Modern Global Model

2007/// Filed in: MNEs

The modern global company follows the tradition of the old (pure) global form but it gives a more significant role to the country subsidiaries. The central authority is responsible for achieving high global integration by providing 1) low cost sourcing platforms, 2) efficient factor costs, 3) global scale, 4) product standardization, 5) quality assurance, 6) global technology sharing and IT, 7) brand name, and 8) global corporate strategy. Contrary to the traditional (pure) global model, the modern global MNE makes more effective use of the subsidiaries in order to become more locally responsive. As traditional global firms evolve into modern global enterprises they tend to focus more on strategic coordination and integration of core competencies worldwide, and protecting home country control becomes less important. Modern global corporations may disperse R&D, manufacture and production, and marketing around the globe. This helps ensure flexibility in the face of changing factor costs for labor, raw materials, exchange rates, as well as hiring talent worldwide (Segal-Horn.99, Yip.96,Yip.91,Yip.91a,Yip.89,Yip.00,Yip.97a,Yip.88,Yip.96a).

- Matrix Position: high global integration / medium localization.
- Stage: developed stage of internationalization.
- Subsidiary role: local responsiveness, country/region specific strategies.
- Center role: global integration, coordination, resource allocation, R\&D, knowledge transfer
- Management Decisions: bottom--down (differentiation) and top--down (integration)
- Technology \& Knowledge Transfer: knowledge transfer across borders.
- Percentage of Foreign Sales: high.
- Example: Gillette

Tags: multinationals, organizational structures