Strategic Positioning for MNE's
See also
Contents |
Multi-domestic
MNE sells across many countries but develops individual Supply Chains and takes into account local cultural conditions. Decentralized federation that are flexible but higher costs - e.g International transfers skills and capabilities to new markets. Their is local discretion about what products to offer but marketing and strategy are kept central e.g. P&G
Global
Profitability through standardization Coca Cola, Semi Conductors
Transnational
Exploit experienced based cost economies and transfer them within the co but also has some local responsiveness Toyota
The Transnational Revisted
Research by Christopher A. Bartlett Volume III, Number I Percy Barnevik took the helm as CEO of Asea Brown Boveri (ABB) in 1988. It was a global engineering giant created through the merger of two firms in the electrical power equipment industry. His challenge was to transform the resulting collection of second and third-tier companies into a first-class operation able to meet the organizational and strategic challenges of the world economy.
A decade later, ABB became a prime example of what Bartlett and Ghoshal described as a "transnational corporation." This radically different corporate model was first developed in their 1989 book, Managing Across Borders: The Transnational Solution . "ABB," they write, "is truly what Barnevik set out to create -- 'a company that is big and small, global and local, decentralized but with central control.'"
According to Bartlett and Ghoshal's research, competing solely on the basis of scale efficiency or national market responsiveness or the ability to transfer specialized knowledge worldwide (approaches employed earlier by Japanese, European, and American corporations, respectively) no longer suffices. Modern transnational firms, in contrast, succeed by developing all three capabilities simultaneously.
Having examined the link between corporate strategy and organizational structure Bartlett and Ghoshal looked at the development of transnational managers. They address three major categories of challenges:
- Strategic - How to understand and confront the forces that drive an industry and shape a firm's ability to perform.
- Organizational - How to build an "integrated network organization," given a company's current resources, structures, systems, and culture.
- Managerial - How to reshape the roles and responsibilities of business, country, functional, and corporate managers while instilling a new transnational perspective.
There is now no such thing as a do-it-all global manager. Instead, there are groups of specialists, each of whom must share a transnational perspective. Bartlett and Ghoshal outline a three-phase procedure that changes the thoughts and actions of managers accustomed to hierarchical bureaucracies. At ABB, for instance, Barnevik was intent from the start on replacing the old context of imposed compliance and control with a more internalized model of behavior. In addition to stripping out structural overhead and simplifying bureaucratic reporting requirements Barnevik focused on the challenge of establishing strong norms of self-discipline and building a context of support and encouragement.
In the second stage of the transformation process, the emphasis is on building [Strategic Stretch|stretch]] and trust-pushing managers toward ambitious goals in an environment with a "bias toward inclusion and involvement, a sense of fairness and equity, and a belief in the competence of one's colleagues." Finally, a "regeneration phase" shifts management's attention to maintaining the momentum of change and coming as close as possible to achieving the ideal of the "self-driven, self-renewing organization."
Bartlett and Ghoshal observe that large companies with the best track records in accomplishing this transformation employ a gradual approach. At General Electric, for instance, under the leadership of CEO Jack Welch, the first two steps took more than a decade to complete. Meanwhile, attempts by other organizations to accelerate the process have been counterproductive. General Motors learned this the hard way in the 1980s, when it tried to implement the first two steps simultaneously. The result was a management overload that led to a breakdown of systems and relationships.
"Understanding the requirements is just the beginning, implementation is far more difficult, especially in an era when people seek instant solutions at every turn. The greatest problem lies in teaching managers to think holistically and understand that the historic and cultural heritages of their nation, their industry, and especially their company are major factors in shaping the capabilities of their organization.
