Managers of the MNC can be classified in three ways. First, managers may be nationals selected from the country in which the headquarters is located. These expatriates (with home country nationality) are chosen to represent and manage the enterprise abroad. These managers because of their experience are usually familiar with the parent companyâ€™s policies and operations.
Second, a firm may select managers who are nationals of the host country. These managers are familiar with the countryâ€™s environment, its education system, its culture, its legal and political processes and its economic environment. They usually also know local customers, suppliers, government officials, behavioral characteristics of employees, and the public in general.
The third source for managerial personnel consists of third country nationals. These are managers who have a nationality that is different from the parent company or the host country. Such managers may have gained experience by working at the company headquarters as well as in different countries. Thus, they would have developed behavioral flexibility that eases their adaptation to different cultures. These may be truly trans-cultural.
Each of the three sources for managers has advantages and disadvantages, and a firm may use a variety of combinations. A few factors that influence the trend in staffing MNCs are worth noting. First, the cost of sending US managers abroad has increased, partly due to the declining value of the US dollar in the 1980s. Second, people in the host countries are now better prepared to assume responsible managerial positions. While conducting management programs in India, Singapore, Hong Kong, and Taipei, one of the authors found that the quality of middle managers measured up to that of their counterparts in the United States. Finally, employing nationals of the host country can improve relations with that country. Therefore, as far as American firms are concerned the trend is toward employing more host country nationals than managers from the parent company.
Leading involves motivating and communicating. It requires exerting leadership inducing employees to contribute to enterprise objectives.
Motivation and leading demand an understanding of employees and their cultural environment. For instance participative management may work well in one country but may cause confusion among employees in another country with a tradition of autocratic rule.
Communication is often a problem in multinational firms with subsidiaries and affiliates in countries where different languages are spoken. Even, a firm with operations in a country where English is the primary language, may encounter communication problems because of the distance of the distance between head quarters and the subsidiary. But new communications technology has greatly improved the transmission of information. Still a telephone call is not quite the same as a visit and a person-to-person discussion. ..
Even large multinational companies may find it difficult to compete in the world market. Therefore, they form global strategic partnership (GSPs). General Motors formed a joint venture with Toyota to produce cars as the Freont plant in California. American Telephone and Telegraph Company share technology with Olivetti and Philips, both large multinational corporations in Europe. Kodak works with a Japanese company to produce some of its cameras. Clearly success of the GSPs will depend on balancing cooperation with competitiveness among the firms.
Organization structures are established to achieve corporate objectives. The company can select from variety of structures. An enterprise may establish a vice presidential position at corporate headquarters with responsibility for the international division. An alternative is organization according to geographic areas. For example, managers may be put in charge of regions such as North America, Latin America, Europe, Africa, and the Far East. Still another way of grouping organizational activities is according to product lines. For instance, at corporate headquarters, managers may be put in charge of a product line which is marketed. The truly multinational firm may integrate domestic and international business into a global structure which gives similar importance to domestic and foreign business activities. It is important to realize that for the large multinational corporation any one structure may be insufficient. Consequently, different organizational designs may to be mixed, depending on the environmental and task demands.