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.
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].
Table of Contents
1. Introduction
1.1. Problem Background
1.2. Aim of the paper
2. Analysis of the Transnational Solution
2.1. Lead in
2.2 Worldwide Administrative heritage
2.3 From unidimension to multidimension
3. Discussion of the Transnational Solution
3.1. Theoretic advantages of the Transnational Solution
3.2. Coordination of the transnational firm in practise
4. Conclusion
4.1 Sum up
4.2. Own evaluation of the transnational solution
Objectives and Research Focus
This paper examines the "transnational solution" proposed by Bartlett and Ghoshal as a strategy for multinational corporations (MNCs) to manage organizational complexity and conflicting global demands. The research focuses on evaluating the theoretical benefits and practical control challenges associated with this structural model.
- Theoretical foundations of the transnational organization
- Impact of administrative heritage on coordination mechanisms
- Strategic trade-offs between centralization, formalization, and socialization
- Critical analysis of subsidiary autonomy and control
Excerpt from the Book
2.2 Worldwide Administrative heritage
International companies differ greatly, and it is therefore not easy to compare them. However, Bartlett and Ghoshal have found major trends in coordination mechanisms and differentiate between backgrounds from the major trading blocks namely Japan, America and Europe.
Traditionally, Japanese companies are coordinated through centralisation, American organizations are guided through formal systems and European companies work with socialization. In Japanese companies “subsidiaries are almost totally dependent on efficient but highly centralized operations” This has major advantages: the system is relatively easy to establish and rapid decision making is possible through minimized arm wrestling of headquarters and subsidiaries. Disadvantages lay in the fact that headquarter are overloaded with information as overseas organizations grow in size and complexity.
In contrast to the Japanese, American companies are usually more in fond of delegation of responsibilities to subsidiaries, and this is made possible through sophisticated management systems based on formal rule. Though formalization gives great possibilities for control as standards have to be achieved, the system is problematic since policies and practises vary in different complex and rapidly changing environments. Also, strategies do not differ and give room for imitation. The traditional European solution seams to overcome the centralisation problem of headquarters overload and formalisations inflexibility. The system relies on shared values and objectives and decisions are reached by knowledgeable groups with common goals. The major disadvantage lays in the costs since socialization is the most expensive means of coordination.
Summary of Chapters
1. Introduction: Presents the background of organizational complexity in MNCs and outlines the aim of analyzing the transnational solution.
2. Analysis of the Transnational Solution: Examines how different administrative heritages influence coordination and the transition towards multidimensional structures.
3. Discussion of the Transnational Solution: Evaluates the theoretical advantages of the model and the practical difficulties of coordinating increasingly autonomous subsidiaries.
4. Conclusion: Summarizes the key findings and provides a critical personal evaluation of the transnational model's realism and application.
Keywords
Transnational Organization, Multinational Cooperation, Administrative Heritage, Centralization, Formalization, Socialization, Subsidiary Autonomy, Global Strategy, Organizational Control, Interunit Learning, Coordination Mechanisms, MNC, Global Efficiency, Local Responsiveness.
Frequently Asked Questions
What is the core subject of this research paper?
The paper explores the organizational challenges faced by multinational corporations and evaluates the "transnational solution" as a management strategy to address these issues.
What are the primary themes discussed in the work?
The central themes include the impact of administrative heritage on company structure, the balance between global efficiency and local responsiveness, and the mechanisms of organizational control.
What is the main objective or research question?
The objective is to analyze the transnational solution by Bartlett and Ghoshal to understand how it handles conflicting organizational demands and to discuss its advantages and problems from a control perspective.
Which scientific method is utilized in this paper?
The paper employs a theoretical analysis and literature review, evaluating established scholarly work to critique the practical viability of the transnational structural model.
What specific aspects are covered in the main body?
The main body covers the analysis of global coordination trends, the transition from unidimensional to multidimensional structures, and a discussion regarding the difficulty of managing a complex network of subsidiaries.
Which keywords characterize this work?
Key terms include Transnational Organization, MNC, Administrative Heritage, Coordination Mechanisms, Subsidiary Autonomy, and Global Learning.
How does the author evaluate the practical feasibility of the transnational solution?
The author expresses skepticism, suggesting that while the model is theoretically sophisticated, it is largely "illusional" due to the practical difficulties of implementation in growing organizations.
What role do subsidiaries play in the author's critique of the model?
The author argues that as subsidiaries grow, they naturally develop their own goals and power, making centralized coordination according to the transnational model increasingly difficult to sustain.
- Quote paper
- Manja Ledderhos (Author), 2002, Transnational Organization - Solution for the Multi National Cooperation?, Munich, GRIN Verlag, https://www.grin.com/document/11505
