direct speech

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CHAPTER 7

Implementing the Strategy: Building Multidimensional Capabilities

Introduction to Implementing Strategy

  This chapter illustrates how to cope with the main challenges when implementing strategies.

  Prior chapters delineated strategies to develop a transnational organization that:   Develops global efficiency and competitiveness

  Creates worldwide innovation and learning

  Establishes multinational responsiveness

7-2

The Challenge Facing MNEs Today

Thus it is important to understand how transnational companies define managers’ roles and responsibilities.

Trying to implement third-generation strategies…

…through second-generation organizations…

…with first-generation managers

7-3

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

7-4

Global Business Manager

  Responsibilities   Develop global efficiency and competitiveness

  Roles   Global business strategist

  Architect of asset & resource configuration

  Cross-border coordinator

7-5

Role as Global Business Strategist

  Incorporate perspectives and interests of geographic and functional managers

  Keep consistency of business strategy with corporate strategy

  Reconcile different views and prepare an integrated strategy

7-6

Role as Architect of Asset and Resource Configuration

  Oversee the worldwide distribution of key assets and resources

  Shape the future configuration by leveraging existing resources and capabilities

  Link resources and capabilities in a configuration that resembles the integrated network form

7-7

Role as Cross-Border Coordinator

  Decide on sourcing pattern   Build on the most capable national operations and capitalize on locations of strategic importance

  Organize cross-border transfer processes   Direct central control: for products of high strategic importance

  Develop internal quasi-markets: for commodity-like products

7-8

Worldwide Functional Manager

  Responsibility   Provide support to line managers, particularly by diffusing innovations and transferring knowledge on a worldwide basis

  Roles   Worldwide intelligence scanner

  Cross-pollinator of “best practices”

  Champion of transnational innovation

7-9

Worldwide Intelligence Scanner

  Capture and transmit leading-edge information across national boundaries in order to track the development and make appropriate adjustments

  Establish functional specialist information channels to link local technologists, marketers and product experts

7-10

Cross-Pollinator of “Best Practices”

  Identify and evaluate leading-edge practices

  Take initiatives that will expose others to the new ideas   Informal contacts

  Formal reviews

  Cross-unit visits and transfer

7-11

Champion of Transnational Innovation

  Locally leveraged   Identify local innovations that have applications elsewhere by scanning the company’s worldwide operations

  Globally linked   Fully exploit the company’s access to worldwide information and expertise by linking and leveraging intelligence sources with internal centers of excellence

7-12

Geographic Subsidiary Manager

  Traditional role   Source of sales and profits

  Access to local factors of production

  Leverage parent company assets and resources

  New role   Bicultural Interpreter

  National defender & advocate

  Frontline implementer of corporate strategy

7-13

Role as Bi-Cultural Interpreter

  Interpret host country environment for corporate management   Communicate the corporate strategies to local employees   Causes of Failure

SUB.

  Upward communication l  Poor receptivity of HQ management l  Blocked HQ/Subsidiary Channels of

Communication l  Limited Sensitivity or Understanding at the

Subsidiary   Downward communication l  Weak Connections or Support at HQ l  Limited Understanding of Corporate Strategy,

Priorities l  Lack of Credibility within the Subsidiary

SUB. CM

7-14

Role as National Defender and Advocate

  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

F B

Business Perspective

Geographic Perspective Subsidiary

Functional Perspective

Transnational decision process requires multi-dimensional perspectives; implies that CMs access and influence in process

  Defend need for national responsiveness   Advocate for role of subsidiary within the global operations

7-15

Role as Frontline Implementer of Strategy

  Convert strategic plans into actions for subsidiaries

  Causes 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

7-16

Pressures and Constraints on Country Manager

Internal Norms

& Values

Organization Structure & Systems

Corporate Strategy

Host Governments Objectives, Policies

National Constituent Interests (Employees, Consumers, Unions)

Local Norms & Values

National Competitor’s

Actions

Global Competitive Activity

Local Market & Industry Structure

Host Country

Interests

Global Competitive Environment

MNC Internal

Motivations

Personal Values

Country Manager

7-17

The Many Hats of the Country Manager

  Pioneer Role:   Define the territory:

market structure, customer needs

  Establish the base camp: make contacts, develop relationships

  Trader Role:   Build profitable operations:

base camp, trading post; control expenses, manage pricing

  Develop local resources: contribute to overall strategy

  Intelligence Role:   Analyse the

environment: intelligence on competitors, technology, market trends

  Develop innovative ideas and capabilities as input to strategy

  Quarterback Role:   Confer with HQ coaches

to defend, and advocate the field view

  Motivate team to achieve results

  Maintain entrepreneurship, creativity and drive

7-18

Skills & Qualifications of the Country Manager

Country Manager

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.

  Entrepreneurial skills:   Innovator & Opportunist

  Administrative Skills:   Controller & Manager

  Strategic skills:   Creative Analyst

  Executive Skills:   Organizational Leader

7-19

Top Level Corporate Management

  Provide long-term direction and purpose   Clarity: simplicity, relevance, reinforcement, etc.   Continuity: commitment to direction and purpose   Consistency : shared by all

  Leverage corporate performance   Control systems based on supporting actions of managers,

not directing them   Coordinate and legitimize diverse perspectives

  Ensure continuous renewal   Ensure an external orientation   Develop a questioning attitude   Legitimize new initiatives   Help the organization embrace, not deny, complexity

7-20