Gazdasági Ismeretek | Vállalatgazdaságtan » Ranim Helwani - Implementing the Strategy, Building Multidimensional Capabilities

Source: http://www.doksinet     Global  Business  –  2014  –  Ranim  Helwani       Chapter  7  –  Implementing  the  Strategy  –  Building  Multidimensional  Capabilities     à  Evolving  transnational  models  have  defined  new  managerial  tasks.   à  Three  typical  management  groups:  the  global  business  manager,  the  worldwide  functional   manager  and  the  national  subsidiary  manager   à  Major  challenge  for  MNE:  allocating  their  many  complex  strategic  tasks  and  organizational   roles  among  the  key  management  groups  and  give  them  influence  in  the  decision  making   process.  Need  to  rethink  traditional  assumptions  about  the  nature  of  work  Top

 management   integrates  the  diverse  interests  and  engage  them  into  a  common  direction.       21st  century  MNEs:   à  Need  to  develop  multiple  strategic  assets:  global  scale  efficiency  and  competitiveness,   national  responsiveness  and  flexibility  and  worldwide  innovation  and  learning  capabilities.   à  puts  pressure  on  existing  structures  and  management  processes:  need  integrated   network  of  assets  and  resources,  multidimensional  management  perspectives  and   capabilities  and  flexible  coordination  processes.     à  need  effective  managers,  highly  skilled  and  knowledgeable     Risk:  tying  to  implement  third-­‐generation  strategies  through  second  generation

 organizations   with  first-­‐generation  managers.       à  Roles  and  responsibilities  of  three  specific  management  groups:     1.  Global  Business  Management  –  product,  SBU  or  division     à  requires  that  management  captures  the  various  scale  and  scope  economies   -­‐ see  opportunities  and  risks  across  national  boundaries  and  functional  specialties   -­‐ coordinate  and  integrate  activities  across  barriers  to  capture  potential  benefits.     à  global  business  manager  involved  in  a  variety  of  diverse  activities,  depending  on  the  nature  of   business  and  the  company’s  administrative  heritage.     But  there  are  three  core  roles:    

a. Global  Business  Strategist   -­‐ Increasing  worldwide  competition  requires  a  worldwide  perspective  and  responsibility   in  order  to  assess  the  strategic  position  and  capability  of  a  business   à  need  to  create  an  integrated  business  strategy   -­‐ Information,  planning  and  control  system  must  be  consolidated  into  consistent,   integrated  global  business  reports.     -­‐ Formulate  strategic  priorities:   à  Not  unilateral:  Also  need  to  incorporate  the  perspectives  of  the  geographic  and   functional  managers  which  interest  might  conflict  with  the  drive  of  maximizing  global   efficiency.     à  business  strategy  must  fit  within  the  broader

 corporate  strategy;  clear  vision  &  values     -­‐ manager  has  responsibility  to  reconcile  different  views  and  to  prepare  an  integrated   strategy  of  how  to  compete     -­‐ global  managers  are  often  perceived  to  be  insensitive  to  non-­‐domestic  perspectives  and   to  be  biased  toward  the  domestic  organization.  à  therefore  their  career  path  should   involve  some  experience  as  country  manager.     -­‐ Global  manager  need  not  to  be  located  in  the  home  country;  several  ones  can  be   relocated  abroad.       b. Architect  of  Asset  and  Resource  Configuration   à  has  the  responsibility  for  overseeing  the  worldwide  distribution

 of  key  assets  and   resources.     Source: http://www.doksinet     Global  Business  –  2014  –  Ranim  Helwani       à  should  also  not  only  be  unilateral     Task  does  not  start  from  a  zero  base:   à  decisions  must  be  rooted  in  the  company’s  administrative  heritage.  Many  key  assets   are  embedded  in  national  companies  which  are  part  of  the  decentralized  federation   structures.    Reconfigurations  must  be  handled  with  social  sensitivity:  shape  the  future   configuration  by  leveraging  existing  resources  and  capabilities  and  linking  them  to   resemble  the  transnational’s  integrated  network  form.       c. Cross-­‐Border

 Coordinator   à  involves  deciding  on  sourcing  patterns  and  managing  cross-­‐border  transfer   processes.     à  coordinating  flows:  material/components/finished  products,  allocating   responsibilities,  controlling  quality  and  managing  the  flow  of  knowledge  =  extremely   complex  in  transnational  structure:  interdependent,  integrated  network  of  specialized   operations  +  need  to  minimize  the  likelihood  of  technology  loss.   Coordinating  mechanisms:   à  From  direct  central  control:  used  for  products  of  high  strategic  importance     to  rules  creating  an  internal  market  mechanism:  for  commodity-­‐like  products;  reflect  the   competitive  conditions  set  by  the

 external  environment       Worldwide  Functional  Management  –  finance,  marketing,  technology     à  functional  managers  are  specialists  responsible  for  different  functions:  R&D,  manufacturing,   marketing;  can  be  the  CFO  or  CIO     à  provide  support  to  line  managers  by  diffusing  innovations  and  transferring  specialized   knowledge  by  function  on  a  worldwide  basis     à  tasks  can  vary  by  function  or  by  business,  but  there  are  three  basic  roles  and  responsibilities:     a. Worldwide  intelligence  Scanner     -­‐ Most  innovations  start  with  a  stimulus  that  drives  the  company  to  respond  to  a   perceived  opportunity  or  threat

 –  may  occur  anywhere  in  the  world.     -­‐ Need  global  sensory  mechanisms:  recognizing  significant  developments  early  and  get   access  to  leading-­‐edge  information.   -­‐ Global  awareness  is  not  sufficient:  need  to  transmit  the  information  to  those  who  can  act   on  it  à  linkages  often  most  effectively  created  through  informal  networks  that  are   nurtured  and  maintained  through  frequent  meetings,  visits  and  transfers.  à  develop   contacts  and  relationships;  transmit  information  rapidly       b. Cross-­‐Pollinator  of  “Best  Practices”   -­‐ Overseas  subsidiaries  can  be  a  source  of  capabilities,  expertise  and  innovation  that  can  

be  transferred  to  other  parts  of  the  organization.     -­‐ Ability  to  transfer  new  ideas  requires  a  considerable  amount  of  management  time  and   attention  to  break  down  the  not-­‐invented  here  syndrome.     à  functional  manager  must  play  a  central  cross-­‐pollination  role  à  fin  out  where  the   best  practices  are  being  developed  and  implemented  through  informal  contacts,  formal   reviews  and  frequent  travel.     à  can  arrange  cross-­‐unit  visits  and  transfers,  host  conferences  and  task  forces  to  expose   others  to  the  new  idea.       c. Champion  of  Transnational  Innovation   à  previously  defined  roles:  position

 functional  managers  to  play  key  role  in   transnational  innovations     -­‐ locally  leveraged:  simplest  form;  scanning  worldwide  operations  to  identify  local   innovations  that  have  applications  elsewhere  à  spreading  them  into  other  subsidiaries     Source: http://www.doksinet     Global  Business  –  2014  –  Ranim  Helwani   -­‐     globally  linked:  more  sophisticated;  exploits  the  company’s  access  to  worldwide   information  and  expertise  by  linking  and  leveraging  intelligence  sources  with  internal   centers  of  excellence  wherever  they  may  be  located.     à  can  only  be  identified  by  functional  managers  with  perspectives  and   responsibilities

 that  reach  across  countries  and  across  businesses.         Geographic  subsidiary  Management  –  country  or  region   -­‐ a  successful  country  subsidiary  manager  is  often  a  necessary  qualification  for  a  top   management  position     o has  frontline  exposure,  must  deal  with  enormous  strategic  complexity  from  a   constrained  position.   o Is  held  accountable  for  results  but  has  only  limited  formal  authority   Tasks:   -­‐ defending  the  company’s  market  positions  against  global  competitors   -­‐ satisfying  the  demands  of  the  host  government   -­‐ responding  to  unique  needs  of  local  customers   -­‐ serving  as  the  “face”  of  the  entire

 organization  at  the  national  level   -­‐ levering  its  local  resources  and  capabilities  to  strengthen  the  company’s  competitive   position  worldwide.     Three  roles:     a. Bicultural  Interpreter   -­‐ Not  only  must  become  local  expert  understanding  local  needs,  the  strategy  of   competitors  and  demands  of  host  government   -­‐ Also:  Must  become  a  cultural  interpreter  (analyze  information  and  make  predictions)   and  communicate  the  importance  of  that  information  to  those  whose  perceptions  may  be   obscured  by  ethnocentric  biases.     -­‐ Also  need  to  interpret  and  communicate  in  the  opposite  direction:  Interpret  the  broad   goals  and  strategies

 to  become  meaningful  objectives  and  priorities  at  the  local  level  of   operation  and  apply  those  corporate  values  and  organizational  processes  in  a  way  that   respects  local  cultural  norms.       b. National  Defender  and  Advocate   -­‐ understanding  and  transferring  information  is  not  enough:  must  also  act  upon  it     à  need  to  focus  on  cross-­‐border  linkages:  counterbalance  centralizing  tendencies  and   ensure  that  the  needs  and  opportunities  that  exist  in  the  local  environment  are   understood  and  incorporated  into  the  decision-­‐making  process.     Both  directions:  Corporate-­‐oriented  identity:  have  strong  advocates  of  the

 need  to   differentiate  operations  locally  and  be  responsive  to  national  demands  and  pressures   (from  headquarter).     Two  distinct  but  related  tasks:  both  related  to  subsidiaries:   1. Defender  of  national  differentiation  and  responsiveness:  if  interest  of  local   constituencies  are  violated  or  subsidiary’s  position  compromised  by  global  strategy,   need  to  defend  the  national  needs  and  perspectives.   2.  Advocate:  Of  his  or  her  national  organization’s  role  in  the  corporation’s  worldwide   integrated  system  of  which  it  is  a  part.  To  ensure  that  each  unit’s  full  potential  is   realized,  country  managers  must  be  able  to  identify

 and  represent  their  particular   national  organization’s  key  assets  and  capabilities,  as  well  as  the  ways  in  which  they   can  contribute  to  the  MNE  as  a  whole.     National  organizations  compete  also  for  roles  in  the  global  operations:     à  need  to  mentor  local  employees  and  support  those  individuals  in  their  fight  for   corporate  resources  and  recognition.       Source: http://www.doksinet     Global  Business  –  2014  –  Ranim  Helwani         c. Frontline  Implementer  of  Corporate  Strategy   àmost  obvious  task:  implementation  of  corporate  strategy     à  Pressured  from  without  and  constrained  from  within:   o challenge

 due  to  the  multiplicity  and  diversity  of  constituents  whose  demands   and  pressures  compete  for  the  country  manager’s  attention.  Feeling  pressure  of   government,  unions  and  customers  as  being  the  subsidiary  representative  of   some  distant  MNE.   o Need  to  take  broad  corporate  goals  which  are  complex  and  representing   conflicting  demands,  and  translate  them  into  specific  actions  responsive  to  the   needs  of  the  national  environment.     à  action  undertaken  must  be  sensitive  enough  to  respect  the  limits  of  the  local  constituencies,   pragmatic  enough  to  achieve  the  expected  corporate  outcome  and  creative  enough  to  balance   the

 diverse  internal  and  external  demands  and  constraints.       à  country  manager  does  not  only  implement  corporate  strategy  but  also  plays  a  key  role  in  its   formulation.  Must  convince  his  national  organization  with  commitment  and  enthusiasm  even   when  he  needs  to  implement  a  strategy  which  he  has  not  supported.         Top-­‐Level  Corporate  Management     à  most  extreme  challenges  at  the  top  à  becoming  transnational   -­‐ need  to  integrate  and  provide  direction  for  diverse  management  groups  while  breaking   many  norms  and  traditions  that  defined  their  roles  in  the  past.   -­‐ Historically:  hierarchical  structures,

 top  management  far  from  frontline,  bureaucratized   role   -­‐ Today:  top  management  must  also  add  value  –  liberating  rather  than  constraining  the   organization  below  them.  Do  more  than  just  assigning  roles  and  responsibilities   à  maintaining  legitimacy  of  each  group,  balancing  and  integrating  their  influences,   maintaining  a  unifying  purpose.  à  Constant  tensions  between  ensuring  long-­‐term   viability  ad  achieving  short-­‐term  results  or  between  providing  clear  corporate  direction   and  leaving  room  for  experimentation.         Three  Core  Top  management  tasks:     a. Providing  Direction  and  Purpose   -­‐ With  multidimensional  strategic

 capabilities,  the  diversity  and  internal  tension  can   create  an  energizing  free  market  of  ideas  and  an  enormous  amount  of  group  motivation.   à  to  overcome  risk  that  these  powerful  forces  pull  the  company  apart,  top  managers   need  to  create  a  common  vision  and  a  shared  set  of  values       Three  characteristics  of  an  energizing  shared  vision:   1. simplicity,  relevance  and  continuous  reinforcement   2. continuity  of  the  vision  –  remaining  committed  to  the  company’s  core  set  of  strategic   objectives  and  organizational  values   3. communicating  the  vision  and  strategic  direction  consistently  across  organizational   units  to  ensure

 that  the  vision  is  shared  by  all.                 Source: http://www.doksinet     Global  Business  –  2014  –  Ranim  Helwani             b. Leveraging  Corporate  Performance   à  also  need  to  focus  on  short-­‐term  result  to  remain  competitive   Key  roles:  provide  controls,  support  and  coordination  to  leverage  resources  and  capabilities   to  their  highest  level  of  performance.     à  But:  Need  to  abandon  old  motions  of  control:  use  control  mechanisms  that  are  personal   and  proactive   -­‐ discussions  with  each  management  group  about  their  responsibilities  and  relation  to   overall  goal;  operational  priorities

 identified  and  agreed  upon   -­‐ set  demanding  standards  and  use  frequent  informal  visits  to  identify  new  opportunities   and  problems  quickly.  à  corporate-­‐level  support:  instead  of  sending  headquarter   experts  to  deal  with  new  opportunity  or  problem,  rather  delegate  clear  responsibilities,   backed  up  with  rewards,  support  management  group  with  resources,  specialized   expertise  etc.     -­‐ Leveraging  overall  performance  to  the  corporation:  need  to  create  a  rich  portfolio  of   coordinative  processes  (managing  the  three  cross-­‐organizational  flows)   o Good  flows  à  For  Malization  à  can  be  routinized  and  managed  through  formal  

systems     o Scarce  Resources  à  Centralization  à  top  management  involved  directly     o Information  à  Socialization  à  most  effectively  generated  and  diffused  through   management  of  personal  contacts   à  need  to  balance  these  processes  in  order  to  fully  exploit  the  company’s  assets  and   resources  and  greatly  leverage  its  performance.       c. Ensuring  Continual  Renewal   à  either  of  these  two  management  processes  performed  at  the  extreme  can  be  dangerous   -­‐ fixation  of  an  outmoded  mission   -­‐ preoccupation  with  short-­‐term  performance   à  risk    that  successful  strategies  become  unquestioned  wisdom  à  loose

 flexibility   à  Top  management  needs  to  ensure  that  the  organization  renews  itself  rather  than  just   reinventing  its  past.   1. External  orientation:  constantly  orienting  the  organization  towards  its  customers  and   benchmarking  it  against  its  best  competitors     2. Dynamic  imbalance:  need  to  question,  challenge  and  change  things  constantly  in  a  way   that  forces  adaptation  and  learning   3. Define  the  corporate  mission  and  values  so  that  they  provide  some  strategic  stretch  and   maneuverability  while  simultaneously  legitimizing  innovative  new  initiatives.     o Support  entrepreneurial  experimentation  or  challenges  to  the  status  quo  that   emerge  from

 the  deliberately  created  instability  (dynamic  imbalance)