transnational solution

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  • 1. Managing Across Borders, The Transnational SolutionBy: Christopher A. Bartlett and Sumantra Ghoshal - is about the Challenges of International Business Particularly in 1980s.
  • 2. Three Main PartsThe Transnational ChallengeCharacteristics of the TransnationalBuilding And Managing The Transnational
  • 3. The first part, called The Transnational Challenge,deals mainly with conceptual issues like the definitionof multinational, global and international companies aswell as structural fit and administrative heritage. Ittries to answer the question "why nowadaystransnational organizations are needed.
  • 4. The second part, called Characteristics of theTransnational, describes mainly the three keyattributes of the transnational organization. Which arethe integrated network configuration of assets andactivities, flexibility due to specialized roles andresponsibilities and last but not least the facilitation oflearning due to multiple innovation processes. It tries toanswer the question what is the transnationalorganization.
  • 5. The third part called Building And Managing TheTransnational prescribes mainly what managers haveto do in order to build and manage an organization thatcorresponds to the model of the transnationalorganization. Tries to answer the question how can atransnational organization be build.
  • 6. The Transnational ChallengeBartlett and Ghoshal argue that because of newpressures, which have transformed the globalcompetitive environment, even the largest companiesworldwide have to rethink their traditional strategies ofdoing international business. This means thatespecially these companies, but not only thesecompanies, have to consider the adequacy of theirorganizational structures and processes.
  • 7. During their studies Bartlett and Ghoshalinvestigated nine leading American, European andJapanese companies of the following three worldwidebusinesses: consumer electronic business(Matsushita, Philips, General Electrics [GE]), brandedpackaged products business (Unilever, Procter &Gamble [P&G], Kao) and telecommunicationsswitching business (Ericsson, NEC, ITT). They arguethat three of the studied companies were losers orlaggards.
  • 8. MANAGING ACROSS BORDERS:THE TRANSNATIONAL SOLUTIONRegarding the new challenges (GE, Kao, ITT) and sixcompanies survived but were battling to maintain viablecompetitive positions in the new environment(Matsushita, Philips, Unilever, P&G, Ericsson, NEC). Asreasons for that the authors mention the very differentstrategic and organizational responses of differentcompanies in different industries as well as ratherorganizational deficiencies than inappropriate strategicanalysis.
  • 9. Thus for example GE lost competitiveness because of alack of global efficiency; Kaos internationalization failedbecause of its lack of national responsiveness and ITTstruggled through because of its lack of worldwidelearning and innovation. This means that the problemfor managers of worldwide companies was not torecognize what they had to do to enhance their globalcompetitiveness, the challenge was rather how to dothis respective how to develop the organizationalcapabilities to do it. In short: The answer was obviousbut the way of answering was obscure.
  • 10. Bartlett and Ghoshal identify very different strategiccharacteristics of the three studied businesses during thepast. Thus the consumer electronic business demandedbasically global efficiency whereas the branded packagedproducts business required mainly national responsivenessand the telecommunications switching business called forinnovations and there global transfer. Regarding thedifferent strategic characteristics the authors distinct threemodels of strategy respective three types of companies ininternational business: multinational, global andinternational companies
  • 11. Three Types of Companies in International Business:Multinational Companies build strong local presencethrough sensitivity and responsiveness to nationaldifferences.Global Companies build cost advantages throughcentralized global-scale operations and,International Companies exploit the knowledge andcapabilities of the parent company through worldwidediffusion and adaptation.
  • 12. The authors state, that because of the dramaticallychange of the strategic demands through environmentalforces during the mid-1980s, the traditional approaches ofmanaging worldwide businesses are not anymore anadequate response to the new challenges. Indeed the newsolution and strategic challenge of managing a companysworldwide operations in a highly competitive, volatileand changing business environment, is the transnationalorganization.
  • 13. The reason for this is, that the performance of acompany is no longer based on the fit of one-dimensional strategic requirements (responsiveness orefficiency or knowledge transfer) and the companysdominant strategic capability, but rather on the abilityof a company to achieve the three requirements at thesame time. In order to develop these multidimensionalstrategic capabilities, companies have to go beyond thepure structural fit and have to increase theirorganizational flexibility by reshaping theiradministrative systems, communication channels andinterpersonal relationships.