Going global transnational management


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Going global transnational management

  2. 2. Multinational / International / Global /Transnational Companies
  3. 3. Consumer Electronics Business : How could Matsushita( Panasonic) evolve in just two decades and become the undisputed leader in the consumer electronics industry ? Of the companies it overtook, why has Philips found it so difficult to adjust to the industry changes ? Yet it has survived . While General Electric was eventually forced to sell off its consumer electronics business ?
  4. 4. Branded packaged products In branded packaged products like soaps and detergents Unilever how has defended its dominant world position for more than half a century ? Procter &Gamble How was able to mount thrust into international markets in the postwar era ? Kao, Why was the internationalization thrust of the dominant Japanese competitor in this industry, been stalled in various markets, despite Kao’s formidable technological capabilities, its highly efficient plants, and its demonstrated marketing muscle ?
  5. 5. Telecommunications / Switching Equipment How has Sweden’s Ericsson enhanced its position as a leader in the dynamic telecommunications switching business ? NEC’s What is behind gains in this highly competitive global industry ? ITT Why was , the most international of all the telecommunication companies,forced to abandon its planned entry into the US switching market , and then to sell its formidable European telecommunication business ?
  6. 6. The disappointments and failures of some of those companies were not due to inappropriate strategic analysis, but to organizational deficiencies. The challenge was how to develop the organizational capability to do it.
  7. 7. The Nine Companies Industry American European Japanese Branded Packaged Goods Procter &Gamble (P& G) Unilever Kao Consumer Electronics GE Philips Matsushita Ericsson NEC Telecommu ITT nications/ Switching
  8. 8. Key strategic Capabilities: Multinational Global International Building strong local presence through sensitivity and responsiveness to national differences Building cost advantages through centralized global- scale operations Exploiting parent company knowledge and capabilities through worldwide diffusion and adaptation Unilever Philips ITT Kao Matsushita NEC P&G GE Ericsson
  9. 9. Multinational Organizational Model Multinational Mentality : Management regards overseas operations as a portfolio of independent businesses Decentralized Federation : Many key assets, responsibilities and decisions decentralized Personal Control : Informal HQ-subsidiary relationships overlaid with simple financial controls
  10. 10. International Organizational Model International Mentality: Management regards overseas operations as extension to a central domestic corporation Coordinated Federation : Many assets, resources, responsibilities and decisions still decentralized, but controlled from headquarters Administrative Control : Formal management planning and control systems allow tighter HQ- subsidiary linkage
  11. 11. Global Organizational Model Global Mentality: Management treats overseas operations as delivery pipelines to a unified global market Centralized Hub : Most strategic assets, resources, responsibilities and decisions centralized Operational Control : Tight central control of decisions, resources and information
  12. 12. Each of these nine companies had become a large worldwide corporation by exploiting its particular strategic capability. However environmental forces had dramatically changed the nature of the strategic demands in a wide range of businesses and the traditional approaches of the multinational, global and international companies could no longer yield an adequate response. The challenges required a new solution
  13. 13. Understanding of the problemsIn the past GE, Kao and ITT was characterized by a single dominant strategic demand. As a result , a company could compete effectively as long as its capability fit the strategic demand of the business. To compete effectively , a company had to develop global competitiveness, multinational flexibility and worldwide learning capability simultaneously. This is where P& G , Unilever , NEC had responded effectively as they broke away from their traditional models very early. This break away to a new organizational model is termed as Transnational Corporation.
  14. 14. A transnational organization is perhaps the necessary response to the changes in the international operating environment as it links environmental complexity , strategic demands and organizational capabilities.
  15. 15. e.g.- Unilever as a Transnational Company Multinational strategy- acquiring identity of its own through sensitivity and responsiveness in the countries in which it operates. Global Strategy –Taking advantages of global economies of scale in exporting from low- cost countries. International Strategy : Developing and transferring parent company knowledge through diffusion to its subsidiaries across the world.
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