Managing Information Technology in the Global Business Environment:

Organizations have to face more serious issues while managing IT globally. Managing IT globally is entirely different from and more challenging than managing IT at the regional and national level. Nothing can be said about whether the solutions will be transported in the same way to the other countries as in the regional and the national markets or whether they will work out well at the global level. Companies that are making a global foray will therefore be facing a completely new experience and a new learning curve. Described here are some strategies and approaches for international IT management.

Strategies for Managing IT Globally

Christopher A. Bartlett and Sumantra Ghoshal in their book, "Managing Across Borders: The Transnational Solution," have proposed four basic global business strategy models that companies use to manage their businesses and compete in the global arena. These models are differentiated by the forces faced by an organization and can be used for managing their IT globally. These are:

• Multinational Strategy
• Global Strategy
• International Strategy
• Transnational Strategy

Multinational Strategy:

A multinational organization is one which has subsidiaries established in all the countries where it has a presence. These subsidiaries function like independent entities and have strong local autonomy. The strategic and organizational capability of the company enables it to respond immediately to the changes in the environment where it is operating.

Multinational organizations concentrate more on understanding national differences. They try to differentiate their products and/or services from those of local players by responding to the customer preferences and requirements, the characteristics of the industry, and the nature of the local government regulations. These companies make the utmost use of the available local resources to meet their requirements. However, they do not try to exploit the knowledge of existing local players. Examples of multinational companies are Unilever, ITT, Nestlé, and Philips.

Global strategy

In a global organization, the control at the center is very strong. This control in turn results in standardized procedures throughout the world that enables the company to reap the benefits of economies of scale. In these organizations, all the strategic and operational decisions are centralized.

Global companies enjoy cost advantages as they have centralized operations. However, their transportation costs are huge and they have to deal with the exchange rate risks. These companies are highly efficient but are not flexible. They usually take the overall global environment into consideration and carry out their operations. They consider the worldwide demand for products and/or services. The R&D facility is also centralized and due to this reason, learning is very limited. Japanese companies like Toyota, Canon, Komatsu, Matsushita, Kao, NEC, etc. are examples of global companies.

International strategy

International organizations develop innovations in the home country and deploy it in the other countries in order to strengthen their competitive positions in those countries. This process adds transferring the processes, knowledge, strategies, and expertise from the parent company to the subsidiaries. This knowledge is then adapted and diffused by the subsidiaries.

Subsidiaries of international companies are less flexible, less independent, less efficient, and have comparatively less autonomy than the subsidiaries of multinational companies. The parent company also retains its control and influence upon the subsidiaries, but comparatively less than that imposed by a global company. The US-based companies like Kraft, Pfizer, P&G, and GE are examples of global companies.

Transnational strategy

A transnational company is a mix of all these strategies of multinational, global, and international. It is an emerging concept in which organizations give importance to both efficiency and flexibility. A transnational organization tries to maintain flexibility in the local markets. On the other hand, it also tries to absorb and diffuse the innovations developed by the parent company. In simple words, these organizations try to spread their innovation across the organization. The costs and revenues are simultaneously managed while the resources and other capabilities are partly centralized and partly decentralized. These companies aspire for global integration of processes and operating efficiencies.

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