Transnational Organization - Solution for the Multi National Cooperation?

MÄLARDALENS Högskola

Transnational Organization - 
Solution for the Multi National Cooperation?

Handed in by: 

Manja Ledderhos

Table of Content

1. Introduction 1
1.1. Problem Background  1
1.2. Aim of the paper 1

2. Analysis of the Transnational Solution 2
2.1. Lead in  2
2.2 Worldwide Administrative heritage  2
2.3 From unidimension to multidimension 3

3. Discussion of the Transnational Solution  4
3.1. Theoretic advantages of the Transnational Solution  4
3.2. Coordination of the transnational firm in practise 4

4. Conclusion  6
4.1 Sum up  6
4.2. Own evaluation of the transnational solution 6

5. Reference List 8

1. Introduction

1.1. Problem Background

International companies are confronted with major organizational problems as they often have to manage a complex system of subsidiaries and at the same time need to respond to the demands of economic and political forces.

The organizational structure of companies get more and more complex. In times of falling national growth rates and globalisation¹, many companies expand into new markets. This global expansion trend can be seen by the intensive growth of foreign direct investment outflows in the last ten years.² Philips, for example, has build up a huge network of subsidiaries in 60 countries.³ As companies expand, the flow of goods, resources and information among organizational units rapidly increases⁴, and it becomes more and more complicated to manage, control and learn from subsidiaries. Demands on companies have also changed as “economic and political imperatives are rising simultaneously in opposite directions“⁵. Economic forces lead towards globalisation demanding minimized unit costs while political forces ask for national responsiveness as a result of protectionism for local economies.⁶ Today, companies are confronted with the demands of efficiency and responsiveness at the same time.⁷

1.2. Aim of the paper

In the following paper, I will analyse Bartlett and Ghoshals’ transnational solution as a means to cope with the complex organization and conflicting demands on Multinational Cooperation (MNC), and focus my discussion on advantages and problems from a control perspective.

2. Analysis of the Transnational Solution

2.1. Lead in

Bartlett and Ghoshal claim to have found the solutions to the conflicting demands of today’s world. They point out, that problems can be solved by building an organization that works with multiple and flexible mechanisms. To understand the basis of the “transnational solution”, the administrative heritage in the global market place has to be examined. Bartlett and Ghoshal, then combine ideas for coordination and show the need for strategic reorientation that is already recognised by most of the MNCs.

2.2 Worldwide Administrative heritage

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1 Donaldson (2002), p.13.

2 Hill (2001), p. 183.

3 Goshal/Bartlett (1990), p. 77 [Art. 22].

4 Bartlett/Ghoshal (1987). p.47 [Article 12].

5 Martinez/Jarillo (1989), p. 500 [Article 23].

6 Hill (2001), p. 386. and Bartlett/Ghoshal (1987). p.9 [Article 11].

7 Bartlett/Ghoshal (1987). p.10 [Article 11].