Strategic Management: Formulation and Implementation


Firms' missions must be tested against many different social, political and economic circumstances. One reason it is so difficult to achieve a culturally acceptable global corporate mission is that a mission statement is the connection of a corporation by definition operates in many different societies.

This means that is mission must be stated in a way that is attractive to the greatest number of people from the greatest number of cultural, social, economic, and political backgrounds. Organizational mission and international involvement are connected through the economic concept of comparative advantage.

The Motives For Foreign Activities

Like their domestic counterparts, multinational corporations are motivated primarily by what they perceive to be in the interests of their stakeholders, rather than that of the wider community of which they are part.

These stakeholders include employees, managers and shareholders. The government is also a stakeholder in that it receives taxation from any profits earned. Most of the literature in the tradition of neo-classical economics asserts that any residual of income earned by a firm over and above the opportunity cost of the stakeholders will accrue to the owners of the business in the form of profits, and that it is the maximization of these profits in relation to the capital invested, which is the driving force of modern business enterprise.

Post neo-classical theories of the firm assert that where output is supplied in other than perfectly competitive market conditions, the owners of enterprises need not necessarily be constrained to maximizing the rate of return of their capital. Whenever the equity stakeholders can earn above the opportunity cost of their capital, they have the freedom to pursue other objectives.

The introduction of risk and uncertainty into factor or product markets adds a further complication the motivation of the firms.