Building multidimensional global capabilities 5 Lecture 5 Building multidimensional global capabilities Copyright © 2012 Karol Pelc; Copyright © 2011 McGraw-Hill Irwin

Initial questions: Why personal capabilities of a manager in a global company need to be different than those of other managers? Illustrate with examples. What barriers/challenges a manager in global business may be faced with? 3. How to develop “global” capabilities of managers?

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)

Global Business Manager Responsible for developing global efficiency and competitiveness Global Business Strategist Architect of Asset & Resource Configuration Cross-Border Coordinator

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

Role as Architect of Asset and Resource Configuration “One product, one facility” Dispersal for robustness Building on existing capabilities Responsibility according to competencies

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

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

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

Geographic Subsidiary Management: New Role Bicultural Interpreter National Defender & Advocate Frontline Implementer of Corporate Strategy

Role as Bi-Cultural Interpreter Interpret host country environment for corporate management; interpret corporate strategies and priorities to the national organization 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 & Downward Communication Weak Connections or Support at HQ HQ Limited Understanding of Corporate Strategy, Priorities SUB. CM Lack of Credibility within the Subsidiary

Role as National Defender and Advocate Defends need for national responsiveness; advocate for role of subsidiary within the global operations Causes of Failure: 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 HQ F B G Functional Perspective Business Perspective Transnational decision process requires multi-dimensional perspectives; implies CM access and influence in process Geographic Perspective Subsidiary

Role as Frontline Implementer of Strategy Converts strategic plans into action for subsidiary 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

Pressures and Constraints on Country Manager MNC Internal Motivations Organization Structure & Systems Corporate Strategy Internal Norms & Values Host Governments Objectives, Policies Country Manager Personal Values National Competitor’s Actions National Constituent Interests (Employees, Consumers, Unions) Global Competitive Activity Host Country Interests Global Competitive Environment Local Market & Industry Structure Local Norms & Values

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 on competitors, technology, market trends Develop innovative ideas and capabilities as input to strategy Trader Role: Build profitable operations: base camp, trading post; control expenses, manage pricing Develop local resources: contribute to overall strategy Quarterback Role: Confer with HQ coaches to defend, and advocate the field view Motivate team to achieve results Maintain entrepreneurship, creativity, and drive

Skills & Qualifications of the Country Manager Entrepreneurial Skills Strategic Skills Innovator & Opportunist Country Manager Creative Analyst Administrative Skills Executive Skills Skills 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. Organizational Leader 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

SUMMARY Multidimensional roles of managers in TNO: Building managerial capabilities Tasks, success criteria and potential of failure in multiple roles of a manager in TNO Role of top corporate management