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A transnational strategy must therefore be able to combine both global and multi domestic strategies. In doing so, a global strategy must have a highly concentrated means of communication in order to maximize its resources and capabilities. The communication system must be centralized from the headquarters, which is the point of authority in order to exploit the potential scale and learning economies. In this case, global strategy has a low degree of customization. However, a multidomestic strategy is the opposite. Resources are allocated throughout the different business, providing them adequate decision making authority. This allows a high degree of customization of products and allows companies to target specific market needs. This is why corporations foregoes the benefits of centralization of activities (Wetlaufer, 2001).
Thus, a transnational strategy involves the balance between global and multi domestic strategies, with the aim of maximizing the benefits of each. Overseas operations are structured across different business units providing each a unit empowerment to be their own creators of specialized innovation. The management approach involves how the company is able to integrate its global activities through close cooperation between its headquarters, operations and international subsidiaries. The management approach is about interdependence of all components efficiently using global information technologies to do so.
A transnational organization's main philosophy is the ability to adapt to changing environmental situations while maintaining flexibility in order to capitalize knowledge flows which are decisions and value added information. It is inherent that a two communication is established across the company. A transnational strategy is characterized by the different contributions of all the business units into one integrated global operations. Joint innovation is done by the headquarters and business units, which will lead to the development of standardization and streamlining of operational procedures (Zwass, 1998).
A key note is that flexibility of products and services are still maintained in order to secure presence in different market segments. Transnational organizations therefore have a distributed system of decision making and knowledge generation. As such it is vital for organizations to have structure to which a business strategy will inherently flow smoother. This means that a transnational strategy should have established a strong structure for the implementation of the strategy.
Suffice to say, transnational strategy involves a hybrid between global and multi domestic strategies. Companies who pursue transnational strategies should have an organizational structure that is characterized by the global geographic structure plus the global product divisional structure. To a certain degree the combination of both strategies may be against each other because a structure needs to both centralized and decentralized at the same time. Companies should be a mixture of integrated and nonintegrated approaches. It also means structures are both formal and informal as well. However, most successful global implements implement a hybrid strategy rather than only using global or multi domestic strategies separately (Wasilewski, 2002).
In order to be time efficient and save costs on capital, transnational companies form strategic alliances with suppliers, partners and customers. Most notable are business partnerships since these are long-term which result in a knowledge transfer of specialized competencies. Partnerships create a stable market outlet for both in which there is a honing of products and services. It also provides a flexible source of supply for both partners. This creates a virtual corporation that is comprised of several independent business units that join forces to deliver products and services to the customer.
Transnational business model is a balance between centralized decision making and local autonomy of business units. The model aims to balance the pressure for local market responsiveness and at the same global assimilation. The balance is achieved when companies employ a distributed management style that is a hybrid of centralization and decentralization activities. Thus, a transnational business model allocates a multi corporation's assets and capabilities depending which activity locations are most beneficial (Wetlaufer, 2001).
At the same time, a multi national company's operational procedures are interdependent with each other allowing for global sharing and development of knowledge. Thus, firms who employ transnational strategy have increased levels of coordination combined a low control distributed throughout the company's scope. There are five approaches used in a transnational business model. First, is the mass customization of activities achieved through global research and development such as American Express, Warner, Frito-Lay, MCI and Time. Companies also use global sourcing and logistics such as Citicorp and Benetton. Companies employ global alliances such as KLM, Northwest, British airways and US Air. Companies also use a global customer service such as American Express and Citicorp. Companies also use global intelligence and information resources such as Accenture and Andersen Consulting (Zwass, 1998).
Studies of US multinational corporations have shown a positive correlation between the use of transnational marketing strategies and performance. Their success can be attributed to the efficient and balance use of global assimilation and flexibility towards local responsiveness. The taxonomy of transnational strategy has five necessary dimensions, which includes the configuration of value-chain activities. This is the balance of distribution of a company's value-chain components. This also means that there exists a configuration as well of value-chain activities, which includes a close coordination.
A necessary dimension of centralization still remains vital. Other dimensions include strategic alliances and market assimilation. This means that the mother company sees the international market as one competitive environment. An example of a transnational management business model is the case of Asea Brown Boveri wherein the mother company is based in Sweden and Switzerland. They have been able to do cross-national mergers, which have lead, the firm to have future various headquarters worldwide. The company was able to provide flexibility in its business unit networks while the headquarters remains to function mainly as the facilitator of knowledge flows amongst the various business units.
Asea Brown Boveri's subsidiaries continue to maintain responsibility for product categories on a global scale. This indicates how transnational business model is beneficial for companies to access new markets. It provides them with the opportunity to develop resources in all of its global operations (Zwass, 1998).
The idea of a global consumer has been questioned and recent studies indicate that firms who implement a transnational strategy are successful in making centralized decisions based on the value-chain activities whether this may be upstream or downstream through the information flow. In fact, companies are beginning to realize that business activities such as
branding, pricing, communication and product development should be decentralized. Other business activities such as supply-chain management, logistics and production should be centralized in decision-making. This strategy allows a company to leverage its brand across global operations instead of diminishing the perceived value in local markets (Cook, 1999).
In lieu of a transnational business strategy, the strategic approach is important and will serve as the company's basis. Strategic planning is the process of how companies define its direction. Decisions are made based on how to best allocate its resources. Many companies use business analysis techniques such as the SWOT analysis. This stands for Strengths, Weaknesses, Opportunities and Threats. Others may use a PEST analysis, which stands for Political, Economic, Social and Technological. A STEER analysis stands for Socio-cultural, Technological, Economic, Ecological and Regulatory factors. Finally, companies may use EPISTEL, which stands for Environment, political, Informatic, Social, Technological, Economic and Legal.
Strategic planning involves a determinations of a company's future direction wherein a company must be able to explain what do they do, which are their customers and how can the company excel relative its competitors. It is suffice to say strategic planning involves the steps in which a company can become superior over its rivals. Strategic planning is usually how the company sees itself in measurable time frames such three to five years. Some companies strategic planning involves their vision for the next ten to twenty years.
It is paramount first that a company analyzes where it stands prior to setting a vision and developing steps in order to achieve its goals. This is the primary rule of having a strategic plan. Strategic planning can accurately forecast the company's direction but it cannot predict accurately environmental business conditions. This has resulted in what is
termed as strategic innovation within the strategic plan. This will allow companies to weather adverse market conditions.
The methodology of strategic planning involves a three step process, which can be a variety of steps. One approach is to evaluate the situation first, target by setting goals and objectives, and create a path that will illustrate the how goals and objectives can be achieved. A second approach used is to draw the ideal and desired end state of the company, analyze the situation and determine gaps between ideal and reality, and create specific actions to close the gap to realize the end goal (Dillon & all, 2000).
This can also be reversed wherein the situation is analyzed first after which the definition of goals and development of map will be done afterwards. Other methodological approaches include the formulation of vision first, the use of a SWOT analysis, formulation of actions plans to achieve goals, the implementation of action plans and the setting up of a control system which will monitor the progresses made.
A commonality amongst all this approaches is the analysis of the current organization and the environment that it operates in. It is also important that the future target and steps taken are always in mind. All of these approaches are best achieved when an internal and external assessment is done. This will help identify the company's core strengths and weaknesses. The factors included when analyzing a strategic plan is to include a study of the markets, competition, technology, supplier and labor markets. It is also important to study the economy and regulatory environment (Sternberg, 1997).
Scholars indicate that the two most important factors to study are the markets and competition. The other factors are also important but not as critical and some companies do not have to study all of the factors at the same time.
The main purpose of strategic planning is the analysis of the customer. Strategic planning involves a formulation of a customer strategy, which is often entails, a visionary skill. It is important to study how changing market environments can affect the customer. The other important area to study is the competitive environment in which a company operates. Thus, strategic planning is necessary for businesses. It is necessary because this involves the formulation of processes in which the company will undertake to compete in the market and gain customers.
Strategic planning involves a development of a way wherein a company is able to easily translate said goals into action. However, companies face challenges when strategic plans are not able to be translated in the day-to-day operations. Sometimes it can be a case of misunderstanding or poor wood choice that makes strategic plans fail. Strategic plans may have conceptual terms that are difficult for the employees to execute (Scott & all, 1996).
These terms in strategic planning include plans, policies, tactics and actions however in some cases these terms lack clarity for employees to use. The best in which strategic plans become most effective is when the statements are specific and time bound of goals and objectives. It is also important that these statements must have continuity towards an end result. In this sense strategic planning is organized in a set of hierarchy with the top rank objective is followed by a second.
The underlying of each is a set of action plans and these to ranks correlate with each other. This means that strategic planning requires goal congruency, which analyzes how effectively the goals combine together. It is essential that all equals to a unified strategy. In
strategic planning goals therefore have a goal hierarchy as well, which is commonly termed as short-term, medium-term and long-term goals.
In strategic management, goal sequencing is used which means that each goal should lead one to the next and on to the next and so on. Short-term goals are easily achieved and usually when summed up this already pertains to the medium or long-term goal. In a sense, strategic planning involves a stairway of steps, with each step different and not conflicting with each other.
A left-brained organizational approach is logical, sequential and rational. Left-based organizations approach involves analytical and mathematical ability. This approach interprets words, does the analysis, pays attention to detail, implements plans and follows rules and regulations. From the literature above we can see the impact of a left-brained organization approach. First in the process of how companies operate in an international scale, which requires companies to choose where to allocate its resources. This involves an analytical step of assessing which area activity will bring about more benefits. As companies must determine the degree of customization, reports and attention to detail is required. This part is essential in the process of customization of products and services (Mintzberg, 1979).
The balance of global and multi domestic strategies is done using logical and systematic approach. In order to maximize the benefit of each, the company must organize its structure according to a step by step analysis in order for business units to achieve empowerment. The act of decision making itself is a left-brained organizational approach wherein decision makers in the company must make use of the knowledge and data obtained in order to make informed decisions.
Overseas operations cover a large a geographical scope, which predetermines before hand by a left-brained organizational approach. This approach will assess which market to penetrate, which activities to conduct based on scientific research and development. The integration of activities involved in a transnational organization requires a close coordination and interdependence of all components with the use of global information technology. The maximized use of this can only be achieved through logic and analysis (Mintzberg, 1979).
Left-brained organizational approach helps the closeness of communication systems including a comprehensive integration of activities. This approach allows companies to adapt to changing business environments or adverse market condition. It also provides enough room for flexibility within the company. This approach helps companies capitalize on knowledge flow by providing value in the information system. A two way communication can never be achieved without a left brained organizational approach.
The fact that organizations enter into joint innovations and strategic alliances is a result of left brained organization approach. This can be clearly seen in the development of standardization and streamlining of operational procedures done by companies. This approach helps make the distributed system of decision making and knowledge generation in transnational organizations efficient. In fact, knowledge generation itself will not be realized without the left-brained organizational approach (Dillon & all, 2000).
The strong structure required by transnational organizations can only be realized by using this organizational approach. Furthermore, it contributes to the company's implementation of strategy. As transnational strategy, is a hybrid of global and multi domestic strategies this conclusion cannot even be derived without using a left-brained organizational approach. The structure required by transnational organizations is a left-
brained organizational structure in order for it to implement a global geographic structure and product divisional structure.
As such this hybrid is important for a company to generate revenue from its overseas operations. Left-brain organizational approach entails savings on capital costs and an efficient use of times. The formulation of partnerships, which create a beneficial scenario for companies, would not be achieved without a left-brained organizational approach. Partnerships create a stable market outlet wherein companies are engaged in a honing of products and services. This is further supported by using this approach while providing independent business units to formulate better and more efficient products and services to the customer (Cook, 1999).
Left-brained organizational approach allows multi national corporations to balance global integration with the pressure of local market responsiveness. Problems are quick killed, services and products are improved. Decision making is streamlined and easier done by the regional business heads. The creation of interdependent relationships require a degree of planning, research and analysis, this approach helps in that area wherein there is global sharing and development of knowledge. The five approaches used in a transnational business model is in fact a direct result of a left-brained organizational approach.
The customization of activities through global research and development used by companies to "localize" their global product and gain more market share is a left-brained organizational approach. Research shows multinational corporations such as American Express, Warner, Frito-Lay, MCI, Time, Citicorp, Benetton, KLM, Northwest, British airways, US Air, Accenture and Andersen Consulting are all left-brained organizations.
Left-brained organizations also contribute to global sourcing and logistics, global customer service, and global intelligence and information resources. This is because all these operational activities rely on critical and analytical thinking in order for it to be effective. Thus, left-brained organizational approach is also positively correlated to the development of strategies and performance. Performance is measured through net revenue, increased operational income and market assimilation.
The creation of a value-chain activities is also a direct result of this approach. Only a left-brained organizational approach will be able to the balance of distribution of a company's value-chain components. It is only through this approach that the configurations of value-chain activities are closely coordinated. Centralization is achieved through left-brained organizational approach as well as the formation of strategic alliances and increased market share. Left-brained organization helps how headquarters are able to view the international market as one competitive arena. This approach helps corporations access new markets, which in turn creates more opportunity for companies to develop resources in all of its global operations (Wagner & all, 1985).
Left-brained organizational approach helps make companies do centralized decisions based on the value-chain activities. This structure helps with the upstream and downstream flow of information. This approach has helped companies realize that activities such as branding, pricing, communication and product development should be decentralized. While this approach helped identify which activities should centralized such as supply-chain management, logistics and production. This approach has helped companies gain competitive advantage by allowing the brand to grow and have a high perceived value in local markets.
Left-brained organizational approach also serves strategic planning. This approach supports how companies define its direction. It further provides the foundation as to how decisions are made based on how to best allocate its resources. The different types of strategic planning analysis such as SWOT (Strengths, Weaknesses, Opportunities and Threats), STEER (Socio-cultural, Technological, Economic, Ecological and Regulatory factors), PEST (Political, Economic, Social and Technological) and EPISTEL (Environment, political, Informatic, Social, Technological, Economic and Legal) would not even be effective without a left-brained organizational approach (Scott & all, 1996).
Left-brained organizational approach impacts strategic planning of transnational companies because it assists in the determinations of a company's future direction. This approach impacts how a company must be able to explain what do they do, who are their customers and how can the company excel relative its competitors. The correct and accurate analysis of competitors is an important result of a left-brained organizational approach. This helps a company realize its core competencies and which can they leverage against its competitors.
Left-brained organizations also help with the structure by provide measureable time lines. This encourages the management to have both a short term, medium term and long term view. Without this visualizations, companies would not be able to survive in this global business climate. Left-brained organizations also help with the forecasting of a company's direction. More importantly, it allows management to become more aware about environmental business conditions. This approach increases chances of predictability. Left-brained organizations also impacts strategic innovation that exists within the strategic plan. This is beneficial and necessary for companies to be able to cope better with adverse market conditions.
Left-brained organizations also impact the methodology of strategic planning. The process that is involved can only be calculated and determined by this approach. Most especially in the following areas: evaluating the situation first, targeting by setting goals and objectives, and creating paths. This approach enables a company to illustrate how goals and objectives can be achieved. Left-brained organizations contribute to the drawing of the ideal and desired end state of the company, the analogy of the situation and more importantly the determination of gaps (Dillon & all, 2000).
It is only through a left brained organizational approach that action steps created. Left-brained organizations also impact strategic planning even if the approaches are reversed wherein the situation is analyzed first after which the definition of goals and development of map will be done afterwards. Left-brained organizations contribute to the methodological approach used by companies such as the formulation of vision first, the use of a SWOT analysis, formulation of actions plans to achieve goals, the implementation of action plans and the setting up of a control system which will monitor the progresses made.
Left-brained organizations allow managers to better analyze the current organization and the environment that it operates in. It is enables leaders to be visionaries and have the future target and steps taken in mind. Left-brained organizations impact even the internal and external assessment. This approach helps a company identify its core strengths and weaknesses. Left-brained organizations impact the study of the markets, competition, technology, supplier and labor markets. It is also impacts the study of the economy and regulatory environment. This is because logic, analytical and critical skills are required in determining these factors. Thus, a company will not be able to function without a thorough analysis of the said data (Cook, 1999).
Left-brained organizations help companies become more customer-centric and less product centric. Companies realize that they are able to create more value to a product by adding new steps in the supply chain. Left-brained organizations provide leaders with a visionary skill in the analysis of how changing market environments can affect the customer. Left-brained organizations make companies realize its competitors even more. It allows companies to analyze the competitive environment in which a company operates. Thus, Left-brained organizations are necessary aspect for businesses. It is necessary because it impacts the way a company conducts itself from the formulation of processes, how the company will compete in the market and how the company can gain customers (Scott & all, 1996).
Left-brained organizations enable companies to implement its strategic planning better. It allows company to easily translate said goals into actions. Left-brained organizations contribute to the structure of a company by allowing for its daily operations to be assimilated in strategic planning. This approach helps with the ease of communication flow and the better understanding of conceptual terms. Left-brained organizations impact the manner in which employees can directly contribute to the company's growth.
Left-brained organizations helps make plans, policies, tactics and actions become more detailed and executable. This approach provides clarity for companies. It also helps promote continuity of goals. The fact that goals need to be set in a hierarchy and sequential manner is a direct result of left-brained management. Left-brained organizations help plans become more specific and time bound. It allows for a creation of an underlying set of action plans. Goal congruency is a direct result of left brained organizations. Overall, this approach is beneficial for companies as it provides an ideal guideline wherein companies can emulate, grow and learn from each other. The left-brained organizational approach has helped companies survive and thrive in the global market by providing structure, a steady stream of innovation, clear rules and guidelines. This enables companies to build brand awareness, gain market share and ultimately generate high revenues.
In today's increasingly interconnected world, companies must employ the best strategies in order to compete in a global scale. Companies who wish to operate overseas must learn about the left-brained organizational approach. This study has always been around and has been widely practiced. Although, its effects are only being realized in recent studies because of the increased interest in organizational development and international business strategy. The largest corporations in the world are left-brained organizations including Citicorp and Accenture. This shows the significance and impact of this approach in today's business environment.
Left-brained organizations show a clarity in its definition of goals. Companies who embody this approach show that they a strong operational structure. They understand the need for standardization and streamlining. At the same time, companies today know the importance of how communication facilitates better business practices. Companies understand how a thorough analysis of market conditions and its impact to the customers affect their bottom line. Thus, companies continue to strive to apply a left-brained operational approach in its business. They know this helps them forecast, plan, execute even better. They know this approach facilitates the actualization of goals. They understand that this approach positively affects its managers, leaders and employees to become visionaries, to develop decision-making skills. In the end, this approach helps everyone involved in the business contribute into the value chain, realizing its mission and overall satisfying themselves and their customers.