What does 'MNE'S need to be both "global" and "local"?' mean

Résumé du document

Since the rise of liberalisation with the opening of markets in the mid 1980's, the business world has entered the era of globalisation where companies have dramatically expanded their business abroad. Indeed, the abolition of barriers of entry was one of significant opportunities for multinational enterprises to gain more market shares by sustaining their competitive advantage on a broader scale. However this situation of globalisation has shifted to a new period called the "semi-globalisation". In fact this expression quoted by Panos Mourdoukoutas highlights the new constraints imposed to most of multinational enterprises (MNE's). In fact new pressures have transformed the global competitive framework, forcing companies to rethink their traditional worldwide strategic approaches. Thereby they are nowadays doomed to be both globally efficient and locally responsive by adapting some elements of their strategy mix to the host country where they operate.

Extraits

[...] Towards a new approach of the transnational structure 6. A necessary understanding of the strategy This following goal which was defined in 1998 by the CEO of the company ABB, Barnevik as be global and local, big and small, radically decentralized with central reporting and control” seems in reality hard to achieve. In fact, Barlett and Ghoshal acknowledge the fact that they saw none of the companies in their study as a genuine transnational company as they defined it. As regards the goal as inherently unattainable, the companies analysed were trying at least to achieve one of its objectives either to compete on the basis of scale efficiency or to respond to national market or to transfer specialised knowledge. [...]

[...] Finally a dispersed operation throughout the subsidiaries is an advantage since it reduces risk exposure to political and economic risk. For instance, facing a high appreciation of the Japanese yen, Matsushita has clearly understood this key point as they could have avoided 500$ million in 1986 sales if they had more offshore subsidiaries Flexibility through local responsiveness Second major advantage is to respond efficiently to the local country regarding the customer demand, economic regulations, infrastructure or political pressure. Even though as Levitt argues, international travel and communications have reduced differences, yet worldwide tastes, habits and preferences are far from homogenous. [...]

[...] The main advantage to such a structure is to attain competitiveness through global efficiency through economies of scale and economies of scope. In fact it is obvious that one of the main objectives for MNE's is to produce at a lower cost with the highest margin possible. Therefore transnational will seek for the best location of their subsidiaries where their fixed costs such as wages and resources will be the lowest as possible. By doing so, transnational will obtain more easily economies of scale as they can sell a much more amount of their production. [...]

[...] In fact it seems a very long process to change radically the organization and the distribution of managerial responsibilities and influence. For instance Philips developed a loosely linked network of highly autonomous national subsidiaries, whereas Matsuhita retained much of the decision-making authority and concentrated more of its organizational resources at the centre. Furthermore there are other impediments such as the different way of managing which corresponds to the impact of national culture. As a matter of fact, we can distinct different ways of managing which then determines the way of affecting responsibilities to the various business units. [...]

[...] In this way they can respond to localised consumer preferences and national political constraints without compromising their economic efficiency Learning as part of the innovation process The third advantage of this transnational structure relies in the transfer of knowledge offered by the integrated network. In fact MNE's are under pressure to respond to rapidly evolving markets. One way of responding to this is through seeking to link their international operations and transfer expertise across them. Here the innovation remains a key element in this structure which is inherently associated with the learning process. The learning can be defined by the ability to learn about new opportunities requiring a wide range of inter/intra firm's collaboration. [...]