Word Count: 1613 wordsTable of Content3Introduction 4Definition of Global Integration 4Definition of Local responsiveness 5Definition of Transnational strategy and world-wide learning 6Problem analysis of conflicting demands 6Hypothesis and synthesis for realizing a Transnational Strategy 7Example of company using Transnational Strategy 8Evaluation and Conclusion 9References:
In the present day, most Multinationals Corporations (MNCs) conduct their business through one of the two classic processes which are Global Integration and Local responsiveness. MNCs are required to build layer of competitive advantage, compromises of ability to capture Global Integration, Local Responsiveness, and World-Wide Learning (Peng, 2006).However, there are few problems of conflicting demands between Global Integration and Local Responsiveness. MNCs have to find some technique to balance these two factors which lead to capability to link and leverage their resources to take advantage through World-wide Learning.Appendix 1 presents Global Integration and Local Responsiveness framework.
Definition of Global Integration
Global integration is a process of MNCs that use global strategy to distribute and coordinate various activities across several countries. Three principal economic forces that drive this process are economies of scale (the average cost of production will decrease while the output units will increase), economies of scope (using the same machinery to produce difference products), and national differences in the availability and cost of productive resources (Bartlett, Ghoshal & Birkinshaw, 2004).In order to conduct business through the global integration process, company must be centralized structure (most major operation are from headquarter and provide standardized product and services worldwide) in order to reach maximum profit from low-cost advantage (Peng, 2006).However, global strategy has some limitation such as too much centralized control which leads to lack of local responsiveness. Also, there is a huge cost to link widely dispersed, capabilities, and resources into effective integrated network of innovations and ideas (Bartlett, Ghoshal & Birkinshaw, 2004).Appendix 2 shows relationship between Global strategy and structure which headquarter and other subsidiary have one way associations to facilitate dispersed value chain.
Definition of Local responsiveness
Local responsiveness is a process of MNCs that use multinational strategy to perform their business. In order to conduct business through the local responsiveness process, company must be decentralized structure, because this process is relies on subsidiary-base knowledge, managers of each subsidiary use their own knowledge, effort, and skill to gain benefit by use of resources and capabilities to create innovation and implement in the local market (Bartlett, Ghoshal & Birkinshaw, 2004). This is an important task for managers of all MNCs, each manager must have...