The manufacturer doesn't have a choice. It's working in a global market. And it's going to have to come up with a global price. But management is fighting a losing battle because it is unwilling to make the hard strategic and organisational changes necessary to adapt to global market conditions.
European and Japanese corporations also face these kinds of organisational roadblocks. Large European firms, for example, historically have been more multinational than US companies. Their international success is due, in part, to decentralised management. The companies simply reproduced their philosophy and culture everywhere, from India to Australia to Canada. They set up mini-headquarters operations in each country and became truly multinational with executives of different nationalities running them.
Now they are having problem running operations on a worldwide basis because these multinational executives are fighting the global imperative. In one European company, for example, the manager running a Latin American division has built an impenetrable wall around himself and his empire. He's done very well, and everyone has allowed him to do as he pleases. But the company's global strategy requires a new way of looking at Latin America. The organisation needs to break down his walls of independence. So far, that's proved next to impossible.
Japanese companies face a different set of problems. On the whole, they have followed a basic, undifferentiated marketing strategy: make small Hondas, and sell them throughout the world. Then make better Hondas, ending up with the $30,000 Honda Acura. It's incremental, and it has worked.
Now, however, the Japanese must create various manufacturing centres around the globe and they're facing many difficulties. They have a coordinated marketing strategy and have built up infrastructures to coordinate marketing, which requires one particular set of skills. But now they've begun to establish three View More »