Lecture 5

Building multidimensional global capabilities

5

Copyright © 2012 Karol Pelc; Copyright © 2011 McGraw-Hill Irwin

Initial questions:

1. Why personal capabilities of a manager in a global company need to be different than those of other managers? Illustrate with examples.

2. What barriers/challenges a manager in global business may be faced with?

3. How to develop “global” capabilities of managers?

7-2

Three Key Management Roles in the Transnational Company

• The Global Business Manager

• The Worldwide Functional Manager

• The Country Subsidiary Manager

(But other roles also starting to emerge e.g. the Global Account Manager)

7-3

Global Business Manager

• Global Business Strategist

• Architect of Asset & Resource Configuration

• Cross-Border Coordinator

7-4

Responsible for developingglobal efficiency and competitiveness

Role as Global Business Strategist

• Needs to resolve diverse perspectives and interests of geographic and functional managers

• Consistency of business strategy with corporate strategy

• Location of business unit: often outside home country

7-5

Role as Architect of Asset and Resource Configuration

• “One product, one facility”

• Dispersal for robustness

• Building on existing capabilities

• Responsibility according to competencies

7-6

Role as Cross-Border Coordinator

• Cross-border flow of materials: Transfer prices and policies

• Cross-border coordination of operations: brand committees and product area boards

• Cross-border coordination of strategy

7-7

Worldwide Functional Manager

• Worldwide Intelligence Scanner• Sense and act on information wherever in the

world it emerges

• Cross-Pollinator of “Best Practices”• Identify sources and recipients; smooth

process of transfer

• Champion of Transnational Innovation• Locally leveraged and globally linked forms

7-8

Geographic Subsidiary Manager:Traditional Role

• Traditional role of foreign subsidiary manager

• Source of sales and profits

• Access to local factors of production

• Leverage parent company assets and resources

7-9

Geographic Subsidiary Management:New Role

• Bicultural Interpreter

• National Defender & Advocate

• Frontline Implementer of Corporate Strategy

7-10

7-11

Role as Bi-Cultural Interpreter

Interpret host country environment for corporate management; interpret corporate strategies and priorities to

the national organization

& Downward Communication

• Causes of Failure: Upward Communication

HQ

SUB. CM

Poor Receptivity of HQ Management

Blocked HQ/Subsidiary Channels of Communication

Limited Sensitivity or Understanding at the Subsidiary

CM

HQ

SUB.

Weak Connections or Support at HQ

Limited Understanding of Corporate Strategy, Priorities

Lack of Credibility within the Subsidiary

7-12

Role as National Defender and Advocate

Defends need for national responsiveness;advocate for role of subsidiary within the global

operations

• Causes of Failure:

FB

G

Business Perspective

HQ

Geographic PerspectiveSubsidiary

Functional Perspective

• CM (Country Manager) unwilling or unable to act as a strong advocate or defender of subsidiary interests

• Structural or cultural blocks that prevent CM from gaining access and influence in corporate decision-making process

Transnational decision process requires multi-dimensional perspectives; implies CM access and influence in process

Role as Frontline Implementer of Strategy

• Cause of Failure

• Organizational or managerial inflexibility prevents diversity and changeability of subsidiary roles

• CM unable to make the complex trade-offs and compromises required

• Parochialism in subsidiary due to inappropriate systems or inflexible managers

7-13

Converts strategic plans into actionfor subsidiary

7-14

Pressures and Constraints on Country Manager

Internal Norms& Values

Organization Structure

& SystemsCorporateStrategy

Host Governments Objectives, Policies

National Constituent Interests (Employees, Consumers, Unions)

Local Norms& Values

National Competitor’s

Actions

Global Competitive Activity

Local Market & Industry Structure

HostCountryInterests

GlobalCompetitiveEnvironment

MNCInternal

Motivations

Country Manager

Personal Values

7-15

The Many Hats of the Country Manager

Pioneer Role:• Define the territory:

market structure,customer needs

• Establish the base camp: make contacts, develop relationships

Intelligence Role:• Analyze the

environment:intelligence oncompetitors, technology, market trends

• Develop innovative ideas and capabilities as input to strategy

Quarterback Role:• Confer with HQ coaches

to defend, and advocatethe field view

• Motivate team to achieve results• Maintain entrepreneurship,

creativity, and drive

Trader Role:• Build profitable

operations: basecamp, trading post;control expenses,manage pricing

• Develop local resources:contribute to overall strategy

7-16

Skills & Qualifications of the Country Manager

CountryManager

Entrepreneurial Skills

• Innovator &Opportunist

Strategic Skills

• Creative Analyst

Executive Skills Skills

• OrganizationalLeader

Personnel Implications:Need CMs with different strengths at

various stages of development;But in a mature subsidiary, the CM

must have all of these characteristics.

Administrative Skills

• Controller& Manager

Top Level Corporate Management

• Providing direction and purpose• Clarity, Continuity, Consistency

• Leveraging corporate performance• Control systems based on supporting actions of

managers, not directing them • Coordinate and legitimize diverse perspectives

• Ensuring continuous renewal• Develop a questioning attitude• Legitimize new initiatives• Help the organization embrace, not deny,

complexity

7-17

SUMMARY

1. Multidimensional roles of managers in TNO: Building managerial capabilities

2. Tasks, success criteria and potential of failure in multiple roles of a manager in TNO

3. Role of top corporate management