Management of Multinational Corporations

The important characteristics of a transnational organization are integrated network of assets and capabilities, differentiation of roles and responsibilities of subsidiaries and simultaneous management of multiple organizational processes. The vast differentiation of roles and responsibilities and management processes within the organization and efforts to coordinate them leads to complexity in transnational organizations. Traditional companies attempted to manage the coordination task using the one particular process or the limited processes which they were familiar with. This approach is simple to follow but often leads to inefficiencies. If an organization is centralized, decisions are taken by the management at headquarters, who are unaware of local markets. Decentralization affects an organization's global competence. A transnational therefore emphasizes flexibility in using different tools and mechanisms, depending on the type of problem and the situation. The top management has to vary the mix of centralization of authority, formalization of systems and socialization of managers according to the nature of the task and the strategic role of the units being considered.