In my previous post I had mentioned about the 4 types of classifications of Multi National firms by Bartlett, Brikinshaw and late Sumantra Ghoshal, in their book “Transnational Management” : (1) International (2) Multinational (3) Global (4) Transnational. Here is a detailed description of each type
International
This is the earliest stage of a company which tries to go from being a single nation to multi-nation company. Such companies regard themselves fundamentally as a domestic company with foreign appendages.
Relationship between foreign and home-country operations
The main role of the foreign outpost (s) is to “support” the domestic parent company in various ways such ass incremental sales of domestic product lines, supply raw material, or components for domestic manufacturing operations.
Management of foreign operations
Decisions related to the foreign operations are made on an adhoc basis.
Mutlinational
This is the second natural stage for an “International” firm which has now been exposed to foreign environments and seen growing sales / profits / other benefits to convince home country managers that international activities could be more valuable than previously anticipated.
Relationship between foreign and home-country operations
Managers begin to emphasize the differences among various foreign markets and operating environments. This leads to flexibility in “modifying” products, strategies, and management approaches on a country by country basis.
Management of foreign operations
Thus there is increased sensitivity and responsiveness to multiple local environments and often each country is lead by its own self-directed leadership with considerable independence from headquarters.
Till about late 1990’s Unilever’s operations in India were known as Hindustan Lever Limited (HLL) (notice Lever not Unilever) and operated with considerable local independence and ownership.
Global
This kind multi-nation firm emerges from an approach of making and selling “the same thing, the same way, everywhere” as popularized by Theodore Levitt.
The approach could be an evolution from the second stage of being a “Multinational” firm or it could result directly from a core internationalization philosophy. A good example is P&G. where even the actors in Ads don’t “speak” any language – thus the same Advertisement for the same product is displayed world-wide with just voice-overs and text captions.
On the other hand as an evolutionary step the multinational firm finds itself very responsive to different national markets but finds inefficiencies creeping up. Proliferation of products designed for local markets leads to losses of efficiency in design, manufacturing infrastructure, logistics, distribution and other tasks.
Relationship between foreign and home-country operations
These companies think about creating products for a world market and manufacturing them on a global scale in a few highly efficient plants, often at the corporate center. Global efficiency rather than local responsiveness is the decisive theme.
Management of foreign operations
Foreign operations are subservient to Headquarters. Headquarters become the center of strategic thinking and planning with considerable centralization of R&D, marketing planning, management etc.
Seeking global efficiencies, HLL in 2000s got renamed as Hindustan Unilever Limited with increasing management oversight and guidance from Headquarters.
Transnational
The goal in these firms is to combine local responsiveness with global efficiency. That is to get the best of Multinational and Gobal approaches to management of multi-domestic operations.
Relationship between foreign and home-country operations
In Transnational firms, key activities and resources are neither centralized at Headquarters nor decentralized so that each subsidiary can act independently for local needs. Resources and Activities are dispersed and specialized to achieve flexibility and efficiency at the same time. Dispersed resources are integrated into an interdependent network of worldwide operations.
Management of foreign operations
Bartlett, Brickinshaw, & Ghoshal state: “The transnational mentality recognizes the importance of flexible and responsive country-level operations—hence the return of “national” into the terminology. And compared to the multinational approach, it provides for lining and coordinating those operations to retain competitive effectiveness and economic efficiency – as indicated by the prefix “trans”. The resulting need for intensive organizationwide coordination and shared decision making implies that this is a much more sophisticated and subtle approach to MNC management.”
» Four Types of Multi National firms from TheBizofCoding
In a globalized Tech World we are often consumers and /or employees of multi-nation or international companies more than firms that operate within the domestic confines of a single country. According to UN estimates by 1991 there were about 36,000... [Read More]
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