Transnational Management Systems: An Emerging Tool for Global Strategic Management

By Eom, Sean B. | SAM Advanced Management Journal, Spring 1994 | Go to article overview

Transnational Management Systems: An Emerging Tool for Global Strategic Management


Eom, Sean B., SAM Advanced Management Journal


Introduction

One of the most significant business and economic trends of the late 20th century is the stateless corporation. A recent issue of Business Week reported (May 14, 1990, cover page) that a new type of company is emerging. Global companies conduct research wherever necessary, develop products in several countries, promote key executives regardless of nationality, and even have shareholders on three continents.

Many global companies are making decisions with little regard to national boundaries. Many heads of the world's largest companies believe that the trend toward statelessness is unmistakable and irreversible due to the following advantages:(9)

(1) Solving trade problems--Northern Telecommunication of Canada could win Japanese contracts by establishing manufacturing facilities in the U.S. because Japan favors U.S. over Canadian companies due to the politically sensitive U.S.-Japanese trade gap.

(2) Avoiding political problems--A German company, BASF, has moved its cancer immune system research to Cambridge, Massachusetts, U.S. to avoid Germany's stiff environmental regulations concerning animal rights, safety, and a clean environment.

(3) Sidestepping regulatory hurdles--Smith-Kline of the U.S. and Britain's Beecham have merged to avoid licensing and regulatory hurdles in the U.S. and Western Europe.

(4) Winning technology breakthroughs--Becoming a stateless corporation could mean the company will be better able to scour the globe for leading scientific and product development ideas.

With this changing global environment, a new type of support system, transnational management support systems (TMSS), is emerging. Computer-based management support systems are playing vital roles in the complex decision making process at multinational corporations (MNCs). For example, when Dow Chemical noticed the recent decline in European demand for a certain solvent product, the decision support system at the company responded quickly to suggest the reduced production of the chemical product at a German plant and a shift from the idle production capacity to another chemical product that was imported from the U.S.(9)

The purpose of this paper is to inform academicians and practicing managers of the emergence of transnational management support systems by:

* reviewing prior research on the development and applications of global management support systems;

* suggesting the definition and architecture of TMSS;

* describing unique functional requirements of TMSS in supporting operational, tactical, and strategic decision making processes of MNCs; and

* providing some practical benefits to the practicing managers and pointing out what managers need to know to introduce or improve their organization's TMSS.

The Emergence of Transnational Management Support Systems

In the early 1970s, Decision Support Systems (DSS) focused on helping an individual user in an organization in a single location. In the 1980s, many companies shifted their attention to the application of DSS technology to large-scale organizational and global decision making. For example, General Motors, in association with EDS, developed PLANETS, a modeling system for business planning. The automotive section of GM manages the thousands of products that are manufactured and distributed by several hundred facilities worldwide.(1) The Decision Support Systems of GM supports analysts and managers in making decisions, either independently or simultaneously regarding expansion at existing plants, buying or building new facilities, and the allocation of production volume among existing plants, to mention a few types of decisions. GM has developed the 80 major applications of this Decision Support Systems software, resulting in over a $1 billion cost savings and approximately 2% or 3% capital expenditure saving.

The forces unleashed by the telecommunication and microcomputer revolutions over the past decade have brought two significant phenomena: increasing global interdependence and internationalization of business firms. …

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