Transnational Organization - Solution for the Multi National Cooperation?

Essay from the year 2002 in the subject Business economics - General, Malardalen University (Institution of Economics), course: International Business, language: English, abstract: 1.1. Problem BackgroundInternational companies are confronted with major organizational problems as they oftenhave to manage a complex system of subsidiaries and at the same time need to respond tothe demands of economic and political forces. The organizational structure of companies get more and more complex. In times offalling national growth rates and globalisation1, many companies expand into newmarkets. This global expansion trend can be seen by the intensive growth of foreigndirect investment outflows in the last ten years.2 Philips, for example, has build up ahuge network of subsidiaries in 60 countries.3 As companies expand, the flow of goods,resources and information among organizational units rapidly increases4, and it becomesmore and more complicated to manage, control and learn from subsidiaries. Demands on companies have also changed as economic and political imperatives arerising simultaneously in opposite directions 5. Economic forces lead towardsglobalisation demanding minimized unit costs while political forces ask for nationalresponsiveness as a result of protectionism for local economies.6 Today, companies areconfronted with the demands of efficiency and responsiveness at the same time.71.2. Aim of the paperIn the following paper, I will analyse Bartlett and Ghoshals transnational solution as ameans to cope with the complex organization and conflicting demands on MultinationalCooperation (MNC), and focus my discussion on advantages and problems from acontrol perspective. 1 Donaldson (2002), p.13. 2 Hill (2001), p. 183. 3 Goshal/Bartlett (1990), p. 77 [Art. 22]. 4 Bartlett/Ghoshal (1987). p.47 [Article 12]. 5 Martinez/Jarillo (1989), p. 500 [Article 23]. 6 Hill (2001), p. 386. and Bartlett/Ghoshal (1987). p.9 [Article 11]. 7 Bartlett/Ghoshal (1987). p.10 [Article 11].