are often used to signify the process. What goes in is the input; what causes the change is the process; what comes out is the output. (Armstrong, 2001) Figure 1.1 illustrates the basic IPO model:
Input – Process – Output Model
The IPO model will give the common structure and guide for the direction of the study. Replacing the variables of this study on the IPO model, the researcher came up with the following:
INPUT PROCESS OUTPUT
With respect to this model, the data gathered will be assessed through the help of Microsoft excel and a statistical software called SPSS. Basically, the SPSS software will be used to validate the hypothesis. Thus, descriptive statistics, correlation and Chi-square will be run in SPSS software.
In the descriptive statistics, it is likely that the study will be inexpensive and swift. It can also propose unexpected hypotheses. Nevertheless, this statistics will be very firm to rule out different clarifications and principally deduce causations. This descriptive statistics utilizes observations in the study. In descriptive statistics measures of central tendency (e.g. mean, median, and mode) and measures of dispersion (e.g. standard deviation, range, variance) will be computed.
According to Guilford & Fruchter (1973), the strength of the linear association between two variables is quantified by the correlation coefficient. Since this paper is in quantitative approach which is also mainly limited to counting, coming up with frequency and cumulative distributions, and computations of percentages, then these methods of analysis yield facts and data, the uses are quite limited. Facts in and of themselves do not speech much, for instance, of achievement or performance are related to other factors that such phenomena are better understood, predicted and to some extent even controlled.
The basic purposes of sciences are description, explanation, prediction and control. Differences in a performance, for example, are better explained if other phenomena, events or even other performance are used to account for each difference. This is achieved through a process called correlation. In a sense t-tests and F-tests are special cases of correlation. Sometimes such relationship show cause-effect but sometimes it is just plain relationship.
Correlations may either be bivariate (at least) or multivariate. Actually, in this paper, the use of Pearson Product moment correlation is considered. The Pearson Product moment correlation is used if the purpose is to determine the relationship or co-variation between two variables that are usually of the interval type of data. Basically, there are two types of correlation depending on the nature of correlation. Correlation may either be positive or negative. Correlation is positive if the objects, items or cases who got high in one variable are also those who got high in another variable, and those who got low in one variable also got low in the other variable.
Correlation is negative if the reverse seems to be the pattern. That is, those who got high in one factor are generally the ones who got low in the other factor; those who got low in one factor got high in the other factor. Correlation, or r for short in the case of a Product Moment Correlation ranges from r = -1.00 to r = +1.00 as limiting values. If r = +1.00 nor r = -1.00. If the general pattern of scores indicates positive correlation or negative correlation, there are usually stray cases which do not fit the mold. These cases cause the correlation to be less than perfect, that is the r may range between, say r = .01 to r = .99 in the case of positive correlation; r =-.01 to r = -.99 in the case of negative correlation. The formula used in this type of statistic is:
= Correlation between X and Y
= Sum of Variable X
= Sum of Variable Y
= Sum of the product X and Y
N= Number of Cases
= Sum of squared X score
= Sum of squared Y score
The previous formula used in computing correlation coefficient standardizes the values. Therefore no matter what changes in scale or units of measurement are given it will not affect its value. For this cause, the correlation coefficient is frequently more helpful than a graphical representation in evaluating the strength of the relationship between two variables.
Aside from this, if the correlation index of the calculated rxy is not perfect, then it is recommended to use the following classifications (Guilford & Fruchter, 1973):
between ± 0.80 to ± 1.00 : High Correlation
between ± 0.60 to ± 0.79 : Moderately High Correlation
between ± 0.40 to ± 0.59 : Moderate Correlation
between ± 0.20 to ± 0.39 : Low Correlation
between ± 0.01 to ± 0.19 : Negligible Correlation
As indicated in the paper of Guilford & Fruchter, (1973), the indicated formula below is utilized to assess Ho for all forms of Chi-Square tests:
Where: fo = observed frequency in the cell.
fe = expected frequency in the cell (if Ho was true).
Note: the fe values for a no preference Chi-Square will always equal each other. The fe values for the no difference from an alternate population are specified by the Ho.
To determine fe for the no preference version of the Goodness of Fit Chi-Square, use the following formula:
The fe for the no difference from an alternate population are based on information provided about the alternative population. On the other hand, the degrees of freedom for a one-way Chi-Square is k-1, where k is the number of cells (i.e, the number of levels) in the design.
Basically, Chi-square is the most commonly reported non-parametric statistic. It can be used with one or more groups. It compares the actual number (freuquency) in each group with the expected number. The expected number can be based on theory, experience, or, or comparison groups. The question is whether the expected number differs significantly from the actual number. Chi-square is used when the data are nominal (categorical).
With regards to chi-square statistics, there are four assumptions that should be considered:
- Frequency of Data
- Adequate sample size
- measures independent of each other
- Theoretical basis for the categorization of the variables
The first assumption is that the data are frequency data, that is, a count of the number of subjects in each condition under analysis. The chi-square cannot be used to analyze the difference between scores or their means. If the data are not categorical, they must be categorized before being used. Whether to categorised depends on the data and the question to be answered.
The second assumption is that the sample size is adequate. In cross tabulation procedures, cells are formed by the combination of measures. None of the cells should be empty. Expected frequencies of less than five in 2 x 2 tables present problems. In larger tables, many researchers use the rule of thumb that not more than 20% of the cells should have frequencies of less than five (SPSS, 1999; p. 67). If the cells do not contain adequate numbers, then the variables should be restructured to have fewer categories.
The third assumption is that the measures are independent of each other. This means that categories created are mutually exclusive; that is, no subject can be in more than one cell in the design, and no subject can be used more than once. It also means that the response of one subject cannot influence the response of another.
The fourth assumption is that there is some theoretical reason for the categories. This ensures that analysis will be meaningful and prevents “fishing expeditions.” The latter could occur if the researcher kept recategorizing subjects, hoping to find relationship between variables. Research questions and methods for analysis are established before data collection. Although these may be modified to suit the data actually obtained, the basic theoretical structure remains.
Limitations of the Study
The broad scope of the research topic is the foremost concern when it comes to the identifiable limitations and barriers of the research activity but the holistic approach likewise will enable the researcher to contribute fully to the academe as well as to the involved business industries that will be analyzed. Meanwhile, when it comes to the selected data gathering procedures, limitations and shortcomings could be expected in the data gathering procedures. Beginning from the sampling techniques that will be used to identify the participants of the study up to the facilitation of the survey forms and the interview sessions, difficulties will be expected. But with the support of the academe to the research activity and the explanations that will be provided regarding the important contributions of the study to the business industry upon completion, will serve as gateway to the successful research accomplishment. Other political, economic, as well as social issues and constraints are also expected while conducting the research activity which will be evident in the different stakes of the participants and the companies they represent.
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