Producción de Concentrados de Cobre y Molibdeno

The control process of MNEs consists of 6 component steps. These are:

i. Strategic Planning; integrate a company’s objectives and capabilities with its internal and external environments. This is a dynamic world, where settings change, positions change, roles change, opportunities change, challenges change and so on. This is so more in a global context. So an MNE must do a continuing reassessment of its objectives and

capabilities. The first step of planning process is to develop a long-range strategic intent, an objective that keeps together and organization and also builds its global competitive viability.

Gary Hamel and C.K. Prahalad in their book, ‘Competing for the future’ define ‘strategic intent’ as ‘an ambitious and compelling dream that energizes and provides the emotional and intellectual energy for the journey of the company to the future’. If strategic architecture that is a high-level blueprint for the deployment of new functionalities, the acquisition of new competencies or the migration of existing competencies, and the reconfiguring of the interface with customers, is the brain, strategic intent is the heart. It should convey a sense of stretch for which current resources and capabilities are not sufficient for the task.

Hamel and Prahalad provided the following three attributes of strategic intent: Sense of direction, Sense of discovery, and Sense of destiny. Strategic intent implies a particular point of view about the long-term market or competitive position that a firm hopes to build over the coming decade or so. That unifying and personalizing view point is sense of direction.A strategic intent is differentiated; it implies a competitively unique point of view about the future. It holds out to employees the promise of exploring new competitive territory which is what the Sense of discovery is about. Strategic intent has an emotional edge to it; it is a goal that employees perceive as inherently worthwhile. This is Sense of destiny.

A typical Strategic Intent Process consists of three important steps:

i. Set the Strategic Intent in terms of Sense of direction, Sense of discovery, and Sense of destiny. Set the Challenges-find appropriate challenges and communicate them to the entire workforce. These challenges are the means to get into the Strategic Intent. (For example: Suppose the Strategic Intent of Tata Motors is: “Maruti”. A strategic challenge could be: Come up with small cars at a target price of Rs 1,00,000. Empower the Strategic Intent: The task of Top Management here is to ‘capture the wisdom of the anthill’ to challenge the traditional downward communication style to an upward communication stream of new ideas coming from all the organization. The strategic intent may encompass whether and where a company wants to be a leader, such as dominating its domestic market, dominating a regional or global market, or attaining profit results without being the market leader.

ii. Analysis of internal resources is the second step in planning. The most successful companies globally are those that find the right fit between what they need and what they are good at. A small company with unique product capabilities may have to collaborate with another company, by licensing foreign production rather than owning facilities abroad. It must control its foreign operations through a contract with the licensee that stipulates sales targets, product characteristics, and so on.

iii. Overall rationale for global activities is the third step. Managers must examine these activities in conjunction with the means of competing, low prices or product differentiation or so.

iv. Local analysis of each country is the 4th step. Changes in local stability and market growth influenced most MNEs to place more emphasis on emerging economies, especially the BRIC (Brazil, Russia, India and china) group countries.

v. Selection of alternatives is step 5 which determines the extent to which a company follows a global, transnational, or multi-domestic strategy. These alternatives, according to John D Daniels and Lee H Radebaugh, include:

• Location of value-added functions: The choice of where to locate each of the functions that comprises the entire value-added chain, from research to production to after-sales servicing.

• Location of sales targets: The allocation of sales among countries and the level of activity in each, particularly in terms of market share.

• Level of involvement: The choice of operating through wholly owned facilities, partially owned facilities, or contract arrangements and whether the choice

varies among countries.

• Product/services strategy: The extent to which a worldwide business offers the same or different products in different countries.

• Marketing: The extent to which a company uses the same brand names, advertising, and other marketing elements in different countries.

• Competitive moves: The extent to which a company makes competitive moves in individual countries as part of a global competitive strategy.

• Factor movement and start-up strategy: The choice as to whether production factors are acquired locally or brought in by the company and whether the operation begins through an acquisition or start-up.

• Rank alternatives, the 6th step is. Managers must rank alternatives so they can easily add or delete strategies as resource availability changes. When remitting dividends from one of its foreign subsidiaries back to itself is thwarted by a foreign government parent’s management must decide among alternatives for financing itself and for investment for the subsidiary.

• The last step is ‘set specific objectives for each subsidiary’. These provide ways to measure both deviations from the plan and conditions that may cause such deviations. Through timely evaluation, the company can take corrective actions. There must be a constant loop from step 6 to step 2 to ensure the company is making timely decisions.

We must make a distinction between operating plans and strategic plans. Strategic plans are longer term and similar to step A. They outline major commitments, such as what businesses the company will be in and where, and are less subject to reevaluation. Operating plans formulate short-term objectives and the means to carry them out. Although input for a strategic plan may come from all parts of the organization, only upper-level management can plan changes in global policies because they can see all the company’s worldwide activities.

Uncertainty and Planning: The more uncertainty there is, the harder it is to plan, but even more is the need for planning. Conditions in the global sphere are more uncertain than those in the domestic sphere and this needs more planning thrust.

4.1.6.2 Organizational structure

From among different structural patterns, company has to choose one. Between centralization and decentralization, between differentiation and unification and between formalization and in-formalization, there are certain broad choices. At one end of the continuum you have centralization, unification and formalization (total structured form) and the on the other you have decentralization, differentiation and in-formalization (total de-structured form). In between these polar alternatives, we have more structured forms, moderately structured forms and less structured forms. Refer Table 1 for details.

Because of growth dynamics, companies change their organizational structures. Simplified organizational structures get replaced by complex or mixed structures. Until organizational re-structuring is made, new acquisitions might report to headquarters. Circumstances prevailing in a particular country, product, or function might necessitate separate handling until a re-structuring is effected, apart from the overall structure. The structure of 100% subsidiaries is different from that of JVs. 100% subsidiaries enable a deeper network of communications. Overall structure may be incomplete and less revealing.

PepsiCo is organized by product lines, namely soft drinks and snacks. This would seem to imply that each product line is integrated globally. However, each line has its own global division, which separates it from domestic operations. Refer Figures 3.1 to 3.7 for details.

4.1.6.3 Location of decision making

Where does the decision making power rests? Is the decision power vested with the parent’s headquarters or with the subsidiary? Decisions made at the foreign-subsidiary level may be considered decentralized, while those made above the foreign-subsidiary level that is the parent level, are considered centralized. The location of decision making power may vary within the same company over time as well as by product, function, and country. In addition, actual decision making is seldom as one-sided as it may appear. A manager who has decision-making authority may consult other managers before exercising that authority.

Centralized decision making is a global strategy while decentralized decision making is a multi-domestic strategy. A combination of the two is called a transnational strategy.

The reason for choosing one over the other is partly a function of companies’ attitudes. For example, an ethnocentric attitude would influence a company to develop competencies, such as knowledge and technology, in its home country and control how they are transferred aboard. A polycentric attitude would cause the company to delegate decisions to foreign subsidiaries because headquarters personnel believe only people on the spot know best what to do. Multi-domestic attitude encourages this. A region-centric attitude would permit more openness to capabilities either at home or abroad and be conducive to a transnational strategy. A geocentric attitude would be conducive to a global strategy where core decisions lie with the headquarters.

According to John D Daniels and Lee H Radebaugh, companies choose the locus of decision power based on a combination of three trade-off’s:

i. Balancing pressures for global integration versus pressures for local responsiveness ii. Balancing the capabilities of headquarters versus subsidiary personnel

iii. Balancing the expediency versus the quality of decisions

4.1.6.4. Control Mechanisms

There are special and general control mechanisms. Corporate culture, Coordinating methods, Reporting and Visits are certain general mechanisms of control in the context of MNEs. Corporate culture is a form of implicit control mechanism that helps enforce the company’s explicit control mechanisms. Employees conform to company traditions of work commitment, interactions with customers and so on. These are unwritten, informal, but more effective. The purpose of controls lies in ensuring that goals are optimally achieved.

Coordination ensures goal achievement. The basis of control is information. The source of information is reporting systems. Control needs timely, up-to-date and accurate reports.

Reports must be frequent and purposeful to assure meeting the MNE’s objectives. Parent concern uses reports to evaluate the performance of subsidiary to reward and rectify, if need be. Visits to subsidiaries by headquarters people make wonders for their motivational, directive, strategic and signaling effects. Special control situations refer to ‘Mergers & Acquisitions, Shared ownership & JVs, and Changes in strategies’.

Special situation warrants special controls. Let us now discuss each of these. (All these are already dealt) 4.1.6.5 Structure and Control Interface

The form of foreign operations and importance of foreign operations influence controls.

a. Form of foreign operation and control:

Branch, JV, 100% subsidiary, etc are alternative forms. Each form involves varying degree of controls by the parent. A foreign branch is a foreign operation not legally separate from the parent company and the parent is 100% responsible for the branch’s actions. Branches are usually subject to less public disclosure because they are covered by tight corporate restrictions. A subsidiary is legally

a separate company, whether the parent shareholding is 100% or otherwise. Foreign subsidiaries are put to lot more screening because the parent’s controls are too subtle to see ordinarily. JVs are a form requiring shared controls among the stakeholders.

b. Extent of importance of global operation:

The more important the foreign operations are to total corporate performance, the higher the corporate level to which those units should report. The organizational structure or reporting system therefore should change over time to parallel the company’s increased involvement in foreign activities.

4.1.6.6 Control in various stages of Globalization Process

There are various factors that influence how much control a company needs at different stages of globalization.

In the initial stages foreign operations, the size and complexity of operations are small and the parent management takes care. When CISCO was a small U.S. manufacturer of networking gear parent management

helped it to gain contracts with Japan’s Nippon Telegraph & Telephone. However, as a company’s operations grow abroad, at later stages of global operation more decentralized structure could emerge.

The parent management develops a foreign management group that is capable of operating more independently of headquarters in the overseas markets.

In due course, parent managers may no longer be able to deal effectively with global business operations because the subsidiaries have entered so many different foreign markets; thus foreign operations tend to become more decentralized. This creates a dilemma to allow decentralization to remain or recentralize. But as foreign operations continue to grow, people with foreign experience move into headquarters positions, and headquarters can afford staff specialists to deal with the company’s multiple global operations. At that point, recentralization becomes feasible. Organizational mechanisms, such as joint committees and the planned sharing of information are useful to ensure activities of subsidiaries and parent complement each other. Structure and Control Interface 4.2 ROLE OF INFORMATION SYSTEMS

In this knowledge led world, information is the great input into decision process of managers. Information = Data + Relevance. Adding relevance to data is what is called

as data processing. To have this information you need a system and that is information system. A system is a group of interdependent items that interact regularly to perform a task. System is a set of interacting or interdependent entities forming an integrated whole. A system is designed to work as a coherent entity. A system has boundary and environment. An open system usually interacts with some entities in their environment. A closed system is isolated from its environment. Information system has input, process and output elements. Open system draws data from the environment, processes the same into useful information to management. Closed information system restricts itself to predetermined data only as input, process the same as set to process and gives output in standard format reports. The essence of system is synergy, that combined output is more valued than the sum of values of outputs of individual interacting elements or sub-systems of the system.

Information - the most valuable asset: The most valuable of all assets of companies today, information ranks first. Information is invisible and is represented in people, experience, know-how, innovations (patents, copyrights, trade secrets), and for a market operator to be able to compete, the firm must have a strong information infrastructure, at the heart of which, lies the information technology infrastructure. Thus, the study of information systems focuses on why and how technology can be put into best use to serve the information flow within an organization.

Information System: An Information System (IS) is the ‘system of persons, data records and activities that process the data into information in a given organization, including manual processes or automated or computerized processes’. The term information system includes, and not equal to computer-based information systems. Computers are the Information technologies component of an Information System. A computer based information system is a technologically implemented medium for recording, storing, and disseminating linguistic expressions as well as for drawing conclusions from such expressions. There are alternative technologies of processing data, including manual processing of data.

Information processing system: An information processor or information processing system, as its name suggests, is a system which takes information in one form and processes (transforms) it into another form, e.g.

to statistics, by an algorithmic process. An information processing system is made up of four basic parts, or sub-systems as given if figure 4.2.

Universality of information system:

The world of humans/animals/plants/planets/inanimate things is full of instances which are in fact examples of information systems. Any object may be considered an information processor if it receives information from another object and in some manner changes the information before transmitting it. This broadly defined term can be used to describe every change which occurs in the universe. Even a falling rock could be considered an information processor due to the following observable facts:

Figure 4.2 Information Processing System with sub-systems

First, information in the form of gravitational force from the earth serves as input to the system which is the rock. At a particular instant the rock is at a specific distance from the surface of the earth traveling at a specific speed. Both the current distance and speed properties are also forms of information which for that instant only may be considered “stored” in the rock.

In the next instant, the distance of the rock from the earth has changed due to its motion under the influence of the earth’s gravity. Any time the properties of an object change a process has occurred meaning that a processor of some kind is at work. In addition, the rock’s new position and increased speed is observed by us as it falls.

These changing properties of the rock are its ‘output’. It could be argued that in this example both the rock and the earth are the information processing system being observed since both objects are changing the properties of each other over time. If information is not being processed no change would occur at all.

In information processing, a Data Processor or Data Processing Unit or Data

Processing System is a system which processes data which has been captured and encoded in a format recognizable by the data processing system or has been created and stored by another unit of an information processing system.