This literature review summarizes research on why multi-national corporations regionalize their branches. It discusses models of organizational decision making and identifies awareness, analysis, and action as key phases. It defines multi-national corporations and examines forces like local differentiation, global integration, and worldwide innovation that shape MNC strategy. The review also explores Hofstede's cultural dimensions model and its insights into how national culture can impact regionalization decisions. Finally, it touches on theories of corporate restructuring and argues MNCs restructure to achieve alignment, economies of scale, and respond to competition through diversification or refocusing of strategy.

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CORP3400-2016-Y Strategy and Management
Dissertation
Why do Multi-National Corporations make the
strategic decision to regionalise their national
branches?
Charlton Brown – P12190319
Dr Thomas Allen
Senior Lecturer
Department of Strategic Management and Marketing
De Montfort University
19th
April 2016
Word Count: 10,458

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ABSTRACT
In August 2015, global engineering company National Instruments made the decision
to align their subsidiaries and regionalise their individual branches into geographical
blocs (Asia Pacific, The Americas and EMEA). This meant large-scale changes for the
company and its employees and impacted workers around the globe. The academic
literature concerning regionalisation indicates clear ambiguity regarding why multi-
national corporations (MNCs) make the strategic decision to regionalise. Theorists
have briefly covered the subject, however there remains no clear reason as to why
multi-nationals restructure in such a way. This paper seeks to decipher why exactly
such a process is implemented and offer an evaluative piece of work which can
potentially be added to academia and be built upon by fellow researchers.
This dissertation examines the primary case example of National Instruments and
compares it to the experience of manufacturing company Cummins, which
regionalised much earlier in its business ‘life’. Both pieces of evidence are in the form
of personal interviews which offer a vital insight into the contemporary motivations of
MNCs. Each case of regionalisation was analysed and was found to have been in
response to an out-dated corporate structure and thus the process was considered to
be implemented to achieve greater alignment and integration, whilst also incurring
economies of scale. The result of the findings is contrasted with the secondary data
sources of Microsoft and Sony, both of whom deployed a strategy of regionalisation in
order to combat poor company performance and a burgeoning presence of more
innovative industry rivals. The paper concludes that despite apparent differences in
motivation, the common driver for regionalisation is to achieve alignment and
economies of scale, whether it be in the face of dire business performance or as a
preventative measure to combat forecasted inefficiency.

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ACKNOWLEDGEMENTS
The author would like to recognise the contribution and cooperation made by
National Instruments and Cummins Inc. with particular thanks to Mark Gradwell and
Alexander Camm for their time and assistance.
The author would also like to thank the support and guidance of Dr. Tom Allen who
has contributed to the construction of this dissertation from the first day.

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CONTENTS
Introduction…………………………………………..5
Literature Review…………………………………… 6
Methodology…………………………………….…...12
Findings………………………………………………17
Data Analysis……………………………………….. 26
Conclusion…………………………………………...28
Reference List………………………………………. 30
Appendices………………………………………….. 35

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INTRODUCTION
This dissertation aims to address the existing ambiguity concerning why multi-national
corporations make the strategic decision to regionalise their national branches. In
order to do so successfully, a number of clear objectives have been identified. These
include the comprehensive understanding of the multi-national corporation (MNC), the
gathering of substantial primary data regarding regionalisation in MNCs and finally the
triangulation of such data with existing secondary sources to support the findings. This
has been done in the hope of building on the existing literature on the subject of
regionalisation whilst offering a distinct conclusion which continues to evade the
academic sphere.
In order to fully ascertain what this paper is attempting to achieve, a brief definition of
key terms will be provided. Firstly, as will be explained later in this study, the term
MNC refers to any company that owns facilities in at least one other country other than
its headquarters or ‘home’ nation (Helin & Sandström, 2008). ‘Regionalisation’
involves the process by which previously autonomous branches or ‘subsidiaries’ of a
company amalgamate and align either regionally or globally to become an operational
bloc rather than an individual nation (Edwards & Rees, 2011). Further definitions and
explanations of both terms will be included later in the dissertation.
To begin, this paper will offer an empirical literature review which will evaluate a
breadth of existing academic literature on topics relevant to the dissertation question.
This will include such topics as strategy, MNCs and corporate restructuring. It is
considered that with a greater understanding of the existing academic notion on the
dissertation topic, one can offer more accurate and succinct research data which
includes both new and existing theory. Following that is a concise methodology which
will outline the philosophy undertaken in this paper, the design of the research and the
strategy this study will adopt. Subsequent to that is the main body of the dissertation
whereby the paper will offer its findings and provide both primary and secondary data.
The primary section consists of two case studies, the first of which is a telephone
interview with the press relations manager at American Engineering Company
National Instruments. This is then compared to the case study of manufacturing
corporation Cummins. Both primary sources will be analysed in relation to the existing
literature on regionalisation before then being triangulated with secondary research.
The secondary data involves two further case studies as well as academic theory on
the motivations behind regionalisation in MNCs. These findings will then be analysed
in the Data Analysis section before a final and comprehensive conclusion is drawn
which will consider all data and offer the papers concluding argument. A substantial
reference list and appendix is offered as the final two sections of the paper.

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LITERATURE REVIEW
Abstract
This literature review has analysed the notion of strategy and how corporations form
a cohesive strategic decision making process. Specific focus has been given to the
Multi-National Corporation (MNC) and what factors they must consider when analysing
their own strategy, and when entering the decisionmaking process to coerce the future
strategy of the company. Globalisation has been the buzz word of the last decade and
is adjudged to coincide with the dramatic rise of MNC’s worldwide, resulting in closer
economic and societal unity. This review will analyse whether globalisation and its
affects play any part in the regionalisation or ‘corporate restructuring’ of MNC’s and
why this would impact the strategy of a corporation.
The author’s focus has been on primary research and the real business example of
National Instruments’ own regionalisation and strategic management process.
Secondary research has been conducted to compare and contrast the strategy across
different MNC’s in the hope of concluding an accurate report as to why regionalisation
has occurred.
Introduction
This paper will analyse the process of a Multi-national corporation (MNC) making the
strategic decision to regionalise their existing national and individual branches. A real
business example of this is American engineering company ‘National Instruments’
(NI). Prior to 2014, NI operated a vast number of individual branches of the company
within foreign countries (such as NIUK & Ireland, based in Newbury, UK). However, in
January 2015 managers at the corporate headquarters in Texas made the decision to
restructure and regionalise individual branches, meaning in place of a self-sufficient
UK & Ireland branch, a new ‘Northern European Region’ (NER) was incepted,
consisting of the UK & Ireland, the Benelux countries, as well as Scandinavia (National
Instruments, 2015).
In order to further investigate the motivations behind such change, specific focus of
this review will be given to theory regarding the strategic decision making process,
before delving into the MNC and what factors such as globalisation, competition or
culture may affect the MNC’s corporate strategy. Existing theories and models will be
referred to in order to gain a historical perspective of the change in corporate strategy,
the rise of the MNC, as well as a contemporary insight into current factors that may
impact a MNC’s decisionmaking process. The dissertation will focus on literature such
as the ‘Conceptual model of organisational decision making’ (Noorderhaven et.al
1995), Ghoshal and Bartlett’s work on MNC strategy (1998), Hofstede’s ‘cultural
dimensions’, (1984) and D’silva’s study on corporate restructuring (2013).

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Models of organisational decision making
The process of decision making within organisations is the centre of many academic
debate and theory. In 1995, Noorderhaven proposed what’s known as his ‘conceptual
model of organizational decision’. Within this model, the author notes three distinct
phases that occur within the decisionmaking process. The first of these is ‘awareness’,
whereby the decision maker realises the opportunity or necessity to take a decision
and an initial formulation of the problem has been made. It is of course this stage of
the organisational decision making that is most relevant to the thesis, as it is the
‘awareness’ of the MNC that would determine regionalisation.
The second phase consists of the decision maker considering what it is they hope to
achieve whilst comparing and evaluating the possible options. This is the ‘analysis’
phase. Finally, the ‘action’ phase comprises of the act of choice being considered
explicitly, as well as the implementation of the decision and the control of the
implementation process (Noorderhaven, 1995).
Figure 1. Noorderhaven’s conceptual model of organizational decision making (1995).
Awareness
Recognition Formulation
Analysis
Goal setting
Generating options Evaluatingoptions
Action
Choice
Implementation Control

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As can be seen in the model (Figure 1), Noorderhaven has identified eight key
concepts of decision making that are clustered in the three distinct phases mentioned
previous (though it should be noted that much of this model is based on the many
existing process models, notably those of Harrison, 1987 and Mintzberg, 1976 et. al).
It is noted that the implication of clustering suggests that all steps are interrelated and
thus the model is deliberately unspecific. Therefore, although the typical order would
be assumed to start with awareness and end in action, it is also possible for the
decision process to begin with action, with the awareness and analysis coming later
(March and Simon, 1993). This would occur if a decision maker attempts to neutralise
a problem using a routine or quick response and the expected effects fail to
materialise, resulting in the decision maker becoming aware of the true nature of the
problem and starting to generate and analyse alternate possible solutions (March and
Simon 1993, Noorderhaven, 1995).
This model provides an insight into the motivations of decision making, however is
limited in its application. Not all decisions will require such an elaborate process for
conscious deliberation, with ‘low involvement’ decisions contributing to much of a
corporation’s strategy (Kassarijan, 1981). Not only this, but Noorderhaven’s model
pays little attention to the specifics of why a corporation may take a certain decision,
thus ignoring its environment (Lynch, 2012).
The Multi-National
A multi-national corporation can be defined simply as an “actively managed substantial
foreign direct investment made by firms that have a long-term commitment to
operating internationally” (Gooderham & Nordhaug, 2003). This particular definition
has been formed to purposely distinguish between prevalent forms of
internationalization such as licensing and contract manufacturing.
There are many debates regarding the birth of the MNC, with some theorists such as
Robins (2006) arguing that the first multi-national dates back to the 1600s in the form
of the East India Company. The majority of theories however promote that MNCs truly
came to prominence during the time that neoliberalism was expanding international
trade through the liberalisation of markets (Bhagwati, 2007).
No matter your opinion on the chronology of the MNC, the growth of economic activity
controlled by MNCs in the last twenty years in undeniable (Edward & Rees, 2011).
According to the United Nations Centre on Transnational Corporations (2009), there
are an estimated 61,000 multinationals globally, controlling around 900,000
subsidiaries. This equates to over half of the world’s industrial output and accounts for
almost two-thirds of world trade, with one-third being intra-firm (Gooderham &
Nordhaug, 2003). Examples of large MNCs include Apple, Microsoft, Volkswagen and
Royal Dutch Shell. Through a better understanding of the MNC, one can better
understand its motives behind strategic decision making.

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Strategy in MNCs
In 1998, Ghoshal and Bartlett released ‘Managing Across Borders: The Transnational
Solution’. Within this text, the authors identified three key forces on managers in
international firms or MNCs. First, they identify with Hofstede’s work on culture and
recognise nations’ individual tastes, values and attitudes. This multiculturalism can be
seen as a force for ‘local differentiation’, meaning the need for MNCs to be responsive
to the local environment.
Secondly, in the face of fierce competition at both global and national level, MNCs are
now under immense pressure to achieve economies of scale at the highest level
possible. The authors argue that technological advancements in the production of
consumer goods has resulted in scale becoming a key factor in shaping organisational
success. Many large MNCs countered this by developing an internationally integrated
production process, or ‘global value chain’ (Gereffi, 2005). Thus the second force on
MNCs is ‘global integration’.
Finally, international firms are under increasing amounts of pressure to quickly
respond to rapidly evolving markets, with product life cycles shortening due to the pace
of developing technology. One way to tackle this is for firms to link their international
operations and transfer expertise across them. Consequently the final force is termed
‘world-wide innovation’.
Despite the popularity of Ghoshal and Bartlett’s typology, Rugman et. al (2011) draw
some criticisms. They argue that major changes in the international business
environment suggest the need for further conceptual improvement. For example,
Rugman stresses the rise of regional integration within MNCs in the last three
decades, which has become increasingly important for businesses and has reduced
the constraints imposed by national borders on international business transactions. It
is claimed that Ghoshal and Bartlett’s studies neglected this and so neglects the
importance of a ‘reduced institutional distance’ between firms (Ghemawat, 2001).
Hofstede’s cultural dimensions
Hofstede’s work on culture is viewed as potentially the most influential of its kind
(Gillespie and Hennessey, 2010). When a corporation looks at regionalising, they must
consider the implications of grouping different nations together, each with their own
individual culture, working practices and expectations alike. This is called cultural
relativism (Edward & Rees, 2011). As Thompson and McHugh observe, it is:
“not difficult to see the basis of the appeal of cultural relativism…[since it] trades on
recognisable, if somewhat stereotypical, national characteristics…[and] normatively
the approach has obvious and useful applications in terms of training to make
managers more sensitive to trading partners and to local cultural conditions” (2009,
p34).

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Determining the cultural aspects of nations may lead to an understanding as to why
corporations regionalise rather than individualise their branches. Hofstede attempts
this (and has received widespread acclaim) with his work in the 1980s. His research
cites five cultural dimensions (as can be seen in Appendix 1) that can be attributed to
a nation in order to evaluate their national character and distinguish members of one
group of people from another (Edward & Rees, 2011). Hofstede’s work has been
extremely influential and has inspired the work of such theorists as Sparrow and
Hiltrop (1994), Ngo et al. (1998) and Tayeb (2005), all of which accept the notion of
cultural dimensions and have based their work on such theory.
However, it is argued that Hofstede’s work suffers some crucial weaknesses.
McSweeney (2002) denotes the assumption of cultural homogeneity within a country
and questions the accuracy of generalising an entire nation using a relatively small
sample of questionnaires from one particular company (Hofstede pooled data from
116,000 employees of IBM in more than 40 countries). Beardwell and Thompson
(2012) also argue that a MNC may attempt to impose the culture of their country of
origin on the new foreign subsidiary. Begging the question, is the culture of IBM
employees truly native to the particular country, or has the American company
imposed aspects of Americanism into the culture of the workplace?
Corporate Restructuring
It is argued that corporate restructuring has become increasingly crucial for managers
of international firms (MNCs), due to the necessity to respond to increased global
competition and rapid market change (Collis et. Al 2007). D’silva (2013) defined
corporate restructuring as a ‘multifarious phenomenon’ involved with ‘the process of
redesigning one or more aspects of a company’. The author continues to argue that
every company’s strategy devolves around two scenarios: diversification or a refocus
of core business principles. It is stated that corporate restructuring is an example of
diversification (D’silva 2013, Dhillon & Gupta, 2015); a theory echoed in Lynch’s study
of corporate restructuring (2012).
According to Lynch (2012), the headquarters of MNCs will take the final decisions on
major company issues such as acquisition or diversification. These are aptly named
‘HQ transaction decisions’. This directly links to the real business example of National
Instruments given in the Introduction, whereby managers at HQ took the decision to
‘diversify’ and restructure. This is similar to the example given by Lynch, as Unilever’s
individual business units were involved in developing strategy options, however it was
only Unilever HQ that sanctioned the final decision.

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Conclusion
This review has sought to analyse a breadth of academic study, in the hope of
determining why a multi-national corporation may take the strategic decision to
regionalise their national branches. Starting with strategy, Noorderhaven’s model of
organizational decision making offered an insight into the decision making process of
a company, however the model lacked real conviction as the firm’s environment was
neglected.
In an attempt to better understand the MNC, Ghoshal and Bartlett’s theory on strategy
within a MNC was evaluated. Despite offering three clear forces, with the ‘awareness’
force relating strongly to the dissertation title, Rugman criticises the study, citing a
disregard for integration and reduced constraints. This clouds the accuracy of Ghoshal
and Bartlett’s theory and leaves us no closer to addressing the problem at hand.
Furthermore, despite Hofstede’s cultural dimensions and theory on cultural relativism
promoting cultural differences in the workplace, again the issue of authenticity is
raised. McSweeney claims the research as limited, due to its collection of solely IBM-
based resources.
Finally, to directly address the dissertation title, D’silva’s study on corporate
restructuring was reviewed. However, though the study on ‘diversification’ mirrored
Lynch’s work on ‘HQ transaction decisions’, no clear consensus was given as to why
a MNC would choose to regionalise a national branch. Therefore it is argued there is
still research to be conducted in order to fully ascertain the motivation behind such
strategic decision making within a MNC.

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METHODOLOGY
Philosophy
When initiating any type of research, there are several major considerations a
researcher must contemplate, such as ‘How to extract data?’ or ‘Whom to contact in
order to discover certain information?’, or more distinctly ‘Should I conduct qualitative
or quantitative research?’ (Remenyi et al 1998). However in order to successfully
investigate a research topic, it must be understood why such research must be
explored (Holden & Lynch, 2004). A researcher must be aware that it is for the
development of knowledge in a particular field that ignites a research and as stated by
Johnson and Clarke (2006):
“As business and management researchers we need to be aware of the philosophical
commitments we make through our choice of research strategy since this has
significant impact not only on what we do but we understand what it is we are
investigating” (p.108).
There are various philosophies a researcher can choose, however it is important to
note that no one option is ‘better’ than another and that each philosophy is relevant to
a particular question/hypothesis (Orlikowski & Baroudi, 1991). It is also important to
understand that a research question rarely fits into one exact philosophical domain, as
portrayed in Appendix 2 (Saunders et al 2009). For this dissertation a question has
been posed, therefore an empiricist philosophy is the most appropriate approach.
Empirical research requires the researcher initially recognising a problem or raising a
question within a certain field that can be solved or answered by some form of study
(Holden & Lynch, 2004). Whilst empiricism is the most appropriate, this does not mean
aspects of alternate philosophies are totally unsuitable, with much research harbouring
features of numerous approaches (Johnson & Onwuegbuzie, 2004).
Positivism is primarily involved with statistics and leads to the production of credible
data and ultimately ‘law-like generalisations’ (Remenyi et al, 1998). Aspects of this
approach will be included in this study as existing theory and data will be analysed
and interpreted to assist with the conclusion of the dissertation question. However, a
solely positivist approach is inappropriate as it is argued: “The social world of business
and management is far too complex to lend itself to theorising by definite ‘laws’ in the
same way as the physical sciences” (Saunders et al, 2009: pp 115-116). This is in
following with the interpretivism approach which advocates the necessity to appreciate
the role of ‘social actors’ in research (Johari, 2009). This approach emphasises the
difference between researching people and inanimate objects, arguing that people
(social actors) are too complex to generalise and so cannot be treated as a mere
statistic as is common with the positivist approach. Therefore this particular research
will adopt an empiricist philosophy, whilst maintaining aspects of both positivism and
interpretivism, enabling the study to offer a fair method of producing quantifiable
evidence to support a justified conclusion (Bazeley, 2015).

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Research Design
The design of research undertaken in this dissertation will follow that of an exploratory
study. Rather like empiricism, an exploratory study is a noteworthy method of finding
out exactly ‘what is happening’ or ‘seeking new insights; to ask questions and to
assess phenomena in a new light’ (Robson, 2002). This again is in coalition with the
research question as this study attempts to discover exactly why MNCs make the
strategic decision to regionalise their national branches. In order to accurately and
efficiently address this issue, a clear set of objectives have been set.
The objectives of this research are as follows:
 Understand the strategy of MNCs (This can be through secondary sources and
existing literature on the subject)
 Research existing examples of when MNCs have regionalised (attempt to
uncover the motivations behind such regionalisation) and when MNCs have
chosen not to regionalise (Again, decipher why this decision was made)
 Directly contact a number of MNCs to enquire about their potential to
regionalise or their experience of regionalisation
In following with exploratory study, this dissertation will search for existing literature
(secondary research) on what motivations an MNC may consider when making the
decision to regionalise their branches. From the literature review earlier in this study,
it is clear that academics have already delved into this subject (though as concluded
there is still much to discover) and so it is understood that such secondary data will
enhance the researcher’s understanding of the question and establish the route for
primary research as any unanswered questions can be directed at a primary source
of information (Hakim, 2000). This secondary data will be derived from literature
regarding strategy, MNCs and corporate restructuring. Resources on the internet will
also be utilised such as Google Scholar, Business Source Complete and online
journals such as the Harvard Business Review and the Journal of Business Strategy.
In terms of primary research, this study will use National Instruments, a multi-national
American based engineering company, as a prime case study and source of primary
data. This source will enable personal interviews with management and an insight into
historical company data. National Instruments was chosen specifically due to the
researcher’s previous employment and inside corporate knowledge of the company
and its employees. It was believed that this existing relationship would enable greater
ease of access, quicker response time and a greater depth of information than
alternate companies would offer. To ensure validity however, other MNCs in differing
industries will also be contacted and used as primary sources of research, with all
sources compared in order to display a clear spectrum of MNC regionalisation.
As with any type of research, the potential constraints to achieving the set objectives
must be noted (Yin, 2013). The first clear potential constraint is a lack of access to

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primary data. Unlike secondary research that is already published and available to
those whom seek it, primary data is reliant on the availability and level of access of the
source in question and so cannot be guaranteed (Connell et al, 2001).The second
constraint is time. Gathering data can be a very time consuming process and so the
researcher must be aware of their capacity for conducting research and the time
restraint they are working within (Remenyi et al, 1998). The third and fourth constraints
are somewhat interlinked; these are location and finance. Despite secondary data
being readily available, it is not uncommon for some data to be available at a price
and so the financial restrictions of the researcher must be considered (Naoum, 2012).
Not only this, but should the research require personal interviews, this may incur travel
costs in order to meet the interviewee. This ties in with the constraint of location; if a
primary source of information is in a different country there may be limitations as to
their response time, especially if the respondent is operating in a different time zone
(Connell et al, 2001).
Finally, when conducting any type of research there must be a level of ethical
consideration (Saunders et al, 2009). In particular with primary data, the informant or
respondent’s privacy must be ensured and respected. Ethical considerations to
research are explained further, later in this piece.
Research Strategy
Choosing an appropriate research strategy is a crucial part in collating a successful
empirical study (Benbasat et al, 1987). As mentioned earlier, this dissertation will
focus on a particular case study (National Instruments) as a large portion of primary
data, therefore this research will adopt the ‘case study strategy’ (Saunders et al,
2009). Robson in 2002 defined case study as:
“A strategy for doing research which involves an empirical investigation of a
particular contemporary phenomenon within its real life context using multiple
sources of evidence”.
For further clarification, Benbasat et al. (1987) offer a succinct list of eleven
characteristics typical of case studies, which can be seen in Appendix 3. They also
highlight the importance of context as “the boundaries of the phenomenon are not
clearly evident at the outset of the research” (pp.370). This particular strategy was
chosen also due to its mirroring of the empiricism philosophy mentioned previously
and its considerable ability to answer the ‘why?’ question in research (Bonoma,
1985).
Despite other strategies offering appealing characteristics (‘Experiment’ being the
most scientific, known as the ‘gold standard’ against other strategies and ‘Survey’
being very popular among business and management research, Saunders et al.
2009), this study seeks to gain “a rich understanding of the context of the research

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and the processes being enacted” which is most frequently found with the case study
approach (Morris and Wood, 1991 pp. 259).
Having chosen the case study strategy, it is also important to note that this particular
strategy involves the collection and use of multiple sources of data, which is known
as ‘Triangulation’. This method refers to the use of varied data collection techniques
within one piece of research in order to check the validity of the acquired results
(Eisenhardt, 1989). This will benefit this particular research question as both primary
and secondary data are to be collected and analysed and triangulation will enable a
more concise result. Within the case study strategy, Yin in 2003 offered four
distinguishable case study strategies based on two distinct categories; these are
‘Single case versus Multiple case’ and ‘Holistic case versus Embedded case’.
This dissertation will adopt the multiple case strategy whilst the unit of analysis will
be holistic. This means that rather than analysing a single critical case (though
National Instruments will be a prime source), the research will consist of multiple
case studies in order to be free from generalisations from the result of one single
source. The unit of analysis will adopt a holistic case strategy as this study will look
at MNCs as a whole and judge their strategy and actions as a single entity as for this
particular question there is no need to examine sub-units within an organisation, as
only their corporate strategy is being questioned (Yin, 2003).
Overall it could be argued that a case study approach may harbour unscientific
results and that the experiment strategy would enable greater accuracy, however
due to the nature of the dissertation title and the philosophy and design of the
research, it is maintained that the case study strategy is most appropriate to assist
the researcher in succinctly answering the question raised.
The final section of the research strategy explains the specific ‘time horizon’ the
study will undertake. Time horizons refer to the period of time of which the study
researches (Halinen & Toernroos, 2005). In this case, due to obvious time
constraints and the nature of the question, this study will involve ‘cross-sectional
studies’ (the study of a phenomena at a particular moment in time, or ‘snap-shot’,
Saunders et al 2009). Despite this, aspects of longitudinal studies (events over a
period of time) may coincide with the research as MNCs have existed for decades
and their regionalisation may have begun during an earlier period.
Ethical Issues
Ethical concerns emerge whenever any type of research is undertaken as data must
be collected from either an organisation or individuals, resulting in issues of
confidentiality, dignity, benefit-to-risk ratio and informed consent (Behi & Nolan, 1995).
In the context of research, ethics focuses on providing guidelines for researchers
whom evaluate and review data and establishing enforcement mechanisms to ensure
such research is conducted and utilised in an ethical manner (Auginis & Henle, 2002).
This is relevant to the dissertation as mentioned previously, both qualitative and

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quantitative data involving real business examples are to be researched and
employees of certain companies are to be interviewed. It is essential that when
contacting companies and performing such research, a code of conduct is adhered to
(Smith, 2003). With an in-depth case study, the privacy of an organisation may be
compromised and so adhering to a code of conduct not only ensures the legitimacy of
research, but also ensures the safety and privacy of a company’s information and so
is imperative when moving forward with this question (Johnson, 1975).
Regarding National Instruments and other MNCs that are to be interviewed, De
Montfort University enforces a strict ethical approval form for research activities that
this dissertation must adhere to which protects participants’ interests and the privacy
of an organisation. This should enable this research to operate more efficiently and
should reduce potential constraints to access.

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FINDINGS
Primary Data – National Instruments Case Study
As stated previously, this paper will focus on the prime case study of American
engineering company National Instruments (NI) and its experience of regionalisation.
NI employs around 7400 employees worldwide and is a MNC with offices in almost 50
countries (At the time of publication, National Instruments 2016). The company has an
operating income of over £1bn and competes with main rival Keysight Technologies
in its home market of North America as well as Europe, Asia Pacific and Africa
(National Instruments, 2016). More recently the company has seen positive levels of
growth and have thus altered their corporate structure as the following example will
show. To highlight this case, reference will be made to a personal phone interview (the
full extent of which can be seen in Appendix 4) conducted by the researcher to NI’s
public relations manager for Northern Europe, Mark Gradwell. The full list of interview
questions can be found in Appendix 5.
The interview began with the researcher enquiring as to whether NI had experienced
any type of regionalisation or restructuring, with the respondent asked to answer to
the best of their knowledge. The respondent replied by explaining that during his time
of employment, most regions that NI operated within had autonomous national
branches which were responsible for their own sales, marketing and customer service
teams. However, the company then decided to restructure, as can be seen:
“A couple of years ago we started a process of regionalisation within Europe, we
moved to having 3 sales regions, Northern Europe, Mediterranean, Central and
Eastern Europe, so the UK & Ireland branch came together with the branches we have
in the Nordic and Benelux countries to form Northern Europe”.
Following this regional change, the respondent continued to describe a more drastic
global process of restructuring which in fact regionalised the company into 3 distinct
sections:
“There was a further change then globally for NI, we moved from 4 sales regions
worldwide to 3. Now we have Americas, Asia Pacific and EMEA(Europe, MiddleEast,
Africa, India, Russia, Arabia) (INTRA is a sub region, India, Russia, Africa, Arabia)
Going through a process of restructuring in order to be more globally aligned. Not just
for EMEA but for all regions”.
Crucially this piece of primary data lends credence to the criticism Rugman (et al,
2011) drew from Bartlett and Ghoshal’s theory in 1998 whereby the former claimed
that the rise of regional integration within MNCs has become increasingly important
for businesses. The respondents final admission of attempting to be “more globally
aligned” is vital to proving the motivations behind regionalisation in MNCs and moves
to support Ghemawat’s (2001) argument found in the literature review, citing the desire
within MNCs for ‘reduced institutional distance’.

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Furthermore, when asked about the prospect of even further regionalisation, the
respondent stated that changes in the business are constant and so “nothing is set in
stone”, however the structure set in place was designed so that ‘sub-regions’ of local
sales teams (individual countries) could still cater to individual country needs. This
denotes the importance of a country’s individual culture, as stated by Hofstede in the
literature review and is considered by NI throughout their regionalisation.
In an attempt to decipher the true motivations behind such regionalisation, the
respondent was asked whether the decision to restructure was made solely at the
corporate headquarters or whether subsidiary managers were involved in the decision
making process. The response confirmed that the main drivers for change were
naturally from executives at HQ however foreign managers were involved in the
process:
“…there was a lot of involvement all the way along, so I think, some of it for sure has
been driven by corporate, their thoughts and vision, trying to buildan organisation that
is more efficient, more receptive and is more aligned worldwide, but there's been very
heavy involvement of folks in the region in that process and that decision”.
This supports Lynch’s (2012) theory made previously that businesses make ‘HQ
transaction decisions’ which involve major company changes and are driven by
managers at HQ. This insight also gives reference to the importance of global
alignment once more, whilst also citing the significance of ‘building’ an organisation
that is more efficient. The search for efficiency would support the argument put forth
by Bartlett and Ghoshal (1998) (As seen in the literature review) that MNCs are
constantly under pressure to achieve economies of scale through global integration.
However, the term ‘build’ an organisation is curious as many theorists (Mavlutova,
2008) (Dhillon & Gupta, 2015) believe that corporate regionalisation or restructuring is
solely in response to poor business performance and is executed to refresh and
improve the company. The phrase ‘build’ infers that this form of regionalisation has
been deployed alongside continued growth and expansion, therefore contradicting the
existing literature. This argument will be explored further when deliberating secondary
research.
Potentially the most insightful response was given when the respondent was asked
whether it had been communicated by HQ exactly why this process of regionalisation
had occurred and whether this communication conflicted with the respondent’s own
belief:
“…it's all about creating an organisation. The problem is as the business grows, the
model that we had as we were growing worked for a growing business but perhaps
doesn't work as well as we get bigger… The challenges that get bigger are that you
get a lot of replication. You get the same repetition in 15/20 branches throughout
Europe, you get the same conditions doing the same thing in slightly different groups
of customers”.

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This again contradicts the existing theory that restructuring is implemented due to a
decrease in company performance and argues that it can in fact correlate with
business growth. The respondent also mentions the challenge of repetition in MNCs
which implies a lack of efficiency; again supporting the argument for the desire for
economies of scale and global integration.
Continually, when further revealing the motivations behind the process, the
respondent noted the possible contradiction in reasoning. Where one driver was
repetition within the business, the other was a difference in operations among
subsidiaries, resulting in a lack of alignment and confusion for customers:
“The other issue which sounds counter intuitive, but you also have lots of people doing
different things meaning that… there's a lack of alignment in terms of a message to
customers and there's a lot of waste in energy…that's really what the restructuring and
the process is trying to address. It's trying to create a more aligned organisation
worldwide where we're all aligned around the message that we're trying to give to
customers and we're speaking with a single voice to customers, whether that's in the
UK, Sweden, China, India or the US”.
Here the respondent reveals the core motivation behind NI’s regionalisation: global
alignment. Whilst the process will incur other benefits, it is clear from the research that
in this case the search for alignment is the overriding reason behind the restructuring
process. This moves to support the argument made by D’Silva (2013) as seen in the
literature review, with the theorist proclaiming that companies restructure in order to
achieve one of two objectives: diversification or a refocus of core principles. In this
case NI are looking to align and speak “with a single voice” to customers; refocusing
a core and simple business principle.
In their final words to the question, the respondent further discards the argument made
by theorists whom argue that restructuring is done to combat financial woe:
“it's been one of the stated aims of the project that it's not about reducing headcount,
where we've got those benefits, that just helps free people up to work… allowing us to
redeploy resource onto other pressing matters”.
It is through this ‘freeing up’ of time and resource that will enable NI to reap the benefits
of economies of scale, which is seen as a secondary benefit to the process.
Finally, when asked about the impact of competitors and competition on the
regionalisation process, the respondent rebutted this proposal and disregarded such
impact:
“…most of our close competitors have this type of organisation already, they have
some kind of Europe or EMEA type organisation rather than a country based
organisation…I don't know if I'm honest how heavily that weighed on the decision for
us to do this, I doubt that it was a key driving factor”.
This clearly removes the prospect of competitors acting as a driver for regionalisation
and in this case is inapplicable.

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Overall this piece of primary data has provided a valuable insight into the motivations
of regionalisation within a MNC, however it is critically considered and noted that this
is only one source of information and may not accurately represent MNCs as a whole.
Generalisations are dangerous within academia, therefore this paper will proceed to
analyse further cases of restructuring.
Cummins Inc.
In order to offer a critical analysis of the motivations behind corporate regionalisation,
this paper will compare the restructuring experience of design and manufacturing MNC
Cummins Inc. The American business was founded substantially earlier than NI and
thus operates on a much broader scale, with over 55,000 employees serving over 190
countries around the globe (Cummins, 2016). The company saw a revenue of $19bn
in 2014 and continues to battle with main rival Caterpillar for global market share
(Cummins Annual Reports, 2014). Contemporarily, the manufacturer has sought
closer global integration and has recently overtaken Caterpillar in the European market
within the Power Generation industry; the details of which are explained further in the
following case example.
This piece of research takes the form of a written response from Cummins UK
Purchasing Manager, Alexander Camm (the full response can be seen in Appendix 6)
in answer to carefully constructed questions which are available in Appendix 7.
The structure of questions remains similar to that of the NI interview and so when
asked whether Cummins had experienced any type of regionalisation, the respondent
began to explain the experience of the company. However, this case offers immediate
differences in terms of the nature of the company which has therefore effected its
experience in regionalising; the most notable of these being the company’s age. Unlike
the relative youth of National Instruments (founded in 1976), Cummins Inc. officially
began operations in 1919 and so began its own process of regionalisation much
earlier:
“In the 1960s Cummins had expanded to 96 different countries and at this point they
regionalized. They had four separate Business Units (Engines, power generation,
distribution and components) which were then further split into regions EMEA, Asia,
US etc. Before, they were being managed/aligned to the HQ in Indiana and Senior
Directors, due to the pace of growth and worldwide coverage it was no longer
beneficial to be managed from the HQ and rather managed as separate entities in
their location to align with culture/needs”.
Comparably, Cummins initiated their own process of regionalisation much earlier than
NI and notably split their business functions into separate entities before then
regionalising those entities into areas much similar to those found in the previous case
study. Similar again is the proposed motivation for the initial restructure with the
respondent citing the “pace of growth” as a main motivation for change, much like the
data gathered from NI and again arguing the case for regionalisation in response to

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business growth and success. However, one clear difference noted from the
respondent is that the separate entities were dispatched in order to cater to the
individual regions’ culture. This moves to support Hofstede’s argument cited in the
literature review that culture plays an important role in regionalisation due to the
necessity to appreciate the individualism of nations.
Despite some initial similarities, it became clear that Cummins’ experience proceeded
to differ to that of NI. When asked about the global nature of the company’s
restructuring the respondent continued to describe the full extent to the business’
strategy and its current position:
“However more recently we have taken a global approach as the business units are
complementary of each other. We now have each previous region aligned and
reunited to form one overriding strategy and structure of operations”.
As is evident from the data, Cummins have gone ‘full circle’ regarding their
regionalisation process and have modified from a region-split company (Asia, EMEA,
Americas) to a fully formed globally integrated business which some theorists describe
as the final stage of regionalisation (Hilpert, 2003).
In order to accurately compare the case studies and to test Lynch’s (2012) HQ theory,
the respondent was pressed as to whether the process was a corporate decision or
whether subsidiary managers were involved:
“The decision was corporate but was initiated from subsidiary manager complaints
about the inefficiency of the current model. The main complaint was with the quality
consistency which meant additional work was being applied to certain plants
unnecessarily... i.e. Stamford producing for a Chinese supplier despite having plants
in China”.
This contrasts greatly to the case at NI whereby HQ maintained full control of the
decision making process. In this instance we see what Tony Edwards described in
2005 as ‘reverse diffusion’, or the transfer of practice within a MNC from host country
back to home country. For Cummins, managers at foreign subsidiaries became aware
of inefficiency within the business and an inconsistency in subsidiary quality; resulting
in overwork for certain plants (Stamford, UK as the example given). In light of the data
the argument could be made that Cummins’ final stage of regionalisation was driven
by motivations very different to its initial stage in the 1960s (and to those of NI) while
the company was enjoying growth and expansion, and that in fact the final restructure
was due to inefficiency within the existing model. Arguably the process was therefore
implemented to combat an anticipated dip in business performance.
Continually, the respondent was asked whether it had been communicated why
exactly this process had occurred. The response cited three clear motivations behind
the restructure: “Economies of scale”, “Alignment” and “Quality”. Regarding
economies of scale the respondent explained that “it was considered wasteful” to
enable each region to operate independently as the regionalised Business Units (BUs)
were each using different suppliers, incurring obvious costs. These costs have since

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been recuperated following the restructure as every BU is now globally aligned, using
the same supplier within each region.
With regards alignment the respondent described how in previous years, before the
final restructure, the company was suffering from a lack of consistency in its offerings
to both customers and suppliers:
“Operating as separate BUs meant that values were not consistent across the board,
so when one BU was working with a supplier in one way another BU would do it in
another removing the consistency of the brand 'Cummins”.
This overtly supports the theory mentioned previously from Bartlett & Ghoshal (1998)
whom argued that regionalisation within MNCs derives from the pressure to seek
efficiencies through ‘global integration’.
Finally the respondent articulated the subject of quality and how regional inconsistency
led to customers demanding the company’s product from the plant deemed ‘highest
quality” – even if this plant resided on the other side of the globe. This presented clear
problems for Cummins as they incurred high logistics fees and an impoverished
reputation and so sought to null the effects of such inconsistency by globalising the
company, ensuring a certain standard at all Cummins locations.
Akin to National Instruments when asked about the influence of competition on the
restructuring process, the respondent dismissed the impact however did divulge that
since the global integration, the company had overtaken their largest rival in the
“Power Generation” industry.
From the data it is clear that the overall motivation for the company’s structural
alteration was a combination of the desire to achieve economies of scale and to
globally align, ensuring the consistency, quality and direction of all foreign subsidiaries.
Despite the difference in type of regionalisation, this result mirrors that of the previous
case study and thus moves to suggest a common strategic motivation for
regionalisation within MNCs.

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Secondary Data
The Case of Microsoft and Sony – Dhillon, I. and Gupta, S. (2015)
This section will analyse the paper written by Dhillon & Gupta and their research on
the restructuring of technology giants Microsoft and Sony. This particular article was
evaluated due to its comparability to the two primary case studies. Dhillon & Gupta’s
work enables a direct comparison of when two MNCs have expanded and
implemented a regionalisation strategy alongside company growth and two MNCs that
have regionalised due to poor performance. Within academia this type of analysis is
scarce and few theorists use multiple case examples to highlight the process of
corporate restructuring.
Within its abstract, the article explicitly and immediately points to the importance of
innovation and competition with regards corporate restructuring. The emphasis of the
literature is distinctly placed on how the two MNCs lost their competitive edge due to
a divided organisational structure and have thus looked to integrate and ‘foster
creativity’. This is made clear by a direct quote from Microsoft’s ex-CEO Steve Ballmer:
“To execute, we’ve got to move from multiple Microsofts to one Microsoft” (p.53).
From this it could be derived that Microsoft were made aware of their lack in
competitiveness and thus sought to align and offer a single corporate message;
comparably similar to National Instruments. This is supported by the researchers as
Dhillon & Gupta report that the company revised their seven previously autonomous
divisions into three new sections. This was mirrored by the actions of Sony, whom in
2013 “focused on reorganizing the company to enhance collaboration” (p.57).
Both cases align with Lynch’s theory of ‘HQ transaction decisions’ (which was also
evidenced by National Instruments) whereby strategy is incepted at HQ and deployed
outwards to the subsidiaries. However one pivotal difference in the two data sections
remains the motivation behind restructuring. The findings from the paper conclude that
negative financial performance and loss of market share were the primary drivers
behind the need to regionalise. As can be seen in Appendix 8, the growth of main
competitors Google and Apple from the years 2010-2013 are 27.07% and 37.95%
respectively, whilst Microsoft and Sony sit at 7.81% and 1.72%, prompting the need
for serious reform. Similar to National Instruments, both Microsoft and Sony engaged
one principle driver for change (in the latter’s case, lagging company performance) but
sought to reap the wider benefits that restructuring would bring. In the case of the
technology companies, the wider benefits are increased innovation and alignment,
with innovation and creativity cited as the most important aspect of a technology
company (Isaacson, 2014). This succinctly aligns with the view given by Bartlett and
Ghoshal (1998) that MNCs alter their strategy and regionalise in order to gain ‘world-
wide innovation’ due to increasing amounts of pressure to respond sharply to rapidly
evolving markets and pioneering technology.
Supporting Dhillon & Gupta’s findings is the view from Mavlutova (2008) whom
collated data from MNCs and found that restructuring was conducted only in response

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to financial woe and as a last resort to avoiding bankruptcy. The researcher continued
to state that “one of the main ends of restructuring is to lead company out of a crisis”
(p.2). This maintains the argument and evidence from Microsoft and Sony and
contends that regionalisation is most commonly conducted in order to improve
business performance in light of poor results or a decrease in competitiveness.
However this contrasts with the findings from National Instruments and Cummins, both
of which proceeded to regionalise amidst growth and positive financial performance.
Nonetheless it could be argued that both MNCs anticipated potential difficulties with
their existing structures (in the case of Cummins their foreign subsidiaries clearly
highlighted inefficient practices) and implemented their process of regionalisation in
order to combat future negative performance, therefore aligning with the motivations
of Microsoft and Sony.
Multinational Corporations & Regional Strategy – Franklin, O. (2010)
This section of the dissertation will analyse the compounded findings of Franklin whom
in 2010 created a critical literature review of the existing theories surrounding strategy,
regionalisation and MNCs. The focal point of the analysis is the work of Stopford &
Wells (1972) and Egelhoff (1988).
Through analysing existing theory and from conducting personal research, Franklin
(2010) denotes that “multinationals have become increasingly dependent on foreign
operations and the involvement between the international units of the firm” (p.50). This
‘dependence’ on international operations (subsidiaries) and the ever-changing
requirements of firms has coerced businesses into creating what Stopford & Wells
(1972) and Egelhoff (1988) term ‘area division structures’. These structures
regionalise subsidiaries by geographical area (much like the case of National
Instruments and the early structure of Cummins) and are said to “coordinate around,
and optimize, performance” within a certain geographical region (p.50). However the
researchers offer certain distinctly different strategic motivations behind such
restructuring, citing four clear drivers that determine the implementation of area
division.
The first of these is the phenomena whereby operations within a certain region
become large, complex and sufficiently different from other regions, thus prompting
the need to collaborate under one strategy. This ideal may correlate with the
descriptions from both National Instruments and Cummins where a region’s
complexity may arise out of growth and expansion, thus necessitating structure
change.
The second relates strongly to both case studies and that is to capitalise on the
opportunity for economies of scale. Stated by all three authors (Franklin, Stopford &
Wells, Egelhoff) this motivation is found in most cases researched and remains a
common theme throughout the paper, linking back to the literature review and the
theory debated by Bartlett & Ghoshal (1998).

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Thirdly and varying from the existing data, the researchers expressed that area
division structures arise “when there is a need for more product modification at foreign
subsidiaries” (p.51). This finding is inconsistent with most other literature however
offers an alternative motivation behind restructuring that has been considered within
the academic sphere.
Finally and similar to the first point is the notion that restructure will arise when the
amount of foreign subsidiaries has surpassed that of other structures and warrants the
need for regional establishment. This motivation is clearly considered to assimilate
with growth and so further enhances the argument that regionalisation is most
commonly due to an outgrowing of the existing structural model (As evidenced by
National Instruments and Cummins and debated by Ghemawat, 2001).
After reviewing the arguments declared above, Egelhoff in 1988 sought to enhance
this theory and so elaborated on the process, adding three more motivations deemed
imperative to MNCs when restructuring. The first of these diversifies from much of the
existing data and infers that regionalisation is a strategy deployed to pursue high
foreign sales. Whilst this does contrast with the primary data gathered earlier in the
paper, this incentive does echo the research found in the cases of Microsoft and Sony,
with both companies restructuring in order to achieve higher sales. This contradicts
the theory proposed earlier that regionalisation correlates with business growth and
moves to suggest that there may be an air of specificity to the process, meaning it can
be implemented in the face of both growth and decline depending on the circumstance.
Moreover this may also support the argument that companies regionalise in
anticipation of negative company performance, suggesting it is therefore a preliminary
or contingency tactic used by HQ.
Furthermore, Egelhoff continues to deliberate that restructuring can be in response to
the need for performance optimisation within a specific geographic region. This again
mirrors the experience of Microsoft and Sony who sought regionalisation as a method
to increasing competitiveness in the face of declining business performance. However
an important difference between the two arguments is that the technology companies
were losing market share to more innovative rivals worldwide, rather than in one
specific region (Dhillon & Gupta, 2015).
Lastly and remaining a common theme throughout the research is the desire for
greater coordination. Though again in this instance Egelhoff narrows the theory to a
specific region, whereas the data gathered suggests that regionalisation is a method
to achieving global coordination, as has been seen in both primary case studies as
well as with Microsoft and Sony (Microsoft’s ex-CEO expressing the need to conform
to ‘one Microsoft’ as opposed to multiple, Dhillon & Gupta, 2015). However this does
contest with the argument made in the literature review, citing emphasis on
‘multiculturalism’ and ‘local differentiation’ as weighing motivators for regionalisation
(Bartlett & Ghoshal, 1998).

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DATA ANALYSIS
This section of the paper will collate and analyse all data gathered and will seek to
succinctly answer the dissertation question. The approach taken will also be evaluated
with the strengths and weaknesses assessed in order to offer a holistic and fair piece
of research. Finally the ultimate findings will be described with regards to their position
within the academic sphere and how this dissertation relates to the existing theory and
literature regarding regionalisation in MNCs.
Firstly from the primary data collected, two clear and definitive strategic motivations
regarding regionalisation were found. In both case studies it was extremely apparent
from the respective interviewees’ responses that the quest for global alignment and
an achievement of economies of scale was the overriding and integral driver for
regionalisation within the companies. This correlated with existing literature portrayed
in the literature review as Bartlett & Ghoshal (1998) and Gereffi (2005) described how
the influence of fierce global competition (attributable to the process of globalisation)
has forced MNCs to seeking efficiency through global integration whilst achieving
economies of scale in order to remain competitive. However, vitally the data differs
from the literature in that both respondents rebutted the influence that competition had
on the decision to regionalise and instead pointed to the inefficiency of the previous
corporate structure. Whilst this may appear to be contrasting at first glance, the
argument could be made that the inefficiency of a previous model would eventually
have resulted in a lack of competitiveness (As foreseen by the subsidiary managers
at Cummins, p.21). This would suggest that the process of regionalisation was in
response to an anticipated dip in performance and that the benefits of restructuring
(integration, economies of scale) were in fact combatants to a forecasted problem.
This argument is supported by the information gathered from secondary sources, in
particular the business examples of Microsoft and Sony. Differentially the two
companies utilised the process of regionalisation in response to immediate corporate
woe and declining performance, however the process was initiated in order to achieve
the same results found in the primary data, with ‘alignment’ the core goal (Dhillon &
Gupta, 2015).
Therefore it can be determined that the process of regionalisation within MNCs can be
driven by company-specific factors such as the quest for innovation (Microsoft &
Sony). Nonetheless overall, whether in response to immediate poor company
performance or a forecasted or anticipated decrease, the strategic decision is made
in order to align the business, making it more efficient and thus ultimately leading to
economies of scale and an increase in competitiveness.
With the dissertation title answered, an evaluation of the thesis’ approach will be now
made. Initially the extensive responses from both sources of primary data proved
invaluable when attempting to answer the hypothesis and so have proved a great
strength to the paper and the approach taken. As stated by Ghauri & Grønhaug

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(2005), a study is only as good as its research and the importance of valid primary
data is paramount. Despite this, it could be argued that the accuracy of the data is
limited due to a lack of extensive research. With only two companies to compare, it is
justifiable to argue that this cannot represent MNCs as a whole and should the paper
have represented a wider range of companies, the outcome of the study may have
been vastly different. The same may also be noted for the use of secondary data.
Whilst the information gathered from the case examples of Microsoft & Sony proved
pivotally helpful, a broader range of examples to compare would have heightened the
credibility of the research. The researcher denotes the restriction of time as a
justification for a limited pool of companies and foreshadowed such limitation in the
methodology (p.14). It is also contested that the process of triangulation was
implemented in order to improve the credibility of the study in order to combat a short
time-horizon.
Finally with regards the existing academic consensus and literature on the topic, this
paper has taken and accepted the work of such theorists as Bartlett & Ghoshal (1998),
Dhillon & Gupta (2015), Mavlutova (2008), Stopford & Wells (1972) and Egelhoff
(1988), and has incorporated the arguments made in each respective study in
combination with tangible primary research. This has resulted in an eclectic and
academically supported dissertation which can be seen as an extension to the industry
literature, both supporting the existing argument whilst adding essential variables and
a deeper understanding of the core strategic motivation of corporate restructuring and
regionalisation.

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CONCLUSION
This paper set out to explore the strategic decision-making process of MNCs and
define exactly why companies choose to regionalise their national branches. In an
attempt to do so, this study began by exploring the existing literature. Within the
literature review it was deemed that whilst there were some theorists (Bartlett &
Ghoshal 1998, D’Silva 2013) that had touched upon regionalisation, there was still
many unanswered questions regarding exactly why a MNC would regionalise.
Following that was a concise methodology which outlined why the paper would adopt
an empiricist philosophy, an exploratory research design and a case study strategy,
plus any potential ethical issues the research may encounter. In addition to this the
researcher cited potential limitations to the dissertation, such as a lack of access to
data, time and finance.
The paper then began to deliver its findings. From analysing the responses of UK
managers in two foreign MNCs, it was revealed that the companies made the decision
to regionalise in order to acquire global alignment and to achieve economies of scale
(with the latter tending to be a result of the former). With the case of National
Instruments, the business outgrew its existing structure and so regionalised in order
to deliver a single message to customers, enabling global alignment. This would result
in greater efficiency for the company, thus enabling economies of scale. In slight
contrast, Cummins had deployed a similar structure earlier in its business ‘life’ but had
subsequently outgrown that and so sought to enter what Hilpert (2003) described as
the final stage of regionalisation: global integration. This process resulted in complete
alignment for the company and has since enabled mass economies of scale, meaning
greater competitiveness within the industry.
Despite those findings, the results from analysing the secondary data conflicted with
the drawn conclusion. According to theorists Dhillon & Gupta (2015) MNCs regionalise
to resist a decline in company performance and decreasing competitiveness, with
examples Microsoft and Sony losing market share to rivals Apple and Google. In order
to combat this, both companies regionalised and altered their corporate structure in
order to align and operate more efficiently whilst also fostering innovation. From this it
was deduced that the two sources of data conflicted and so offered differing results.
However upon returning to the case of Cummins, their second process of
regionalisation derived from subsidiary manager complaints of inefficiency. Similarly
at National Instruments, management realised the existing model was becoming
incompatible with the levels of growth the company was experiencing. Therefore it was
concluded that both decisions to regionalise were the result of an anticipated decline
in performance and thus both sources of data are interlinked. The strategic motivations
behind each regionalisation are consistent, with each company seeking alignment in
their operations thus benefitting from economies of scale, enabling greater
competitiveness.
Due to the nature of the hypothesis it is argued that this paper may have direct
implications on MNCs. As has been discovered, it is not uncommon for MNCs to

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regionalise once company performance has dropped and that in many cases the
process is used as a tool to combat current decline. It is suggested that the publication
of this paper may act as a pre-warning to companies and may encourage managers
to re-evaluate their current corporate structures and assess how efficient or compatible
they are in comparison to the business’ operations. Inspiration can be taken from this
paper, which highlights the cases of Cummins and National Instruments, both of whom
regionalised in recognition of an out-dated and inefficient structure and have since
continued to grow and prosper in their respective industries. This study offers vital
insight into the strategy of MNCs and how they can remain competitive by altering their
corporate structure and so has the potential to be useful to those in practice.
Despite its usefulness however, this dissertation does encompass limitations. As
mentioned earlier in the data analysis section, the most prevalent of these is the lack
of extensive data. In order to succinctly answer a question regarding strategy in MNCs,
it is suggested that a greater breadth of data must be collated. This would improve the
accuracy and credibility of the data and the research paper as a whole. Not only this,
but the accuracy of the primary data sources may be contested as both case example
companies originate from the United States and so may exhibit similar characteristics,
motivations and operations (Gillespie & Hennessey, 2010). Comparing companies
from a different nation may have more accurately represented MNCs and thus again
would have improved the accuracy of the data. As mentioned previously however,
these limitations were foreseen by the researcher as highlighted in the methodology
(p.14). Due to the short time horizon of the research it was deemed unrealistic to
contact an extensive number of companies and so the researcher focused on two main
businesses as the prime cases for the study. It was due to the foreseen lack of access
to data that both case examples consisted of American companies however should
the researcher decide to continue academic work on the topic, a longer time horizon
would be implemented.
Finally, it is suggested that this paper could have a direct influence on the existing
academic literature on regionalisation in MNCs. As mentioned previously, this study
has built upon existing arguments by theorists which begin to approach the subject of
regionalisation. Bartlett & Ghoshal (1998) offer a significant insight into how
companies may benefit from economies of scale due to global integration, however it
is argued there is substantial room for conceptual improvement as critics such as
Rugman (et al, 2011) describe. Continually whilst there are theorists who analyse
corporate restructuring (D’Silva, 2013), few are able to isolate the core motivation
behind the process whilst others offer a clouded interpretation which consists solely of
companies combating poor performance (Mavlutova 2008, Dhillon & Gupta 2015).
This study has taken the work from a breadth of academic theory and has
amalgamated theory with primary business evidence. Whilst there are limitations, it is
argued that this paper offers a fresh and critical insight into the true motivations behind
regionalisation in MNCs and if built upon within academia, could provide a platform for
substantial regionalisation theory.

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APPENDICES
Appendix 1:
Appendix 2:
Appendix 2 exhibits the ‘research onion’ and highlights the complexity of choosing a
specific design or strategy.
Source: Saunders, M. Lewis, P. Thornhill, A. (2009) Research methods for business
students, Fifth Edition, Prentice Hall Financial Times, Pearson Education
Appendix 1 shows Hofstede’s cultural dimensions which are deemed to describe a
country’s individual characteristics and culture. This may influence the actions of a
MNC and may influence the decision to regionalise.
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accessed: 22/03/16

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Appendix 3:
Appendix 4:
Interview with Mark Gradwell - PR, Advertising and Social Manager, Northern
Europe, National Instruments – 25/02/2016
Interviewer: Has National Instruments experienced a period of regionalisation or
restructuring? If yes please can you describe this change to the best of your knowledge?
PR Manager: Yes, so over the last couple of years the organisation's changed quite a bit,
so I work in the UK office based in Newbury and previously was the marketing
communications manager for the UK & Ireland. Most of the regions around the world have
a local branch office physically located within that region and are traditionally responsible
for providing sales, marketing and support for customers in the local region and local
language. Some of the branches are bigger than others and most have operated fairly
autonomously, some have grown out of distributor arrangements in those countries but
generally we have that direct sales model throughout the world. A couple of years ago we
started a process of regionalisation within Europe, we moved to having 3 sales regions,
Northern Europe, Mediterranean, Central and Eastern Europe, so the UK & Ireland branch
came together with the branches we have in the Nordic and Benelux countries to form
Northern Europe. I was part of the leadership team for marketing that had to figure out
how that integration was going to work, alongside the marketing manager here at the time
for the UK & Ireland, Kyle Voosen and our counterparts in the Nordic and Benelux
countries and so the 4 of us worked together to figure out how to put our teams together
and our activities and programs together so that Northern Europe was structured. So this
was the first period of restructuring. There was a further change then globally for NI, we
moved from 4 sales regions worldwide to 3. Now we have Americas, Asia Pacific and
EMEA (Europe, Middle East, Africa, India, Russia, Arabia) (INTRA is sub region, India,
Russia, Africa, Arabia) Going through a process of restructuring in order to be more
globally aligned. Not just for EMEA but for all regions.
Appendix 3 shows Benbasat’s list of eleven properties of case studies.
Source: Benbasat et al. (1987) The Case Research Strategy in Studies of Information
Systems.

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Interviewer: As you've said you've gone through many different stages of further
integration, are there are plans that you're aware or that you could foresee for any further
regionalisation, or do you think the current structure will be set for some time?
PR Manager: Changes are constant, the business is always evolving, so I wouldn't say
anything is set in stone. We are actually moving at the moment so that the sub regions
will still exist, you still need to look after the customers in those local regions. The sales
organisation is sub regional like that, but a lot of the more support structures if you like,
including marketing, are moving to a more regional organisation rather than sub regional
- meaning that we're going to be part of an EMEA organisation rather than just Northern
Europe. Obviously we will still sit within NR as we're physically located here, whether that's
the UK or NED or SWE, and we still need to maintain a link to the local sales teams but
the organisation is going to be what's called a regional demand centre for EMEA which
will have all the Marcomms in it and will be organised by media (events, web &dm, ad and
pr). The teams will roll up to EMEA leaders within that organisation and that's the process
we're going through at the moment. We're using the same kind of map process when we
transitioned from UK & IRE to NER by interviewing the people in teams, asking them how
they spend their time, what they work on, what they like to do or not, what they want to do
in the future, and then looking at the needs of the business and trying to map those things
together to try and build an organisation which can serve the business as well as the
people in it.
Interviewer: Was this regionalisation a corporate decision and were subsidiary managers
involved in this decision making process?
PR Manager: Yes, absolutely there was a lot of involvement all the way along, so I think,
some of it for sure has been driven by corporate, their thoughts and vision, trying to build
an organisation that is more efficient, more receptive and is more aligned worldwide, but
there's been very heavy involvement of folks in the region in that process and that
decision. And then at the leadership level, in the implementation it's the leadership and
the management in the sub regions and in these teams that have actually had to make
the process work and so yeah there's been a lot of involvement by the managers in those
regions, they've driven the process. Corporate came to us with a vision, 'This is the end
point and how we want the organisation to work and function, these are the benefits and
reasons why, but then to some extent we had to figure out how to make that happen and
also make that happen without completely derailing the business, we still had to do the
things we needed to do to make the business successful, support sales, support
customers and also we had to not completely derail the teams.
Interviewer: Was it explained to you exactly why this process was occurring and if it's any
different, why do you personally believe such regionalisation did occur?
PR Manager: Sure, it's all about creating an organisation. The problem is as the business
grows, the model that we had as we were growing, worked for a growing business but

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perhaps doesn't work as well as we get bigger so you had branches having a lot of
autonomy and having a very strong connection to the local market, to their customer base,
providing local sales and marketing, in local language taking account of local market
conditions or culture or anything like that and that worked well and helped us grow fast,
helped us solidify the culture through the organisation. The challenges that get bigger are
that you get a lot of replication. You get the same repetition in 15/20 branches throughout
Europe, you get the same conditions doing the same thing in slightly different groups of
customers. The other issue which sounds counter intuitive, but you also have lots of
people doing different things meaning that they're doing the same thing but they’re doing
it differently so they're all running events but they're all doing it in slightly different ways
using different messages, graphics, agendas or content and so there's a lack of alignment
in terms of a message to customers and there's a lot of waste in energy with 10 different
branches all creating something that broadly the same but slightly different, for their own
customers, their own market and then the strategy of course should be driven as we have
R&D product marketers in the corporate office that happen to be based at HQ that will
drive a lot of strategy as they’re the one that has taken the input from the regions,
understand the customer requirements and have decided what products we need to
address and then put it together and figure out how to market it and then that's not always
translating into what happens and should happen in the regions. And they're feeling that
disconnect and so all of those issues, that's really what the restructuring and the process
is trying to address. It's trying to create a more aligned organisation worldwide where we're
all aligned around the message that we're trying to give to customers and we're speaking
with a single voice to customers, whether that's in the UK, Sweden, China, India or the
US. That's one big piece of it and one of the key driving forces and with that, it brings lots
of other benefits - more efficiency and more effectiveness as we can free up people from
creating stuff that already exists somewhere else and that element of people doing the
same thing, it's been one of the stated aims of the project that it's not about reducing
headcount, where we've got those benefits, that just helps free people up to work on other
things and there's always so much we'd like to do and not enough resource to do it and
so it's been helpful in allowing us to redeploy resource onto other pressing matters. It also
hopefully, the plan is to try and allow people to work more on things they want to work on
and therefore grow their careers that way.
Interviewer: Are you aware of any competitors that have or are planning to go through a
similar process and do you think competitiveness weighed in on the decision to
regionalise?
PR Manager: I don't know the competitors as well as I know our experience, having said
that, I do know that most of our close competitors and then similar companies in a similar
field, a lot of companies in the engineering, industrial, technology b2b space have this
type of organisation already, they have some kind of Europe or EMEA type organisation
rather than a country based organisation. So, that's definitely the case. I don't know if I'm
honest how heavily that weighed on the decision for us to do this, I doubt that it was a key
driving factor but once we made the decision, I'm sure we probably looked at models that
other companies and how they've done it. Certainly other companies have a similar
structure, in some respect they're probably ahead of us on that journey and maybe don't

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have the same country organisation that we have extensive. We're keen to get the balance
right so that we don't completely lose all of that straight away. It's part of our offering to
customers where we have a good offering to local customers that is supportive and they're
listened to, understood and served in their local markets in their local language.
Appendix 5:
Appendix 6:
Written response from Alex Camm, Purchasing Manager – Cummins UK –
22/03/2016
In response to questions 1&2: In the 1960s Cummins had expanded to 96 different
countries and at this point they regionalized... They had four separate Business Units
(Engines, power generation, distribution and components)... they were then further split
into regions EMEA, Asia, US etc. Before, they were being managed/aligned to the HQ in
Indiana and Senior Directors, due to the pace of growth and worldwide coverage it was
no longer beneficial to be managed from the HQ and rather managed as separate entities
in their location to align with culture/needs. However more recently they have taken a more
global approach as the business units are complementary of each other. We now have
each previous region aligned and reunited to form one overriding strategy and structure
of operations. Prior to the new global approach they had suppliers providing BUs
Interview questions for National Instruments
1. Has National Instruments experienced a period of regionalisation or restructuring? If yes,
please describe this change.
2. [Based on answer to question 1]…Has this been a global process?
3. Are there any plans that you’re aware, for further regionalisation?
4. Was this a corporate decision and were subsidiary managers involved in this decision
making process?
5. Was it explained to you why this process was occurring?
6. Why do you personally believe such regionalisation occurred?
7. Are you aware of any competitors that have or are planning to go through a similar
process?
8. [Based on answer to question 7]…Why do you think this is?

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separately and customers buying from more than one BU. Managers made the decision
to take a global approach for the following reasons:
• Economies of scale: with some suppliers catering for all four business units it was
considered wasteful for them to treat business units separately. Even worse the BUs were
not always buying from the same suppliers for the same commodities i.e. one BU
purchase from one steel company and another BU another, obviously incurring a cost as
little economies of scale is generated this way. Also consolidated supply bases are easier
to manage so having as little as possible is beneficial.
• Alignment/Reputation: Operating as separate BUs meant that values were not consistent
across the board, so when one BU was working with a supplier in one way another BU
would do it in another removing the consistency of the brand 'Cummins.' Therefore aligned
training is conducted across all BUs and regions to provide a level of consistency. There
are international purchasing offices located around the globe which help deliver
consistency and overcome cultural barriers. They operate on behalf of all BUs.
• Quality: There was once a time when Cummins 'Stamford' was perceived to be of better
quality than Cummins China... this was to the point where customers refused products
from China insisting it was from Stamford incurring costs for logistics. Now, processes are
consistent across the board with the expectation that are adhered to, however many
including myself believe there still to be a lack of quality and global consistency.
In response to question 3: With the globalisation strategy being relatively new it still has
its flaws. Suppliers are still building up capacity to meet the demands of all Cummins BUs.
Quality measures are still flawed in China in comparison to Stamford... so at the minute
it’s more a case of progressing the current strategy and working on the interconnectivity
than making further plans.
In response to question 4: The decision was corporate but was initiated from subsidiary
manager complaints about the inefficiency of the current model. The main complaint was
with the quality consistency which meant additional work was being applied to certain
plants unnecessarily... i.e. Stamford producing for a Chinese supplier despite having
plants in China.
In response to question 5: The process was explained and reiterated in almost every
team meeting. Interdepartmental conference calls took place to ensure the rigorous
processes were being adhered too globally. Managers had more frequent updates to enrol
to the team but there was also many all employee briefings that took place.
In response to question 6: I believe the process occurred to make the business more
efficient. For example Cummins Generator Technologies’ number one customer is
Cummins power generation.. it makes sense for them to therefore work collaboratively.
Share suppliers for consistency and to force price down... this can then allow a lower price
to be charged to CPG giving them a cost advantage over their main competitor Caterpillar.
In response to questions 7&8: Caterpillar’s BUs are much more diverse than ours at
Cummins so it isn’t as feasible for them to do this to the same extent. Since the new
approach Cummins have overtaken Caterpillar in the Power Generation BU.

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Appendix 7:
Appendix 8:
0
5
10
15
20
25
30
35
40
2010-2013
Net Revenuegrowth as a % from2010-2013
Microsoft Sony Google Apple
Appendix 6 shows the
comparative net growth of
Microsoft, Sony, Apple and
Google from the years 2010-
2013.
Source: Dhillon, I, & Gupta,
S. (2015), 'Organizational
Restructuring and
Collaborative Creativity: The
Case of Microsoft and
Sony', IUP Journal Of
Business Strategy, 12, 1,
pp. 53-65, Business Source
Complete, EBSCOhost,
viewed 30 November 2015
Interview questions for MNCs
1. Has [company name] experienced a period of regionalisation or restructuring? If yes, please
describe this change. If no, why do you think this is? *
2. [Based on answer to question 1]…Has this been a global process?
3. Are there any plans that you’re aware, for further regionalisation?
4. Was this a corporate decision and were subsidiary managers involved in this decision making
process?
5. Was it explained to you why this process was occurring?
6. Why do you personally believe such regionalisation occurred?
7. Are you aware of any competitors that have or are planning to go through a similar process?
8. [Based on answer to question 7]…Why do you think this is?
* If answer to question 1 is no:
2. Are there any plans that you’re aware of for any type of regionalisation or restructuring?
3. Why do you think this is?
4. Are you aware of any competitors that have or are planning to go through a similar process?