Chapter 7: Implementing the Strategy Building Multidimensional Capabilities

1. Chapter 7: Implementingthe StrategyBuilding Multidimensional Capabilities

2. The Challenge Facing MNEs Today Trying to implement third-generation strategies… …through second-generation organizations… …with first-generation managers.

3. Three Key Management Roles in the Transnational Company • The Global Business Manager • The Worldwide Functional Manager • The Country Subsidiary Manager (But other roles also starting to emerge e.g., the Global Account Manager)

4. Global Business Manager Responsible for developing global efficiency and competitiveness • Global Business Strategist • Architect of Asset & Resource Configuration • Cross-Border Coordinator

5. Role as Global Business Strategist • Needs to resolve diverse perspectives and interests of geographic and functional managers • Consistency of business strategy with corporate strategy • Location of business unit: often outside home country

6. Role as Architect of Asset and Resource Configuration • “One product, one facility” • Dispersal for robustness • Building on existing capabilities • Responsibility according to competencies

7. Role as Cross-Border Coordinator • Cross-border flow of materials: Transfer prices and policies • Cross-border coordination of operations: brand committees and product area boards • Cross-border coordination of strategy

8. Worldwide Functional Manager • Worldwide Intelligence Scanner • Sense and act on information wherever in the world it emerges • Cross-Pollinator of “Best Practices” • Identify sources and recipients; smooth process of transfer • Champion of Transnational Innovation • Locally leveraged and globally linked forms

9. Geographic Subsidiary Manager:Traditional Role • Traditional role of foreign subsidiary manager • Source of sales and profits • Access to local factors of production • Leverage parent company assets and resources

10. Geographic Subsidiary Management:New Role • Bicultural Interpreter • National Defender & Advocate • Frontline Implementer of Corporate Strategy

11. Role as Bi-Cultural Interpreter HQ SUB. CM Interpret host country environment for corporate management; interpret corporate strategies and priorities to the national organization • Causes of Failure: Upward Communication Poor Receptivity of HQ Management Blocked HQ/Subsidiary Channels of Communication Limited Sensitivity or Understanding at the Subsidiary & Downward Communication Weak Connections or Support at HQ HQ Limited Understanding of Corporate Strategy, Priorities SUB. CM Lack of Credibility within the Subsidiary

12. Role as National Defender and Advocate B F G Defends need for national responsiveness; advocate for role of subsidiary within the global operations • Causes of Failure: • CM unwilling or unable to act as a strong advocate or defender of subsidiary interests • Structural or cultural blocks that prevent CM from gaining access and influence in corporate decision-making process HQ Functional Perspective Business Perspective Transnational decision process requires multi-dimensional perspectives; implies CM access and influence in process Geographic Perspective Subsidiary

13. Role as Frontline Implementer of Strategy Converts strategic plans into action for subsidiary • Cause of Failure • Organizational or managerial inflexibility prevents diversity and changeability of subsidiary roles • CM unable to make the complex trade-offs and compromises required • Parochialism in subsidiary due to inappropriate systems or inflexible managers

14. Pressures and Constraints on Country Manager MNC Internal Motivations Organization Structure & Systems Internal Norms & Values Corporate Strategy Host Governments Objectives, Policies Country Manager Personal Values National Competitor’s Actions National Constituent Interests (Employees, Consumers, Unions) Global Competitive Activity Host Country Interests Global Competitive Environment Local Market & Industry Structure Local Norms & Values

15. The Many Hats of the Country Manager • Pioneer Role: • Define the territory: market structure, customer needs • Establish the base camp: make contacts, develop relationships • Intelligence Role: • Analyze the environment: intelligence on competitors, technology, market trends • Develop innovative ideas and capabilities as input to strategy • Trader Role: • Build profitable operations: base camp, trading post; control expenses, manage pricing • Develop local resources: contribute to overall strategy • Quarterback Role: • Confer with HQ Coaches to defend, and advocate the field view • Motivate team to achieve results • Maintain entrepreneurship, creativity, and drive

16. Skills & Qualifications of the Country Manager Entrepreneurial Skills Strategic Skills Country Manager • Innovator & Opportunist • Creative Analyst Administrative Skills Executive Skills Personnel Implications: Need CMs with different strengths at various stages of development; But in a mature subsidiary, the CM must have all of these characteristics. • Organizational Leader • Controller & Manager

17. Top Level Corporate Management • Providing direction and purpose • Clarity, Continuity, Consistency • Leveraging corporate performance • Control systems based on supporting actions of managers, not directing them • Coordinate and legitimize diverse perspectives • Ensuring continuous renewal • Develop a questioning attitude • Legitimize new initiatives • Help the organization embrace, not deny, complexity