The Transnational Corporation

Building a global presence is never exclusively the result of a grand design. Nor is it just outcome of a sequence of opportunistic and random moves. The wisest approach which might be called directed opportunism maintains opportunism and flexibility within a broad direction set by a systematic framework that addresses four major issues choice of products! choice of markets! mode of market entry and speed of global expansion." Anil Gupta and Vijay Govindarajan1

Introduction
In their famous book Built to last, authors James ollins and Jerry I !orras mention that many visionary "ompanies did not have a "lear idea of #hat to do, #hen they started their operations$ %et, they thou&ht bi&, defined their "orporate purpose in terms of a broad overar"hin& set of loosely defined obje"tives and set themselves Bi&, 'airy ( Auda"ious Goals )Bha&s*$ +imilarly, the evolution of many of todays transnational or truly &lobal "orporations has in more "ases than not, been shaped by "ir"umstan"es, rather than deliberate strate&ies$ 'o#ever, these "ompanies typi"ally nurtured bi& ambitions ri&ht from the start and had stron& leaders to fa"ilitate their &lobal e,pansion$ In this "hapter, #e look at ho# "ompanies &lobali-e$

The process of globalisation2

'istori"ally, it has been observed that the pro"ess of &lobalisation evolves throu&h distin"t sta&es$ In the first sta&e, "ompanies normally tend to fo"us on their domesti" markets$ .hey develop and stren&then their "apabilities in some "ore areas$ A stron& "ore "apability a"ts as the laun"hin& pad for &lobalisation$ /or e,ample, +ony developed e,pertise in miniaturi-ation of "onsumer ele"troni"s produ"ts$ .oyota perfe"ted its lean produ"tion system based on its Just in time philosophy$ .he 01 retailer .es"o, learnt ho# to respond to market trends, perfe"ted its supply "hain and streamlined its loyalty pro&ramme$ In the se"ond sta&e, "ompanies be&in to look at overseas markets more seriously but the orientation remains predominantly domesti"$ .he various options a "ompany has in this sta&e are e,portin& its produ"ts, settin& up #arehouses abroad and establishin& assembly lines in major markets$ .he idea is to &et a better understandin& of overseas markets, but #ithout "ommittin& lar&e amounts of resour"es$ +ony in the 1234s, is a &ood e,ample$ In the third sta&e, the "ommitment to overseas markets in"reases$ .he "ompany be&ins to take into a""ount the differen"es a"ross various markets to "ustomise its produ"ts suitably$ 5ifferent strate&ies are pursued in different markets to ma,imise "ustomer responsiveness$ .hese may in"lude overseas resear"h ( development "entres and full6fled&ed "ountry or re&ion spe"ifi" manufa"turin& fa"ilities$ .his phase "an be referred to as the multinational or multi domesti" phase$ .he different subsidiaries lar&ely remain independent of ea"h other and there is little "oordination amon& the different units in the system$ !hilips and 0nilever, till the 1274s, are &ood e,amples$ In the final sta&e, the transnational corporation emer&es$ 'ere, the "ompany takes into a""ount both similarities and differen"es a"ross different markets$ +ome a"tivities are standardised a"ross the &lobe #hile
1

+urvey 6 8asterin& Global Business, /inan"ial .imes, January 92, 1227$ :ead 1eni"hi ;hmaes book <.he Borderless =orld,> p 21 to kno# more about the pro"ess of &lobalisation$

9
others are "ustomised to suit the needs of individual markets$ .he firm pursues a multidimensional approa"h and formulates different strate&ies for different businesses, to "ombine &lobal effi"ien"ies, lo"al responsiveness and sharin& of kno#led&e a"ross different subsidiaries$ A seamless net#ork of subsidiaries a"ross the #orld emer&es, and it is very diffi"ult to make out #here the home "ountry or head?uarters is$ =e shall use the #ord transnational and &lobal inter"han&eably in this book, from this point on#ards$ Exhbit 4.1
Why firms go International #aturated domestic market@ =hen the domesti" market be"omes saturated, attempts to in"rease market share be"ome in"reasin&ly ineffi"ient$ $ompetitive factors@ +ometimes, "ompetition may be less intense in overseas markets than in the domesti" market$ ;verseas presen"e may also be needed to "ompete more effe"tively #ith players havin& a stron&er international presen"e$ %xcess capacity@ =hen e,"ess "apa"ity e,ists, the firm "omes under pressure for in"reasin& sales by enterin& ne# markets$ &roduct life cycle@ .ypi"ally, a produ"t &oes throu&h four sta&es A Introdu"tion, Gro#th, 8aturity and 5e"line$ If a produ"t has rea"hed the de"line sta&e in the domesti" market, a "ompany "ould introdu"e it in another market$ 'iversification of risk@ By havin& a presen"e in various markets, a firm "an do#ns in individual re&ions$ insulate itself from the ups and

(inancial reasons@ If attra"tive investment in"entives or venture "apital are available, overseas e,pansion may make sense$

S !"# E$olution of a global company% +ome of the most famous &lobal "ompanies today, #ere ?uite "autious durin& their early days of overseas e,pansion$ +ony "ofounder Akio 8orita firmly believed that an overseas market had to be first understood "arefully and a marketin& net#ork put in pla"e before makin& heavy investments$ 8orita #as parti"ularly "areful in the 0+ market@ <I al#ays had an eye on produ"in& in the 0nited +tates, but I felt that #e should do it only #hen #e had a really bi& market, kne# ho# to sell in it and "ould servi"e #hat #e sold$> .hat time "ame in 12B1, #hen settin& up a fa"tory be"ame a matter of "ompulsion rather than "hoi"e, as +ony found its shippin& "osts in"reasin&$ 8orita identified other advanta&es in an offshore plant@ <=e "ould fine tune produ"tion dependin& on the market trends and #e "ould more easily adapt our desi&ns to market needs in a hurry$> +ony started #ith an assembly operation, fed #ith "omponents shipped from Japan$ Cater, +ony de"ided to sour"e many of its "omponents #ithin the 0+, e,"ept for some "riti"al "omponents su"h as ele"tron &un and some spe"ial inte&rated "ir"uits$ Dven as +ony &lobalised "autiously, it did not la"k vision$ =hen it started marketin& its transistors in the 0+ in the mid612E4s, one retailer, Bulova offered to buy 144,444 units but insisted that they should be sold under the Bulova brand name$ Dven thou&h +onys head?uarters initially favoured the a""eptan"e of the order, 8orita remained firmly a&ainst the idea$ =hen 8orita "onveyed his stand, Bulova insisted@ <;ur "ompany name is a famous brand name that has taken over fifty years to establish$ Fobody has ever heard of your brand name$ =hy not take advanta&e of oursG> 8orita, remained steadfast in his vie#s and refused to a""ept the order$ 'is rejoinder to Bulova@ </ifty years a&o, your brand name must have been just as unkno#n as our name is today$ I am here #ith a ne# produ"t, and I am takin& the first step for the ne,t fifty years of my "ompany$ /ifty years from no# I promise you that our name #ill be just as famous as your "ompany name is today$>

5ra#n from Akio 8oritas book <8ade in Japan>

H
.he Information .e"hnolo&y )I.* &iant IB8 seems to have entered the transnational phase in re"ent years$ D; +am !almisano has e,plainedI ho# the modern multinational "ompany has evolved$ In the 12 th "entury international model, firms #ere essentially based in their home "ountry and sold &oods throu&h overseas sales offi"es$ In the ne,t phase, the parent "ompany "reated small versions of itself a"ross the #orld$ .he IB8 of the 12B4s, fell in this "ate&ory$ But in the past ten years or so, IB8 has in"reasin&ly moved to#ards be"omin& a <&lobally inte&rated enterprise$> IB8 has lo"ated people and jobs a"ross the #orld based on the ri&ht skills and the ri&ht business environment and inte&rated these operations$ IB8s heavy investments in India and to a smaller e,tent in "ountries like Bra-il )#here it has a finan"e ba"k offi"e* must be seen in this "onte,t$ :efle"tin& the &ro#in& importan"e of hina, the "ompanys "hief pro"urement offi"er, John !aterson relo"ated to +hen-en in ;"tober 9443$ !aterson #ill spearhead moves to develop a stron& vendor base in the re&ion$ .o demonstrate that IB8 is a truly &lobal "ompany, IB8 held its 9443 annual investors meet in Ban&alore, India, an event traditionally, held in Fe# %ork$
The globalisation of the Indian ITES Industry .he J 3$H billion Indian I.D+ )Information .e"hnolo&y enabled +ervi"es* industry has "ome a lon& #ay in the past five years$ :evenues, in the industry are e,pe"ted to &ro# to J7$H billion ne,t year$ .he industry has evolved throu&h different phases$ )+ee dia&ram belo#*

Phase I: Phase III: End-to-end focus Cautious attempts at outsourcing

Metrics driven relationship Multiple geography options Lower-end processes Transaction based

Phase II: Middle end processes

Deployment of technology Services delivered essentially from one place

As the industry &ro#s, it is also maturin&$ Bi&&er deal si-es, &eo&raphi" spread and end6to6end solutions are be"omin& in"reasin&ly "ommon$ +ome of the deals refle"t this trend$ . + has ba&&ed a J7I7 million deal from !earl, the 01s insuran"e and pensions &roup$ Genpa"t has si&ned a hu&e J994 million deal #ith 5elphi, the 0+ autoparts maker, #hi"h #as earlier a part of General 8otors$ =ith deal si-es in"reasin& and the importan"e of ?uality bein& in"reasin&ly felt, &eo&raphi" spread is also be"omin& important$ !rospe"tive "ustomers from Durope, Japan and the 0+ are more "omfortable #ith #ork bein& done near their "ountries$ Infosys has added Brno in the -e"h :epubli"$ And keepin& in mind the es"alation of "osts in India, the "ompany is seriously lookin& at the !hilippines and hina$ All these trends #ill pi"k up momentum as Indias B!;s move beyond voi"e, data and analyti"al servi"es to "omprehensive end6to6end solutions that "reate a "ompetitive advanta&e for the "ustomer$

in a spee"h at the IF+DA5 business s"hool in /ran"e in 9443

The characteristics of a transnational corporation

A transnational "orporation has a truly &lobal presen"e spread a"ross "ountries$ %et, it #ould be too mu"h of a simplifi"ation to "all a "ompany transnational if it has a presen"e in several "ountries or has transa"tions in several "urren"ies$ .he real ?uality of a transnational "orporation is obviously the ability to pursue a judi"ious blend of lo"al responsiveness throu&h "ustomisation, "ost redu"tion throu&h standardi-ation and optimum value "hain "onfi&uration$ /or e,ample, a "ompany #ith a #ell thou&ht out manufa"turin& net#ork in different "ountries, to make it "urren"y neutral E #ould be more transnational that one #hi"h e,ports from its home "ountry and uses hed&in& tools su"h as for#ard "ontra"ts to eliminate forei&n e,"han&e risk$ +imilarly, a "ompany #hi"h develops a net#ork of operations that make it less vulnerable to politi"al risks in individual overseas markets, #ould be more transnational than one #hi"h does not have su"h a net#ork$ .ransnational "orporations "ombine various attributes that are #ell beyond the rea"h of "ompanies #hi"h predominantly "ompete in their domesti" markets$ =e no# e,amine these attributes$
Woc&hardt's globali(ation) Indias pharma industry is not far behind the I. industry #hen it "omes to &lobalisation$ .he Indian pharma industrys Bi& four, :anba,y, 5r :eddys, =o"khardt and ipla have all taken &lobali-ation seriously$ =o"khardt &enerates over E4K of its revenues from Durope$ In re"ent years, the "ompany has made major a"?uisitions in Ireland, Germany and /ran"e$ Fo# it is lookin& seriously at the 0+$ .hrou&h mer&ers and a"?uisitions, =o"khardt hopes to rea"h a turnover of J1 billion by the end of 9442$ :ealisin& the risks involved, =o"khardt looks for "lear benefits #hen it makes an overseas a"?uisition$ .he "ompanys takeover of Fe&ma Cerads, the /ren"h pharma "ompany in ;"tober 9443, is a &ood e,ample$ Fe&ama is a resear"h based "ompany #ith 1B9 patents$ =o"khardt hopes to e,pand its presen"e in Durope and market its other &eneri" dru&s throu&h Fe&ama$ .he /ren"h &overnment is populari-in& the use of &eneri"s in the "ountry$ Fe&amas stron& distribution and sellin& net#ork #ill stand =o"khardt in &ood stead in the "omin& months$ =o"khardt has also taken over !ine#ood, a hi&hly respe"ted Irish pharma "ompany #ith over 944 pres"ription and ;. produ"ts$ A market leader in renal therapy produ"ts, !ine#ood has an e,"itin& portfolio of produ"ts at various sta&es of development$ !ine#ood #ill also enable =o"khardt to shift some operations from the 01 and "ut "osts$ In 944I, =o"khardt established a subsidiary in the 0+$ By 9443, the subsidiary had filed 93 AF5As )abbreviated ne# dru& appli"ations*, ei&ht of #hi"h #ere approved$ =o"khardt hopes to &et more approvals in 944B and stren&then its position in a market #here "ompetition amon& &eneri"s players is rapidly intensifyin&$ =o"khardt is also takin& seriously bio&eneri"s, i$e$, biote"hnolo&y produ"ts that have &one off patent$ By 9414, the &lobal bio&eneri"s market is e,pe"ted to be #orth J14 billion$ =o"khardt is buildin& "omprehensive "on"ept6to6market "apabilities for bio&eneri"s for the international markets$ .he "ompany has several appli"ations pendin& for approval in various parts of the #orld in"ludin& :ussia, +outh Ameri"a, entral Asia, +outheast Asia and Forth Afri"a$

Capabilities
A truly &lobal firm not only has uni?ue resour"es that "an be levera&ed in markets a"ross the #orld, but also "ontinues to develop ne# "apabilities in response to "han&es in the environment$ Global "ompanies strike a balan"e bet#een capability leverage and capacity building$ apability levera&e involves makin& full use of e,istin& "apabilities in the market pla"e$ .hese "apabilities may e,ist any#here in the system, not ne"essarily at head?uarters or in the home "ountry$ But a &lobal firm "annot live only on its e,istin& "apabilities$ It must also build ne# "apabilities$ A""ordin& to +tephen .allman and 1arin /ladmoe
E

urren"y neutral means operations are immune to forei&n e,"han&e rate flu"tuations, #ith losses in some transa"tions bein& "ompensated by &ains in others$ :ead 1eni"hi ;hmae, <.he Borderless =orld,> pp 1EB61B1 to understand more about forei&n e,"han&e markets and their impa"t on &lobal "orporations$ 3 +umit Ghoshal, <Global footprint,> Business India, +eptember 9H, 944B, pp$ I76EI$

E
Cind?uistB, there are broadly t#o kinds of "apabilities 6 Business )evel $omponent and $orporate )evel *rchitectural$ Business Cevel "omponent "apabilities help a firm to produ"e better produ"ts, develop better pro"esses and make marketin& more effe"tive$ 'onda for e,ample has stron& "apabilities in produ"in& internal "ombustion en&ines$ orporate level ar"hite"tural "apabilities are <or&ani-ation #ide routines for inte&ratin& the "omponents of the or&ani-ation to produ"tive purposes$> .oyotas Just6in6time produ"tion system is a &ood e,ample$ arlos ordon, .homas D Vollmann and Jussi 'eikkila7, "ate&orise a "ompanys "ompeten"ies as follo#s@ 'istinctive competencies .hese are the most important "apabilities of the "ompany$ %ssential competencies .hese are the "apabilities needed for the "ompany to operate effe"tively #pillover competencies .hese are "apabilities that allo# a "ompany to make profits in a related a"tivity thanks to the "ompanys distin"tive "ompeten"y$ &rotective competencies .hese are "apabilities related to a"tivities that pose a "onsiderable risk for the su""ess of the #hole "ompany, if they are not properly mana&ed$ &arasitic competencies .hese are a"tivities "urrently bein& done in6house, that #aste or&ani-ational resour"es$ .hey are a le&a"y of previous de"isionsLindustry situations$ A"tivities be"ome parasiti" #hen stron& third party vendors emer&e$

5istin"tive and parasiti" "ompeten"ies lie at opposin& ends of the spe"trum$ =hile distin"tive "ompeten"ies must be "arefully developed in6house, parasiti" "ompeten"ies must be outsour"ed$ Dssential "ompeten"ies and prote"tive "ompeten"ies "an be outsour"ed if me"hanismsL relationships are established to ensure the "ontinuous availability of the servi"e and minimi-ation of risks$ A hi&h de&ree of trust and mutual understandin& bet#een the "ompany and its partners are important$ +pillover "ompeten"ies "an be outsour"ed, provided the "ompany finds a #ay of "apturin& the value "reated$

*ultidimensionality
In the past, "ompanies "ould "ompete by bein& &ood at one thin& A reapin& &lobal s"ale effi"ien"ies or ma,imi-in& responsiveness to the needs of lo"al markets$ .he old paradi&m #as either to ti&htly "oordinate from the "entre and a"hieve &lobal standardi-ation or to leave subsidiaries free to "ome up #ith suitable strate&ies to serve lo"al markets effi"iently$ In the "ase of the first paradi&m, kno#led&e #as developed at the "entre and e,ploited #orld#ide$ In the "ase of the se"ond, the kno#led&e developed lo"ally, remained #ith ea"h subsidiary and for all pra"ti"al purposes, #as not available to other subsidiaries$ In a "omple, business environment, a more sophisti"ated approa"h is needed$ .his is #here the transnational "orporation "omes in$ .ransnational "ompanies, have the "apability to "ombine &lobal effi"ien"ies, lo"al responsiveness and the ability to levera&e kno#led&e a"ross the #orld#ide system$ .hey &o #ell beyond a unidimensional approa"h #hi"h fo"uses e,"lusively on &lobal effi"ien"ies or lo"al responsiveness or #hi"h "onsiders all businesses to be alike$ A fle,ible, multidimensional approa"h is the essen"e of a transnational "orporation$ +u"h a "apability is typi"ally built up over a period of time as the "ompany evolves and learns to deal #ith various types of business problems in different overseas lo"ations$

B 7

<Internationalisation, &lobali-ation and "apability A Based +trate&y,> alifornia 8ana&ement :evie#, /all 9449$ /. 8asterin& Global Business

3
Exhibit 4.2+ Integration $s ,esponsi$eness
0igh Global +trate&y .ransnational +trate&y

/ressures for global integration

5omesti" +trate&y 1o2 8ultinational +trate&y

1o2

/ressures for local responsi$eness

0igh

=hy is a multidimensional approa"h so "riti"al in todays &lobal business environmentG As markets be"ome more "ompetitive and "ustomers be"ome more demandin&, effi"ien"y be"omes important$ =ithout effi"ien"y, "osts "an &o out of "ontrol, produ"ts "an easily be"ome overpri"ed and &o out of the rea"h of "ustomers$ Global "ompanies, even #hen servin& diverse markets, look out for opportunities to standardise produ"ts to the e,tent possible$ +tandardisation yields obvious benefits in the form of e"onomies of s"ale, in a"tivities su"h as produ"t development, manufa"turin& and pro"urement$ But standardisation and s"ale effi"ien"y alone "annot &enerate a sustainable "ompetitive advanta&e$ Indeed, standardisation if "arried too far, #ould mean loss of responsiveness to lo"al markets$ .he tri"k is to standardise those aspe"ts #hi"h "ustomers do not per"eive differently a"ross the #orld and "ustomise those #hi"h they do$ .his point is #ell illustrated by the automobile industry$ In the 12B4s and 1274s, a proliferation of models led to balloonin& development "osts$ +o automobile "ompanies started fo"usin& on a fe# platforms around #hi"h "ars of different shapes "ould be desi&ned$ +in"e then, "ompanies su"h as /ord, 'onda and .oyota have mastered the art of standardisin& the "ore produ"t #hile retainin& the fle,ibility to "ustomise and offer features to suit "ustomer tastes in individual markets$ +imilarly, fast movin& "onsumer &oods "ompanies have standardised some of the elements of the marketin& mi, #hile "ustomisin& others for lo"al markets$ Festle, oke and 0nilever have e,ploited opportunities to e,tend e,pensive advertisin& "ampai&ns developed in one "ountry, a"ross "ountries, #ith a bit of "ustomisation #herever re?uired$ A truly &lobal "ompany also does not treat its subsidiaries on a stand6alone basis$ +u"h a "ompany "an take full advanta&e of its entire #orld#ide "apabilities #hen it makes a "ompetitive move$ It has the re?uired de&ree of or&anisational inte&ration to transport "apabilities a"ross borders #henever needed$ In other #ords, e,"han&e of ideas, best pra"ti"es and resour"es a"ross subsidiaries is a key re?uirement in a transnational "orporation$

The changing face of Indian IT ser$ices 1-# .rom offshoring to total sourcing
2 14

Adapted from <8ana&in& A"ross Borders,> By hristopher Bartlett ( +umantra Ghoshal$ =illiam 0nderhill, Jason ;verdorf, <Bottom to best,> Fe#s#eek, +eptember 14, 944B$

If there is one industry #hi"h has dramati"ally "han&ed the fortunes of India in the past four years and taken the "ountry to the "entre sta&e of the #orld e"onomy, it is Information .e"hnolo&y )I.* offshorin&$ In the past de"ade, Indias offshorin& revenues have in"reased tenfold$ .he &lobal market for offshored I. servi"es is e,pe"ted to &ro# to JHB$7 billion by 9411$ .he top Indian I. "ompanies like Infosys, .ata "onsultan"y +ervi"es and =ipro are positionin& offshorin& not just as a #ay to "ut "osts but also as a #ay to transform the business of their "lients$ As Fandan Filekani, 'ead of Infosys mentioned re"ently@ <.he "ustomer is no lon&er just payin& for 144 people to #ork for him but for a spe"ifi" business out"ome$ .herefore, the Indian "ompanies have to improve the "apa"ity of their people, so #e have more people #ith a "onsultin& mindset$ And #e have to be #illin& to take risks$> In short, the leadin& Indian I. servi"es "ompanies seem to be movin& from offshorin& to total sour"in&$ .he Indian I. "ompanies, on the stren&th of their past tra"k re"ord, are hopin& that they "an start handlin& more sophisti"ated operations$ .hey are also movin& "loser to their "lients by establishin& fa"ilities in the #est and at promisin& lo"ations in "entral and eastern Durope, Asia !a"ifi" and Catin Ameri"a$ entral Durope is in parti"ular be"omin& important due to lan&ua&e skills and time -one advanta&es$ .hou&h not as "ost effe"tive as India, entral Durope "an better meet spe"ifi" Duropean "ustomers outsour"in& needs due to the lo"al talent and lan&ua&e skills and by virtue of its lo"ation in the same time -one$ +atyam, a leadin& Indian I. "ompany no# runs operations "entres in 8alaysia, Bra-il and hina and has plans to add more delivery "entres in the -e"h :epubli", :ussia, Vietnam and .hailand$ . +11 is e,pandin& its presen"e in Catin Ameri"a$ It is "onsolidatin& its operations in 0ru&uay and Ar&entina into a sin&le unit that #ill provide nearshore servi"es to the other Catin Ameri"an "ountries as #ell as the 0+ and Durope$ .he "onsolidated operations #ill in"lude a Global 5elivery entre and a re&ional trainin& "entre in 8ontevido, the "apital of 0ru&uay and an e,tension "entre in Buenos Aires, the "apital of Ar&entina$ .he staff stren&th is e,pe"ted to in"rease to 1944 by the end of 944B and further in the "omin& years$ .he main advanta&es . + sees here are Dn&lish lan&ua&e skills, attra"tive "ost stru"ture and a similar time -one as Ameri"a$ 8ean#hile, . + has also announ"ed plans to stren&then its operations in Bra-il and 8e,i"o$ But the Indian I. "ompanies are not i&norin& "ost "ontrol$ .hey are automatin& many of their internal operations to "ut "osts$ .hey are also outsour"in& routine #ork to "ountries like Vietnam #here labour "osts are lo#er$

A slo&an #hi"h be"ame very popular in the 1224s #as .hink Global, A"t Co"al$ .he notion that &lobal strate&ies have to be implemented lo"ally, seems to imply that kno#led&e transfer is unidire"tional from head?uarters to the subsidiaries$ A truly &lobal "ompany, on the other hand, en"oura&es lo"al mana&ers to share their best pra"ti"es so that they "an be applied &lobally$

11

Business +tandard, +eptember 926H4, 944B$

7 Exhibit 4.% The Three 3s of globali(ation12

Adaptation
Local responsiveness!

Aggregation
Economies of Scale!

Arbitrage
Absolute economies!

The 4lobalisation of 5T61% :onnie +"re#valas 0.V +oft#are "ommuni"ations illustrates ho# the 'indi movie industry is tryin& to &lobali-e$ 0.V &ot into film distribution in 1223 and in the ne,t year produ"ed a lo# bud&et movie #hi"h failed$ .hen the "ompany produ"ed three bi& bud&et movies that strayed from traditional Bolly#ood formulas$ Bi& su""esses su"h as <:an& de Basanti,> &ave +"re#vala the finan"ial stren&th and "onfiden"e to think bi&$ 'e for&ed "o6produ"tion deals #ith /o, +ear"hli&ht, +ony !i"tures and =ill +miths ;verbrook Dntertainment$ 0.V #ent publi" on the 8umbai +to"k D,"han&e in 944E, to be"ome one of the first listed movie "ompanies in India$ .he "ompany &ot another bi& break #hen 5isney took a 1E per"ent stake for J1I million in 9443$ 0.Vs modern mana&ement pra"ti"es in bud&etin& and marketin& have stood it in &ood stead$ 0.V shoots movies typi"ally in three months and on bud&et, a phenomenon previously unheard of in the hi&hly indis"iplined and unprofessional Indian film industry$ 0.V has set up its o#n overseas distribution net#ork in the 0+, anada, Britain and 0nited Arab Dmirates$ .he "ompany is seriously lookin& at some 94 other "ountries #here Bolly#ood films have established a ni"he market$ 'ere 0.V is takin& advanta&e of the fa"t that the 'indi movie industry "urrently earns more than 34K of its revenue abroad$ =ith ti"ket sales for Indian movies risin& fastest outside India, 0.V #ill ?uite likely be one of the more a&&ressive &lobalisers in Bolly#ood in the "omin& years$

.he automobile "ompany, /ord has put in pla"e a system on its Intranet to allo# different manufa"turin& units to "ontribute ideas on best pra"ti"es from time to time$ .he oil &iants hevron and B!6Amo"o have both developed best pra"ti"es databases to fa"ilitate kno#led&e sharin& a"ross subsidiaries$ +ame is the "ase #ith Information .e"hnolo&y )I.* "onsultin& "ompanies like IB8, !ri"e =aterhouse and A""enture$ Indian I. servi"es "ompanies like . +, Infosys, =ipro, o&ni-ant and +atyam are also emphasi-in& kno#led&e sharin& a"ross their #orld #ide system$ /le,ibility lies at the heart of a multidimensional approa"h$ Global "ompanies, have to modify their strate&ies over time, espe"ially the #ay they mana&e subsidiaries$ .raditionally, Japanese "ompanies have either used their &lobal s"ale domesti" fa"ilities to supply to overseas markets or repli"ated these fa"ilities on a smaller s"ale in strate&i"ally important markets$ 8atsushita Dle"tri" is a typi"al e,ample$ .he "ompanys "entralised desi&n and manufa"turin& fa"ilities enabled it to be"ome the #orlds most effi"ient
19
1H

!ankaj Ghema#at, <:edefinin& Global +trate&y$> Jason ;verdorf, <Bi&&er than Bolly#ood,> Fe#s#eek, +eptember 14, 944B, pp$ H26IH$

2
"onsumer ele"troni"s manufa"turer$ ;ver the years, ho#ever, 8atsushita has been dele&atin& more responsibilities to its subsidiaries$ ;n the other hand, many Duropean "ompanies due to their small home markets and their ea&erness to e,pand overseas, offered "onsiderable autonomy to "ountry subsidiaries to en"oura&e responsiveness to lo"al needs$ .ill the 1274s, both !hilips and 0nilever "onformed to the multinational style of mana&ement$ ;f late, ho#ever, these "ompanies have put in pla"e me"hanisms to monitor and "ontrol the a"tivities of different overseas units, to a"hieve better &lobal "oordination$ In other #ords, strate&ies of &lobal "ompanies need to "han&e in a dynami" #ay, in response to "han&es in the environment$ An important element of fle,ibility is to retain #hat #orks and eliminate #hat does not, #ithout any pre"on"eived notions$ /loris$ A$ 8aljers, former D; of 0nilever on"e remarked 1I@ <;ur or&ani-ation of diverse operations around the #orld is not the out"ome of a "ons"ious effort to be"ome #hat is no# kno#n amon& a"ademi"s as a transnational$ +in"e 12H4, the "ompany has evolved mainly throu&h a 5ar#inian system of retainin& #hat #as useful and reje"tin& #hat no lon&er #orked A in other #ords throu&h a"tual pra"ti"e as a business respondin& to the market pla"e$>

6alue chain configuration

A transnational "ompany "onfi&ures its value "hain a"ross different "ountries to ensure that a"tivities are lo"ated in those "ountries #here they "an be performed most effi"iently and effe"tively$ onsider Ci ( /un&, 'on& 1on&s lar&est e,port tradin& "ompany$ It deals in items ran&in& from "lothin& and fashion a""essories to toys and lu&&a&e$ In "ase of toys, Ci ( /un& has lo"ated hi&h value addin& a"tivities su"h as desi&n and fabri"ation of molds in 'on& 1on&$ ;n the other hand, labour intensive a"tivities su"h as inje"tion of plasti", paintin& and manufa"ture of the dolls "lothin& are "arried out in hina$ .he "ompany uses 'on& 1on&s #ell6developed bankin& and transportation infrastru"ture to market its produ"ts around the #orld$ As "hairman Vi"tor /un& puts it, the labor intensive middle portion of the value "hain is still done in southern hina #hile 'on& 1on& does the front and ba"k ends$ 8any of the leadin& Indian soft#are "ompanies havin& su""essfully established themselves in markets like the 0+ and Durope are no# attemptin& to make hina an inte&ral part of their delivery value "hain$ In parti"ular, hina is be"omin& a key lo"ation #hile servin& "ustomers in Japan$ IB8 is in"reasin&ly doin& mu"h of its :esear"h and 5evelopment in India, #here the "ompany is also stren&thenin& its delivery "apabilities$ .ransnational "ompanies develop the "apability to demar"ate a"tivities that need to be ti&htly "ontrolled by the head?uarters and those #hi"h "an be de"entralised and dele&ated to national subsidiaries$ .he +#iss food &iant, Festle &ives a lot of freedom to its "ountry subsidiaries, to take de"isions on adaptin& produ"ts to suit lo"al tastes$ %et, there are some fun"tions, #hi"h the "ompany has "hosen to "ontrol ti&htly$ .hese in"lude basi" resear"h, brandin&, finan"in& de"isions and many human resour"es poli"ies$ !eter Brabe"k Cetmathe1E, Festles D;, on"e remarked, <.he :(5 fun"tion is one of the fe# thin&s #e havent de"entralised, althou&h over 17 :(5 "enters are physi"ally lo"ated all over the #orld$ All our resear"h "entres, #herever they are, are finan"ed and "ontrolled by head?uarters and re"eive the ne"essary input mainly from the strate&i" business units, based upon re?uests from the markets$>

1I 1E

'arvard Business :evie#, +eptember A ;"tober, 1229$ .he 8"1insey Muarterly 1223, Fumber 9$

14

The globali(ation of the Indian 7e2ellery industry1)

Indian je#ellers have been busy e,pandin& &lobally in re"ent years$ In late 9443, Gitanjali Gems a"?uired +amuel Je#ellers the ninth lar&est je#ellery "hain the 0+$ In 8ar"h 944B, +hrenuj 5iamonds a"?uired an 7IK e?uity stake in +G+, a #holesale je#ellery distributor in the 0+$ .hese a"?uisitions #ill help +hrenuj and Gitanjali &ain a""ess to a lar&e number of je#ellery retailers in the 0+$ :ajesh D,ports, another leadin& Indian je#ellery maker is also plannin& a"?uisitions$ .anish? promoted by .itan, has plans not only to a"?uire retail "hains but also set up its o#n retail stores in the 0+$ .hese deals #ill help the Indian je#ellery industry to stren&then their presen"e in the 0+, one of the most important markets in the #orld$ 8ean#hile, the Indian je#ellery firms are also e,pandin& their presen"e in the 8iddle Dast, 'on& 1on&, hina and 8alaysia$ All these moves "ome at a time #hen Indias share of &lobal diamond pro"essin& is de"linin&$ By a"?uirin& retail "hains, Indian je#elers hope to move up the value "hain and improve their mar&ins$ Indeed, many of these moves essentially represent a strate&y of for#ard inte&ration from diamond manufa"turin& into je#ellery retailin&$ At the same time, Indian je#elers "ontinue to provide "ommodity je#ellery to retail "hains abroad and also develop private labels for overseas retailers$ .he idea is to o""upy a position a"ross the spe"trum from desi&nin& and manufa"turin& to brandin& and sales$ Exhibit 4.4
Eight "ey world mar#ets in gems and $ewellery %igures in &!

Exhibit 4.8
Mar#et share of various 'ewellery segments %igures in & !
'latinu( )* +thers &*

3" # 23 ! #$ #$
,old -2* .ia(ond -!*

2$

3%

&%

#3

#3

Rest of the world

US

Turkey

UK

Italy

India

Japan

Middle East

China

Contestability
A &lobal "ompany needs to have the "apability to "ompete in any overseas market$ =hile it "an be sele"tive about the markets it #ants to enter )based on their stru"tural attra"tiveness,* it should have the ability to "ompete in any market if &lobal "onsiderations demand this$ .o put it another #ay, a &lobal "ompanyNs de"ision not to have a presen"e in a parti"ular "ountry, is by "hoi"e, not due to la"k of resour"es$ +imilarly, a &lobal "ompany mi&ht even make a strate&i" retreat from a market$ .his #ould, ho#ever, be a part of a &lobal &ame plan rather than be"ause it does not have the stayin& po#er$ .ransnationals "onstantly look around the #orld for market openin&s, pro"ess information on a &lobal basis and al#ays "onstitute a potential threat to e,istin& players even in "ountries they have not yet entered$

13

+an&ita +hah, <;n a shinin& trail,> ;utlook Business, July 94, 944B, pp$ 3I632

11

4ulf companies go global19 8any "ompanies in the Gulf OBahrain, 1u#ait, ;man, Matar, +audi Arabia, and the 0nited Arab Dmirates )0AD* O are ridin& the oil boom to e,pand their operations abroad$ .he &ulf states are e,pe"ted to a""umulate J9$I trillion in #indfall revenues throu&h 941I17$ 0nlike earlier oil booms #hen mu"h of the surplus #ent into passive portfolio investments, ?uite a bit of the money &enerated in the "urrent boom seems to be &oin& into strate&i" overseas investments$ :e"ent deals "onfirm this trend$ .he &lobal banks, iti&roup and 0B+, for e,ample, have invited investors in the &ulf to take si&nifi"ant stakes$ 5ubais bid for a 94K stake in FA+5AM also refle"ts the "urrent mindset$ If the deal is su""essful, Borse 5ubai #ill &et EK of the votin& ri&hts of FA+5AM alon& #ith t#o board positions$ 5ohas Muatar Investment Authority is tryin& to buy major stakes in the Condon +to"k D,"han&e and +to"kholms ;8P$ .he Authority has also an eye on the British supermarket &iant +ainsbury$ .here have also been reports of "ompanies in 5ubai makin& bi& investments in the entertainment &iant, 8G8, the retailer Barneys Fe# %ork and privately held builder, John Cain& 'omes$ .he trend, #hi"h #e are seein& amon& &ulf "ompanies today, pi"ked up momentum about five years ba"k #hen petro6 "hemi"al &iant +audi Basi" Industries )+abi"*, a"?uired the petro"hemi"al division of the 5ut"h "hemi"als and pharma"euti"als &roup 5+8 in 9449 for J9 billion$ At the time, it #as the lar&est takeover of a Duropean "ompany by a middle east investor$ .he deal helped +abi" be"ome the #orlds tenth6lar&est "hemi"al "ompany, #ith revenues of J94$2 billion in 944E$ A year later, +abi" announ"ed that it #ould invest up to JE billion in a hinese joint venture$ Another state6"ontrolled enterprise, the 0ADs 5ubai Aerospa"e Dnterprise )5AD*, supported by a "onsortium, paid J1$H billion for the +#iss "ompany +: .e"hni"s, the leadin& independent supplier of air"raft maintenan"e, repair, and overhaul servi"es in late 9443$ !rivate "ompanies are also joinin& the party$ In 944E, the 1u#aiti lo&isti"s &roup A&ility bou&ht "ompanies in +in&apore and the 0nited +tates$ +maller, family6o#ned businesses, su"h as the +audi independent "ar distributor Abdul Catif Jameel )ACJ* and the 1u#aiti retailer 8$ '$ Alshaya, are e,pandin& in Durope, :ussia, and else#here$ In &eneral, t#o fa"tors have motivated "ompanies in the &ulf to e,pand &lobally$ .he first is the need to find ne# &ro#th opportunities as domesti" markets be"ome in"reasin&ly saturated$ .he se"ond is the need to a"?uire parti"ular skills or "apabilities$ A"?uisitions in Durope and Forth Ameri"a, are helpin& Gulf "ompanies &ain rapid a""ess to =estern mana&ement kno#6ho# and te"hnolo&y$ A &ood e,ample is the 5ubai property &roup Dmaar !roperties #hi"h in 9443 a"?uired the se"ond6lar&est private home builder in the 0nited +tates, John Cain& 'omes )for J1 billion*, and the 01 realtor 'amptons International )for J1EI million*$ Dmaar hopes to &ain e,pertise in real estate development and marketin& throu&h these deals$ +tron& "ash positions have &iven "ompanies in the &ulf a &reat opportunity to make a"?uisitions, to e,pand their market share and to pi"k up ne# skills$ .hese a"?uisitions, ho#ever, #ill have to be mana&ed "arefully$ Inte&ration skills #ill be espe"ially important #hen an a"?uisition is made to &ain e,pertise$ 8arketin& skills #ill also be "riti"al$ ompanies #ill have to put in pla"e suitable systems and pro"esses to a"hieve &lobal "oordination$ Cast but not the least, they #ill also have to find and retain the ri&ht mana&erial talent$ .he Arabs #ill also have to deal #ith "ultural barriers$ In the Arab #orld, personal relationships and so"ial stru"tures have traditionally "arried &reat #ei&ht and influen"ed hirin&, promotion and transfer de"isions$ =hat in the =est #ould be "riti"i-ed as nepotism or "ronyism is still #idely a""epted in the &ulf states as a #ay of bondin&$ But as they e,pand overseas, &ulf "ompanies #ill need to move to#ards a more professional "ulture and be"ome less dependent on personal relationships$

*ar&et spread
1B

.his bo, items dra#s heavily from, +aleh A$ Al6Atee?i and 'ans68artin +to"kmeier, <'o# Gulf "ompanies "an build &lobal businesses <8"1insey Muarterly =eb D,"lusive 8ar"h 944B 17 A re"ent .ime 8a&a-ine report )<=el"ome to 5u6Buy,> .ime, ;"tober 1E, 944B* mentioned that the re&ion possesses <tidal> li?uidity to the tune of about J9 trillion$

19
A &lobal "ompany earns a si&nifi"ant portion of its revenues in overseas markets$ %et, as mentioned earlier, this is not a suffi"ient "ondition for a "ompany to be "alled &lobal$ +ome Indian soft#are "ompanies, for e,ample, typi"ally &enerate a si-eable "hunk of their revenues in the 0+, but "annot be "onsidered &lobal, be"ause they have an insi&nifi"ant presen"e in other overseas markets$ /or a truly &lobal "ompany, &eo&raphi" spread is important$ In the ideal "ase, a "ompany #ith a &lobal market presen"e #ould &enerate the same market share in ea"h "ountry$ Assume the "ompany operates in 144 "ountries$ If it has a market share of say H4K in ea"h of these "ountries, it #ould be more &lobal than another "ompany #hi"h operates in fe#er "ountries but has, say, a I4K &lobal market share be"ause of its dominan"e in a fe# individual markets$
,anbaxy's globalisation12 onventional #isdom holds that "ompanies in emer&in& markets #ill find it diffi"ult to e,pand internationally$ Co"al environments are typi"ally "hara"teri-ed by personal relationships, privile&ed a""ess to resour"es, hi&h tariff #alls, and a "aptive market of lo"al "ustomers$ .hese are not stren&ths that "an be levera&ed in developed "ountries$ In reality, by #orkin& #ith demandin&, yet pri"e6sensitive "ustomers and "hallen&in& distribution environments, "ompanies in emer&in& markets "an develop distin"tive "apabilities and levera&e them in &lobal markets$ A &ood e,ample is :anba,y Caboratories, one of Indias leadin& pharma "ompanies$ /or many years, :anba,y operated in a uni?ue patent re&ime that en"oura&ed Indian "ompanies to repli"ate patent6prote"ted dru&s throu&h a different pro"ess and offer them at affordable pri"es to the "ountryNs vast population$ :anba,y took full advanta&e of this pro"ess patent re&ime$ In essen"e, Indian "ompanies "ould produ"e any dru& in the #orld as lon& as they used a manufa"turin& pro"ess #hi"h differed from the one that the ori&inal manufa"turer used$ :anba,y stren&thened its "ompetitive position by settin& up sophisti"ated laboratories, hirin& hundreds of #orld6"lass "hemists and by investin& heavily in state6of6the6art fa"tories that "ould s"ale up the manufa"ture of a dru& ?ui"kly$ .he "ompany rapidly developed ne# pro"esses for synthesi-in& patented dru&s and to s"ale up manufa"turin& ?ui"kly thereafter$ By the early 1224s, :anba,y reali-ed that it "ould e,ploit these stren&ths by ?ui"kly synthesi-in& dru&s that #ere &oin& off patent in developed markets and sellin& them there$ .he "ompany a"?uired ;hm Caboratories in the 0nited +tates in 122I and entered the 0+ &eneri"s market$ +ubse?uently, :anba,y rapidly e,panded its business in other international markets$ urrently the "ompany ranks amon& the #orldNs top ten &eneri"s manufa"turers$ .o su""eed, "ompanies must ali&n strate&y and stru"ture$ =ell kno#n business historian Alfred handler emphasi-ed this point several years a&o$ .o provide autonomy to lo"al mana&ers #ithout losin& the "ru"ial &lue that keeps business pro"esses fun"tionin& effi"iently, su""essful &lobal "ompanies usually or&ani-e their operations on a three6dimensional matri,@ businesses, &eo&raphies, or fun"tions$ +u"h stru"tures help "ompanies to transfer and levera&e their distin"tive "apabilities seamlessly, to "ontrol &lobal operations, to "apture e"onomies of s"ale a"ross fun"tions, and to develop &lobal mana&ers$ =hen :anba,y internationali-ed its business, it pla"ed :(5 in a &lobal unit and other fun"tions in several &eo&raphi" units, in"ludin& its home market$ :anba,yNs senior mana&ers be&an to spend a substantial amount of time in their most important market, the 0nited +tates$ Guided by the vision of 5r$ !arvender +in&h and ba"ked by "ommitted mana&ers at the ne,t level, :anba,y has "ome a lon& #ay sin"e its humble ori&ins$ .oday, the "ompany has be"ome a role model for other Indian "ompanies #hi"h are serious about &lobalisation$

8arket spread has helped Ameri"an "ompanies in re"ent years to sustain their finan"ial performan"e as their domesti" market has be"ome in"reasin&ly saturated$ ompanies in the +tandard ( !oors E44 Inde,
12

.his bo, item dra#s heavily from the arti"le by, Jayant +inha, Global "hampions from emer&in& markets, 8"1insey Muarterly 944E Fo 9

1H
"urrently )mid6944B* &et I2K of their sales from outside the 0+, up from H4K in 9441, a""ordin& to +(! 94$ H8, 8"5onalds and 'alliburton, #hi"h &enerate more than half of revenue outside the 0+, led the +(! E44s 3$9K &ain in 944B #ith profits that e,"eeded analysts e,pe"tations$ .he insuran"e "ompany AIGs earnin&s from sellin& life insuran"e and retirement savin&s produ"ts outside the 0+ jumped HH per"ent to J1$3 billion in the fourth ?uarter, the bi&&est &ain in at least t#o years$ .he Fe# %ork6based insurer, &enerated a third of its profit from those businesses$ 8"5onalds posted its bi&&est sales in"rease in Durope sin"e 122I durin& the first ?uarter of 944B as net in"ome "limbed 99K 91$ 'alliburton, the #orlds se"ond6 bi&&est oilfield6servi"es "ompany, posted a 1H per"ent in"rease in first6 ?uarter profit in 944B on risin& demand from the former +oviet 0nion, the 8iddle Dast and Afri"a$ Exhibit 4.)

The four le$els of global strategy

Level 3 +tron& "apabilities in all the A s )Adaptation, A&&re&ation, Arbitra&e*$ Fot easy to a"hieve +tron& "apabilities in one A ba"ked by supplementary "apabilities in another A +tron& "apabilities in one of the As Fo a#areness of arbitra&e a&&re&ation and adaptation possibilities

Level 2 Level 1 Level 0

#ource &ankaj +hemawat! ,edefining +lobal #trategy"

:i$ersity
/or transnational "ompanies, mobili-in& and nurturin& a diverse talent pool is a "riti"al su""ess fa"tor$ .hey must be &ood at mana&in& diversity, a"ross various dimensions A lan&ua&e, "ulture, edu"ation, ra"e, &ender, a&e, reli&ion$ A diverse #orkfor"e is ne"essary to help the "ompany "ope effe"tively #ith different environments$ 5iversity implies in"lusion of people #ith different #orld vie#s and e,perien"es$ By poolin& diverse ideas and insi&hts, innovation "an be enhan"ed$ ommitment to diversity implies a "ommitment to tappin& the best talent a"ross the #orld$ 'o#ever, #hile a""ommodatin& people #ith different ba"k&rounds and levera&in& their uni?ue skills is important, diversity should not be taken too far$ As !hilip 8 :osen-#ei& mentions99, multinational firms should not only push for diversity but also try to enfor"e some measure of "ommonality and "ohesion amon& disparate parts$ .hus multinationals have to find #ays to benefit from diversity #hile also for&in& "onsisten"y <.he "hallen&e is not to promote diversity alone, for that "ould su&&est that anythin& &oes or that all differen"es are &ood$ For is it to insist upon ri&id "onformity of behaviour around the #orld, #hi"h #ould ne&ate the benefits of diversity$ :ather, it is to identify the key elements of "onsisten"y needed to su""eed and to make the most of diversity on other dimensions$> =e "an no# make an attempt to define a transnational )&lobal* "orporation@ <* transnational corporation operates across the world! configuring its value chain activities in different countries to achieve the twin needs of efficiency and local responsiveness. -t has the capability to pool together the resources available to it in its entire worldwide system and use them not only to enter new markets but also to strengthen its competitive position in existing markets. * truly global corporation
94 91

<0+ bull run stoked by os &ro#in& hina, German sales>, .he D"onomist, 2 8ay 944B ibid$ 99 <+trate&ies for mana&in& diversity,> /. 8asterin& Global Business, !renti"e 'all, 1222$

1I
believes that learning is important and puts in place mechanisms to transfer knowledge across subsidiaries! from subsidiaries to headquarters and from headquarters to subsidiaries. >
Exhibit 4.9 Transnational Corporations# 3 frame2or& for understanding the &ey dimensions

Local Empowerment Local (erformance *lobal Standardisation

Local )nnovation

Transnational Corporations

*lobal "nowledge Sharing

Local Customisation *lobal Coordination

*lobal Tas# Action

Conclusion
In their book, <8ana&in& a"ross borders,> +umantra Ghoshal and hristopher Bartlett dra# a distin"tion bet#een multinational, global and international "ompanies$ 8ultinational "orporations tend to be de"entrali-ed and self suffi"ient$ .hey are &ood at identifyin& and e,ploitin& lo"al opportunities$ But the kno#led&e developed is retained #ithin ea"h unit$ A &lobal "orporation on the other hand believes in "entrali-ation and a"hievement of &lobal s"ale of operations$ By and lar&e, kno#led&e is developed and retained at the head?uarters$ .he international "orporation is &ood at adaptin& and levera&in& the parent "ompanys "ompeten"ies$ In these "ompanies, kno#led&e is developed at the "entre and transferred to the national subsidiaries$

.he transnational "orporation "ombines the best of all these paradi&ms$ It does not pursue effi"ien"y or lo"al responsiveness for the sake of a"hievin& them$ :ather, su"h a "ompany attempts to have the fle,ibility to do #hat is best &iven the "ompetitive "onte,t$ .hus in some areas, the transnational may emphasise s"ale effi"ien"ies #hile in others, it may pursue a strate&y of lo"al responsiveness$ And of "ourse, the transnational "orporation is &ood at "reatin& and sharin& kno#led&e a"ross the system, from head?uarters to subsidiaries, from subsidiaries to head?uarters and a"ross subsidiaries$ In short, the transnational aims for the optimal blend of "entrali-ation and de"entrali-ation and standardi-ation and "ustomi-ation$ As Ghoshal and Bartlett mention 9H, <.he transnational develops responsiveness by buildin& multinational fle,ibility in many #ays$ It desi&ns some sla"k into its produ"tion fa"ilities and adopts fle,ible automation to respond to unforeseen shifts in demand and or in supply$ It "reates produ"ts #ith modular stru"tures so that features and stylin& "an be differentiated by market #hile basi" "omponents and the "ore desi&n are
9H

<8ana&in& a"ross borders,> p$B1

1E standardi-ed$ 8ost important, the transnational builds systemati" differentiation of roles and responsibilities into different parts of its or&ani-ation$>

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13 6 ontestability@ apability to "ompete in overseas markets$ 6Gulf ompanies Go Global)+trate&i" overseas investmentsLa""ess to te"hnolo&y in =est* 68arket +pread@ "riti"al for a &lobal "ompany$ 6Ali&n +trate&y (+tru"ture 6H5 8atri, for Global ompany stru"ture@ Businesses, Geo&raphies, /un"tions 65iversity@ of =orkfor"e a "riti"al "ompeten"y of .F )0nilever, Festle$$$$$*