Managing across Borders: The Transnational Solution

Article excerpt

Bartlett, Christopher A.; Ghoshal, Sumantra. Managing across borders: The transnational solution. Second edition. Boston, MA, Harvard Business School Press, 1998. xxiii + 391 pp. Application handbook, notes, bibliography, index. ISBN 0-87584-849-4.

This book contains practical ideas on how to manage transnational corporations, and describes very well the difficult challenges they face in developing global business in respect of technological research, new product development, supply, production, distribution, sales and marketing. Their major challenge is to coordinate and integrate upstream and downstream operations to achieve global efficiency and competitiveness while simultaneously responding to the diversity in consumer requirements in individual national markets. The authors emphasize the strategic integration of management resources to cope successfully, with global business development as the key to success.

They also discuss the importance of human resources management in global business integration with respect to recruitment, career path development, training and education together with communication, cooperation and commitment. Corporate philosophy and basic values in management, vision and mission statements and informal socialization are stressed as important and integral parts of management for achieving global integration.

The arguments in the book are based on a fact-finding survey of nine multinational companies in three business sectors household chemicals, consumer electronics and telecommunications electronic switchboards. The companies covered are Procter and Gamble (P & G), Unilever and Kao in the household chemical business, General Electric, Philips and Matsushita in consumer electronics, and ITT, Ericsson and NEC in the telecommunications electronic switchboard industry. Each of the three companies within each sector competes against the others in the same global market segment. The different management approaches in the United States, European and Japanese companies in these sectors are compared and their relative success and failure explained in some detail, based on the survey.

An attempt has also been made to conceptualize the management framework for transnational corporations under three main pillars: the configuration of assets and capabilities; the role of overseas operations; and the development and diffusion of knowledge. Distinct types of corporations are identified: multinational companies, classic global companies, and international companies. The "transnational solution" which this book is concerned to promote is built on what the authors learned from both the losers and the survivors among the various corporations studied.

The development process of each of the companies is described, starting from their origins in pre- or post-war times up until the mid-1980s. Since the latter half of the 1980s, however, significant changes have taken place in the global business environment, i.e. the collapse of communist systems and the transition to a free market economy, the open global financial and capital markets, the increased application of information technology, the outbreak of economic crises in the emerging market economies in Asia, eastern Europe and Latin America, and the dramatic drop in foreign capital investment of multinational corporations in emerging market economies. In the face of the global economic crisis it now remains to be seen how these multinational enterprises will respond and adapt themselves to global business strategies.

In the household chemicals, cosmetics and foodstuffs business, the needs of national markets vary greatly between countries. Consumer tastes and requirements are affected by differences in lifestyles as well as values and culture, and the social, technical, ecological and regulatory environments. It might be possible to develop a common European Union (EU) brand, but may be more challenging to develop a common transatlantic brand across the EU and United States, and almost impossible to develop a common global brand across the United States, the EU and Japan. …