Multinational Strategic Management

An Integrative Entrepreneurial Context-Specific Process

Erdener Kaynak, Robert Mockler, Dorothy G Dologite

• Publisher: Routledge
• Year: 2014
• ISBN:
  9781317719441
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Build the skills needed to compete in the highly competitive global business environment!This incisive book is a comprehensive introduction to contemporary multinational strategic leadership and management. A vital guide to business policy, Multinational Strategic Management: An Integrative Entrepreneurial Context-Specific Process combines basic strategic management with a distinctive international business perspective. The result is invaluable as a preparatory overview for novices and as a guidebook for business practitioners.Mixing basic management and leadership perspectives with a study of international business, Multinational Strategic Management takes a comprehensive approach to subjects that traditionally require multiple texts. Designed for use as a textbook for undergraduate and graduate course work, the book fills an educational void in a rapidly growing field. The in-depth text provides you with a thorough understanding of how to lead and manage enterprises that operate within and across national borders.Multinational Strategic Management helps professionals, students, and educators:

• acquire and enhance skills in entrepreneurial contingency thinking and action
• integrate those skills to creatively handle specific situations
• learn more about management processes (and possibly develop new ones)

Ideal for use in support of executive training workshops and as a text in advanced university business programs, Multinational Strategic Management introduces you to all levels of integrative decision-making from the entrepreneurial perspective of the leading multinational firms like General Electric and Intel. Perfect for educational use, the book provides more than the standard textbook descriptions and case studies. It will inspire the kind of creative entrepreneurial thought and action needed to compete in today's highly competitive global environment.

PART I:

INTRODUCTION

Chapter 1

An Integrative Entrepreneurial Process

The United Nations (UN) has defined multinational enterprises as enterprises which own or control production or service facilities located outside of the country in which they are based. A multinational business operates in more than one country, a domestic business in only one country.

Each country in which a multinational enterprise operates has a distinct economic, political, legal, cultural, industrial, and competitive market context. Businesses must be responsive to this diversity, especially when integrating their different operations. Achieving integration in a multinational firm involves maintaining a balance between capturing global efficiencies and responding to local differences, a task which requires both creative innovative entrepreneurial unstructured approaches as well as systematic structured ones.

Whatever the approach, the ability to change, whether abruptly or over time, has become a critical factor in successful multinational management.

AN ENTREPRENEURIAL PERSPECTIVE

Rapidly changing markets, and resulting market dislocations and discontinuities, are not a new phenomenon. From the beginning of time, entrepreneurs and entrepreneurial managers have found ways to profit from often unanticipated rapid changes within marketplaces. In fact, they welcome them—and at times create market dislocations because others become confused and see chaos when faced with such dislocations, and so in this way create opportunities. In contrast, aggressive entrepreneurs think positively about ways to exploit change and profit from the opportunities accompanying rapid change.

In many ways, today’s business environment is similar. The major forces creating change are different of course:

• the digital revolution, the knowledge explosion, globalization of business, worldwide deregulation and privatization, increased pace of change and reduced cycle time, convergence of industries and less well-defined industry boundaries, the Internet and its growing links with expanding mobile telecommunications, disintermediation caused by the Internet, more competitor cooperation, sensitivity to ecology and other social forces, and overabundance of capital.

Even though the circumstances have changed, entrepreneurial and innovative contingency perspectives, such as the process shown in Figure 1.1, are still needed.

A dramatic example of the entrepreneurial perspective described previously is found in the Peter O’Toole movie, The Lion in Winter, in the scene where he creates chaos and then remarks in reply to Katharine Hepburn’s question:

HEPBURN(ELEANOR): “What’s going to happen?”

O’TOOLE(HENRY II): “I’ve no idea. I’m winning. I know I’m going to win. I just don’t know what will happen.”

O’Toole as King Henry II of England makes the point that at times a leader can even go so far as to create dislocations because it confuses most people, enabling an opportunist to in a sense “buy cheap and sell high, ” if he or she approaches it entrepreneurially and innovatively. The late Colman Mockler, former CEO of Gillette, described this leadership vision in this way: “I know exactly the kind of company I envision; I just don’t know precisely what it will look like.”

“Creative Destruction” is also not a new concept. The world has often experienced it and it is part of basic economic theory, as noted by Joseph Schumpeter, among others (Fisher 1999). It is a social, economic, and literary phenomenon. The steam engine, the telephone, the radio, the airplane, the television, and the computer were all new forces that led to dramatic and uncertain changing times (Barringer 2000). The Internet is just one more in a long series of these new disruptive challenges which entrepreneurs have faced and eventually mastered and exploited.

Jack Welch, the former CEO at General Electric (GE) was an early advocate of the creative destruction approach, creating crises (like O’Toole as Henry II in The Lion in Winter)—for example, by reorganizing GE, reducing the layers of management, and laying off over 100, 000 people. He then worked through the chaos he created and successfully renewed GE, which in 2000 was among the largest and most admired companies in the world (Colvin 2000). His objective was entrepreneurial, to stretch the potential of the firm, even though his firm was very large (Hurst 1995; Slater 1999; Stewart 1999; Waters 1999).

Welch’s major talents included his ability to define patterns or strategic guidelines (structures) that channel and stimulate innovative and entrepre-neurial actions without inhibiting often unstructured individual initiative. Planning, for him, was something everyone did, not just top management. Welch’s other talents were his charismatic leadership and his ability to change.

FIGURE 1.1. A Basic Emergent Entrepreneurial Contingency Process

Copyright © 2002 by R. J. Mockler. All rights reserved.

An entrepreneurial perspective is needed to deal with the many disparate forces existing today, such as globalization, deregulation, the knowledge explosion, and digitalization—especially the Internet—which provides instant access to a global marketplace. The entrepreneurial fever appears to be a worldwide phenomenon (Fleming 2000; Spindle 2000). At the same time, a systematic structured perspective is also needed to formulate and implement strategies.

Balancing diverse multinational forces while dealing with the demands of rapidly changing and highly competitive multinational markets creates major challenges for managers. Meeting these challenges often requires “breaking the mold, ” or as Marcus Buckingham describes it, breaking the rules (Buckingham and Coffman 1999). For example, in 1999, Unilever, the Anglo-Dutch group that makes much of the world’s detergent, took twenty young managers—average age thirty-two—and set them loose for six months to examine trends and identify opportunities. The group questioned many traditional ways of thinking about brands and consumer buying motivation. The studies led to a dramatic shift of brand strategy; Unilever reduced to 400 the number of brands it would focus its resources on and let the remaining 1, 200 brands find their own level of sales or eventually disappear (Cowell 2000; Willman 1999).

As seen from Unilever’s, GE’s, and other companies’ experiences, managing the challenges presented by the multinational market requires cognitive skills to understand what is (and may be) happening in those markets, entrepreneurial skills to respond to and exploit rapid changes innovatively, and leadership and management skills to balance the many diverse elements using both structured and unstructured approaches.

THE MULTINATIONAL STRATEGIC LEADERSHIP AND MANAGEMENT PROCESSES

As used in this book, leadership refers to envisioning the future and leading an enterprise by developing strategic frameworks, putting enablers in place, and energizing, guiding, and motivating others. Strategic frameworks and their related values, strategies, and visions generally define important aspects of the envisioned enterprise: they are action patterns intended to integratively guide how a firm allocates its resources and so are the basis of action plans. Management involves managing the activities involved in formulating and implementing strategies and their related action plans. Because the management discussed in this book is done within a strategic perspective, it is called strategic management. Strategic management encompasses both leadership and management, since individual leaders and managers may perform both leadership and management activities.

Based on company experiences described throughout this book, it is possible to identify various multinational strategic leadership and management processes. The familiar linear process shown in Figure 1.2 is a specific application of the one shown in Figure 1.1. Figure 1.2 outlines a common sense systematic contingency approach as applied to the task of formulating enterprise-wide strategies multinationally and then implementing them: systematically examine situation restraints, creatively and systematically formulate and evaluate alternative solutions, make a decision, and take action as appropriate for each situation.

When a Chinese entrepreneur started his small conglomerate, each venture was built on:

• The analysis of external (market, customer, and competition) and internal (financial and other resources) situation factors

• The formulation and evaluation of possible alternatives given future conditions

• The development of specific strategies and action plans, the synthesis

• The skillful implementation—management of making each venture work given the individuals, organizations, and external market conditions involved

FIGURE 1.2. The Multinational Strategic Management Process: A Linear Situational Overview

Copyright © 2002 by R. J. Mockler

The viewpoint of this book is that entrepreneurial and systematic approaches to formulating and managing strategic frameworks in today’s rapidly changing markets have always been used by entrepreneurs and niche players, approaches described in general in Figures 1.1, 1.2, and 1.3. The major differences arise from the speed of continuing change and the current ability (because of worldwide electronic infrastructures, easier access to knowledge, deregulation, and huge capital reserves) of much larger firms, and many individuals and firms with different size resource bases, to do it domestically and globally.

The basic general skills needed are the age-old ones of analysis, evaluation, synthesis, and communication/action (Dauer 1996), applied to, and balanced with, creative, unstructured entrepreneurial approaches, combined with conceptual thinking, associative reasoning, and practical “get the job done” skills (Whittington 1999). The specific management tools used, some of which are indiscriminately called “models, ” are contingent both on the type of situation and specific situation requirements.

The first step in dealing with rapid change in business now, as in the past, is to think positively. For example, the Internet can be a huge opportunity, not a threat, for the entrepreneur who embraces change. In April 1998, Jay Walker started Priceline.com, an Internet service which allows users to set their own prices for airline tickets; a year later his share was worth $1 billion (Weber and Petersen 1999). It was clearly an effective strategic business model, timed perfectly to meet a then market need; several years later the market shifted and Priceline.com was having problems and working to formulate new strategies (business models).

During the situation study (that is, studying how a situation works), the analysis involves decomposing the new and existing forces (identifying components) and evaluating their impacts (their relationships to present and future success). This involves searching for clues to future market trends affecting opportunities and keys to success (Slywotzky et al.1999). A similar situation analysis is needed of the investor or company involved, and creative ways in which his or her or its resources can be reconceived and reapplied in light of the new force. This is an indispensable step in tailoring strategies to the specific situation requirements.

The situation study includes relationship evaluations, evaluations which explore the ways new forces can be exploited at the enterprise-wide, strategic business unit, or operational level. This opportunity search continues within the perspective of the specific company and market under study. During this phase, preliminary ideas about possible alternative strategies and strategic plans are formulated, using one’s own and others’ business experiences and one’s own thinking about the situation (Slywotzky and Morrison 1997, and Brown and Eisenhardt 1998, for example). These syntheses are initially treated as hypotheses to be studied further.

FIGURE 1.3. Strategic Management: Multinational and Domestic

Copyright © 2002 by R. J. Mockler

FIGURE 1.4. Strategic Management Process Cycle

Copyright © 2002 by R. J. Mockler

As alternatives are formulated and evaluated, the structured synthesis phase involves more detailed systematic planning at the operational, strategic business unit, and enterprise-wide level for the immediate, intermediate, and long-term time frames. The exact form of this strategic structure or framework will depend on t...

Table of contents

• Cover
• Half Title
• International Business Press
• Title Page
• Copyright Page
• Dedication
• About the Author
• Table of Contents
• Preface
• Acknowledgments
• Part I: Introduction
• Part II: Making Strategies Work-Business Process Enablers
• Part III: Enabling Human Resources
• Part IV: Integrative Perspectives
• References
• Index