What do you see as the main organizational problems that are likely to be associated with implementation of a transnational strategy? The transnational strategy is an international marketing method that "seeks to combine the benefits of global-scale efficiencies with the benefits of local responsiveness" rather than settling for the limitations of either strategy. The transnational strategy also strives for local responsiveness and external flexibility within the foreign subsidiaries at the cost of integration.The transnational strategy creates a mutually dependent relationship between the central hub and foreign subsidiaries, thereby empowering both worlds.
The strategy also becomes difficult to implement due to its conflicting nature. Most firms find it difficult to implement transnational strategy. In the long run, almost all firms want to include some elements of localized decision-making because each country has its own eccentric characteristics. For example, very few people in Japan prefer a computer that includes English-language keyboard. Another example would be how Coca-cola differentiates its ingredients for each country.Consumers in US prefer sweeter coca-cola while Chinese consumers prefer less sugar. There are several issues associated with implementing transnational strategy.
Organizational issues include: Cultural differences, Language barriers, Geographic barriers, technical challenges and sound knowledge of local market. Implementation difficulties include communication issues, trust issues, multiple roles, flexibility and cultural issues, among many others. For example, with GM, some European operations may need to collaborate with operations in Latin America.Significant performance ambiguities may occur with transnational strategies. A way to address these challenges is with a very strong culture and many integrating mechanisms. I personally believe that handling the technical challenges would be the most critical of all challenges. While, information technology and improvements in global telecommunications are giving international firms more flexibility to shape their global strategies, not many managers are willing to adapt to the change.
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The IT systems department needs to be up to date and should be unctioning smoothly at all times. The advances in communication technology coupled with the authority and affordability of information technology, has transformed the way companies conduct business both nationally and internationally. The affordability of these technologies has allowed smaller companies to compete in markets dominated by large companies as well as compete in progressing and new markets. As the technology has progressed, businesses have also gradually engaged in international business as the tools and opportunities have been presented.Transnational operations can provide organizations with many advantages in several different levels, and if managed correctly, the organizations can offset the possible problematic aspects that exist, providing these organizations with an optimized structure that can transform the business into a successful company operating globally. Disadvantages are if not properly accounted for and controlled, transnational operations can present several aspects that can negatively affect an organization.Among these aspects are technological infrastructure of the foreign nation, political and economic stability, cultural difference, and technical knowledge.
Understanding the particulars and differences of the foreign nation is fundamental to the success of business conducted in an international environment. Not every country has access to the technological infrastructure enjoyed by most first and second world countries. Also, not all business segments may have access to highly efficient communication networks or infrastructure. The price of such services may be disproportionate and out of the reach of most small businesses.For example, India still does not have Internet facilities everywhere and cost for using them is exorbitant. Traditionally, technological innovations in developing nations are significantly higher in price and, in terms of communication infrastructure, also less reliable. Even when readily available, the local service levels may be below the standards that the organization requires.
Given that optimal communication and efficient communication channels are essential to the success of international business, the infrastructure available needs to e clearly understood and alternatives to account for communication must be in place prior to the commencement of business operations in the foreign nation. Problems in infrastructure can lead to difficulty in the transfer of work or meeting project deadlines and can lead to quality issues. Another major difficulty of the transnational operation is to design an organizational form that is capable of being efficient and responsive, and which enables the transfer of knowledge across locations.In addition to the basic structural issues in designing a global organization, a company must decide to what extent: decision making should be held in a few key centers (centralized) or distributed to a large number of business units (decentralized). According to me, decisions should be made at both a centralized and decentralized level depending on the company’s needs. There needs to be a mix of informal and formal integrating mechanisms. Differences in culture can present several issues.
If not managed properly, these issues can turn into major disadvantages. An atmosphere where there is a respect towards local customs needs to be established and simple actions such as having an understanding of local holidays, cultural customs, religious traditions, and language variances can make the organization have a corporate culture that transcends borders. Finally, transnational organizations have the inherent advantages of flexibility, diversity, global market reach, and efficient cost structures, among several others.Even though several disadvantages have been presented, the commodization of bandwidth technology and the globalization trends of economies and politics are driving companies to meet an ever-expanding global market. As these tendencies continue, fueled by the expansion in use and popularity of global communications, the disadvantages will be reduced at a similar pace. While issues such as quality of work and service levels that have traditionally plagued international corporations, the evolution of technologies and the experience gained from transnational operations are also vastly improving these areas and thinning the negative view.
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