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1.3.6 Management Strategies Integrated at the Global Level

Finally, the issue relating to the integration of strategies created for individual countries into a corporation as a whole must be solved. It is important that strategies for developing countries such as China and India, which have significantly different economic environments than developing countries, be specific to the circumstances prevalent in those countries. However, the final objective of management strategies in global businesses should be the optimal use of management resources distributed throughout the world and its integration for the benefit of the company's overall performance. The level of control exerted by headquarters on local entities, or alternatively, the level of delegation to local entities for management decisions, is an issue of concern. Japanese multinational corporations, as compared with those in Europe or the US, are said to be headquarter oriented, with strong management systems exerting stringent controls over local entities (Bartlett and Ghoshal 1989). Until now, Japanese multinationals had focused on expanding production centers overseas. These production centers were managed by transferring production technology from the headquarters to the subsidiaries, resulting in the production of goods that mimicked the parent factory. Therefore, in many instances, the facilities were operated under the tight control of the headquarters. In addition, the productfocused model of “make good products and they will sell” deprioritizes the research of local consumer needs. Accordingly, sales offices were focused on selling existing products rather than gathering information on local consumer needs.

However, capturing the growing “good-enough” product markets in developing countries requires more local R&D. Using ideas unique to the region to target customers and moving forward with local R&D that is reflective of local needs cannot be accomplished by way of traditional, one-way decision making, in which decisions flow from the headquarters to local entities. Many large manufacturing companies in Japan generate higher revenues overseas. Moreover, an increasingly high percentage of their revenues come from developing countries. However, in such an environment, companies must not treat headquarters and local entities as separate entities, but rather consider corporate-wide strategies on a global basis. Doing so will enable companies to select countries and regions of future expansion and start the process of company-wide integration of strategies based on local area conditions.

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