International Management - Rodchenko VV

Management of American multinationals

The effectiveness of production and business operations of US transnational companies (TNCs), occupying in the number of first place among the top ten international companies, based on the benefits of optimal location of their businesses on all continents of the world, the rich natural resources and international management experience.

The main features of American management is to provide greater autonomy to foreign affiliates of TNCs, increasing the role of international companies in marketing strategy, accelerating the adaptation to the conditions of the host country, an increased emphasis on international business ethics.

One of the main problems of the management of international companies - control over the activities of foreign affiliates, while providing managers with opportunities to make decisions related to the demand in foreign markets. This takes into account national peculiarities, build strong long-term business contacts with local authorities and the business community.

There are the following objectives of the organization of foreign branches of US multinationals.

1. Expanding markets. The parent company in the host country organizes the production of finished goods or the provision of various services. At the same time the American corporation transfers for production manufacturing technology, management experience and the right to use the trademark.

2. The increase in export volumes. The share of exports of American multinational corporations, attributable to foreign branches. For the development of foreign production corporations to invest in the host countries with cheap labor and abundant natural resources. A necessary condition for the effective functioning of the foreign branch - capacious local and regional markets.

3. Provision of raw materials. A large part of foreign affiliates of US corporations is intended to provide the natural resources of the enterprise system of TNCs, including the parent company.

4. Acquisition of unique technologies. American TNCs organize foreign enterprises in high scientific potential countries (Japan, EU), where there are research centers, universities, technology parks.

5. Improving the functioning efficiency. Foreign operations of American TNCs take advantage of "economies of scale" and the possibility of vertical and horizontal integration of international production.

Solving the problem of optimizing the relationship of the parent company with businesses abroad, American multinational corporations (each in its own way) will organize the management structure of foreign affiliates activities. Typical forms of such control Hodzhest American scientists R. and F. Lyutans include the following: commodity - for TNK to widely differentiated products; geographic - for corporations of similar goods (such as oil); global - for TNK, products or services that are common to the three most capacious markets of the world (North America, Europe and Asia).

The effectiveness of the foreign business organization depends largely on the industrial relations between the parent company and its subsidiaries. Each foreign branch is unique because of the specific conditions of the host country, the impact of factors that Professor E. rappels connects with the legal provisions of the national affiliation of the foreign branch of the corporation staff, local customs, relations of production, attractiveness for shareholders, especially competition, the specifics of consumer needs, technology and degree of development of the national economy.

Ultimately, the parent company is committed to ensuring that its foreign branch quickly took a firm place in the system of foreign enterprises Corporation, bringing its stake in the organization of production and distribution of goods and services on an international scale. At the same time an international manager must find ways to remove obstacles on the part of the host government.

In particular, to overcome trade barriers (high customs duties, import quotas, requirements, prescribing a certain portion of the national production of components in the production of a foreign enterprise, restrictions on foreign firms when placing state orders) American multinational corporations instead of exporting organize production previously exported goods in the territory of the host country . In the manufacture of products in its US technology firms attract subcontractors host and organize joint ventures. At the same time, the import quotas are forcing American exporters to move to more expensive supply of goods.

Obstacles to direct investment from the United States (eg, foreign ownership restrictions in the territory of the receiving State) foreign affiliates forced to expand cooperation with domestic enterprises in the form of exchange of technologies, entering into licensing and franchise agreements, cooperation in R & D.

Restrictions on the repatriation of foreign affiliates of US multinationals and the risks of nationalization of their assets income managers are forced to seek various forms of cooperation with local firms that can prevent the loss of investors.

To reduce the tax burden in the host country, US corporations are seeking legal ways of reinvesting the profits of foreign affiliates in other countries, often resorting to trade through the local agent of the company. At the same time the parent company strategy covers not only the activities of its overseas branch in production and sales, but widespread in recent years, the transfer of technology firms, international management experience and extensive know-how.

American managers classify the amount and quality of technologies transferred as follows:

1) a high level of transferred technology when the technology gap between the transmitting and receiving technology companies, it is more than 10 years. Dispatched already old and newly developed products; supplied equipment; submitted to the technical documentation for new production processes; communicates confidential commercial information; given the opportunity to use the sales network technology provider; passed international management experience;

2) the average level of the transferred technology as technological backwardness of firms of the host country of the transmission technology of the corporation does not exceed 10 years. The scope includes the development of the transferred technology to improve product quality, supply the most sophisticated and modern equipment, the introduction of international standards in enterprises; providing the opportunity to use the distribution channels of the transmitting technology corporation for the expansion of export programs, including produce products with new trade marks; transfer of experience with respect to raising the level of management, including the organization of courses for field managers;

3) the minimum amount of transferred technology, when firms of the host country are at approximately the same level of technology with a foreign affiliate of a US corporation. In this case, you have the following options for scientific and technological cooperation: the branch does not transmit to national firms of the host country its technology, and adopts their innovations on which they are located at a higher level; national companies are selling the host branch of the American company its most complex and unique equipment; Branch sells on the market of the host country only its products or services; local firms is transmitted only American management experience; Local specialists are trained in the American company specific technological processes.

International corporations have complete control over their foreign assets owned by them in the construction of new facilities in the host countries. This situation also arises at the confluence of a local firm with an American corporation. The negative side of building their businesses abroad, or join local firms to foreign affiliates associated with the need of large investment, and complications of relations with the host Government.

The expansion of markets, reduction of possible risks, the replacement of competition in cooperation entails the exchange of technologies, strategic alliances and joint ventures with local firms in host countries. At the same time these forms of foreign economic relations deprive American corporations efficiency in decision-making opportunities dictate, based on technological superiority and absolute control over the activities of foreign affiliates.

Joint ventures and other investment alliances provide American TNCs to expand markets, to minimize risks, reduce costs for the maintenance of foreign affiliates. However, similar forms of business pose for parent companies difficulties in the management and control [20].

Faster and less expensive foreign affiliates of US TNCs from developing their activities in the countries that seek to liberalize its law with respect to foreign investment in accordance with the international concept based on the following principles:

• Providing foreign companies the right to free legal investment in the economy of the host country;

• national treatment for foreign investors, providing equal legal conditions for the functioning of local and foreign firms in the territory of the receiving State;

• most favored nation treatment, meaning that the host Government does not provide any benefits to investors from other countries;

• agreed measures to protect foreign investment, and the rules for resolving disputes arising from forming the basis of the relationship between foreign investors and the host government.

. Among the factors that contribute to the effective functioning of foreign affiliates of US multinationals in host countries in the 90-ies of XX century, the World Bank, and Kwan W. X. Singh experts identify the three most important: sociopolitical stability, estimated in lost working hours; favorable investment climate; export-oriented industry of the host country. At the same time the possibility of expanding exports of manufactures are most attractive to the parent company.

Variety of operating conditions due to the different structure of the organization of management of parent companies with their foreign affiliates. Virtually no major international companies with the same management structure. Yet, analyzing the experience of the development of industrial relations parent companies with foreign subsidiaries, there are three typical stages on the way from the first steps of becoming a branch of TNCs in the host country to its deep integration into the activities of all international business company system.

The first stage - the organization of the parent company of the new branch in the host country. The parent company of wholly owned assets of the branch, it provides the technology, funding and dictating its management decisions on all matters related activities to the market of the host country. Private branch strategy has not yet been formed. The parent company is not confident in the future effective operation of the branch, as the country of the parent company with the Government of the receiving State are no bilateral agreements on trade and investment, in the way of exports from the country of the parent company retained the customs barriers, and transportation and communication has not been established and require significant costs.

The second stage (simple integration) occurs when a foreign branch expands business relationship with the firms of the host country. Some of them are subcontractors of the branch and the parent company as sellers of components and raw materials, service after-sales service centers, joint venture partners. At the same time he becomes a subsidiary of a manufacturer of products (or services) in the common system of vertical or horizontal integration or diversification of production by TNCs. Deepen and expand production affiliate links with the parent company. Uniformity standards, reduction of transport costs due to the regularity and the growth of cargo traffic empower geographical areas TNC strategies. Implemented by the combination of the advantages of "economies of scale" and the organization subcontracts with low production costs. In the trade and political relations are implemented free trade regimes and foreign direct investment, secured by bilateral and multilateral agreements. With the liberalization of foreign economic relations between the country of the parent company and the host State with the mediation of a foreign subsidiary are developing technology exchange and international production.

The third stage (complex integration at the regional or global level) is characterized by the integration of a foreign subsidiary in world economic activities of the parent company with a complex system of all kinds of foreign economic relations on the basis of specialization of production and of branch services. Communication with the parent company carried out with the use of information technology. Products are exported to the branch in various countries, including the country of the parent company. Strengthened external economic relations with the other branch of foreign enterprises TNK-based subcontracting, licensing agreements, consortia, alliances. With guidance from the TNC branch established partnerships, rather than hierarchy, and the more efficient and profitable operation of the foreign branch, the more autonomy it provides the parent company.

An example of a trend towards greater independence of foreign affiliates of TNCs from the parent company and to reduce their size and purpose of specialization and making them more flexible organizational structure can serve as a Corporation "IBM". Each of its foreign branches, with regional headquarters only the general principles of the policy and a number of check digit plan for the next year. Other issues of the branch - marketing, sales, range of services, pre-sales advice and after-sales service, hiring of personnel - are free to decide foreign branches. Management believes that "IBM", focus on the provision of foreign affiliates of maximum independence from the parent company provides them with flexible tactics in relation to the market of the host country while preserving the "IBM" strategy general principles.

The result of departure from rigid centralized management is the management in the form of business units, which themselves are responsible for their activities. Along this route went Corporation "American sianamid" and "Westinghouse". These companies are dispersed production and sales in its foreign enterprises, the total market for which is the entire world. To coordinate the activities of 18 business units, with the volume of trade turnover up to $ 4 billion. each corporation "Weight-tingauz electrician" organize the world's resources management and technology, which, through regional offices assists business units in matters of law, environmental protection, tax law, finance, information systems, transport, marketing, provision of raw materials, information about the results of research and development, quality control of products.

By common in the 90s of XX century. forms of control by the parent company for its foreign branches is the so-called matrix in three dimensions. The organizational structure in the form of a matrix provides an informal organization of management, in which every manager has an overseas branch in the parent company of the two leaders - on the production line of the corresponding type of product and by region of the control line, which includes the country of location of his enterprise. Anticipating the further development of American international companies management structure in the field of management, scientists from Harvard University have found that the complexity and diversification of international business at the end of the XX century. We reached a stage when the management of multinational companies should be extremely sensitive and flexible, not constrained by any limits.

Можно сделать вывод о том, что деловым кредо наиболее эффективно функционирующих американских ТНК становится концепция доверия партнеров из разных стран друг к другу, без которого немыслим международный бизнес. При всех превратностях судьбы менеджер, принимая решение, должен руководствоваться тремя основными принципами: соответствия бизнеса своим целям, подчинения здравому смыслу, элементарной порядочности.

В заключение можно выделить ряд особенностей менеджмента США:

• создание и развитие научных школ управления;

• менеджмент на основе четко разработанных систем и правил (широкое применение технологий управления, разработанных в университетах);

• индивидуальный подход и система индивидуального поощрения;

• принцип "передовой демократии";

• строгая система субординации;

• ориентация на долгосрочную перспективу;

• широкое использование информационных ресурсов (консалтинговые фирмы);

• глобальное мышление.

Test your knowledge

1. Сущность общей концепции менеджмента США.

2. Глобальное мышление.

3. Менеджмент американских транснациональных компаний.

4. Особенности менеджмента США.