Case assignments must be completed with a written 2-page study on the assigned case questions in the textbook. The format requested for these assignments is based on elaborating and answering all the questions listed in each case in two or three sound paragraphs. Use the APA style for these assignments.

Case: The Multinational Enterprise Of The Future: Leading Scenarios

Evolving workflows, technology platforms, and market dynamics intensify globalization trends. MNEs respond in kind, rethinking visions, clarifying missions, adjusting strategies, and reconfiguring value chains to compete in the brave new world. Forecasts of accelerating change due to digitization, frugal innovations, robotic cells, and activist transnational institutions, among others, spur MNEs to assess the best path to bundling resources, capabilities, and competencies. Lets take a look at some high-concept visions of the MNE of the future.

The Globally Integrated Enterprise

The evolutionary perspective sees MNEs responding systematically to the steadily unfolding imperatives of globalization. As policies and practices progressively connect countries, MNEs similarly respond, progressively integrating their cross-national operations. Sam Palmisano, the past CEO of IBM, has a provocative take. Reflecting on IBMs evolution, he contends that it has passed through three strategic phases, each fitting the prevailing circumstances and collectively foreshadowing the MNE of the future. First, there was the nineteenth-century international model, whereby the company was headquartered both physically and mentally in its home country; it sold goods, when it was so inclined, through a scattering of overseas sales offices. Headquarters focused on business activities in its home country and configured international operations with little input from overseas units. As such, it used an international strategy to engage a world composed of unevenly connected countries. Phase two of the evolution ushered in the classic multinational firm of the late twentieth century. Echoing the localization strategy, this phase saw HQ build smaller versions of itself abroad. Steadily, the expanding connection among countries, by supporting concentrated value chains geared toward exploiting location economics and scale economies, highlighted the inefficient economics of the mini-me option. The cost of redundancyeach country essentially ran a stand-alone operationgrew unacceptable in the face of intensifying competition. The third phase, the globally integrated enterprise, speaks to the dawn of globality in which business flows in every direction. Companies have no centers. The idea of foreignness is foreign. Commerce swirls and market dominance shifts. Competing with everyone from everywhere for everything requires putting investments, people, and work anywhere in the world based on the right cost, the right skills, and the right business environment [with] work flow[ing] to the places where it will be done . . . most efficiently and to the highest quality.114 Earlier models saw configuration and coordination barriers constrain knowledge flows, production opportunities, and organizational options. Now, like the Internet, the globally integrated enterprise designs its strategy, configures its activities, and coordinates its processes to connect everything, everywhere, 24/7.

The Metanational

In the future, goes this scenario, world-class operational efficiency will no longer determine an MNEs competitive advantage. Nor will an MNE build superior competitiveness from unique features of its home country or, for that matter, from a set of national subsidiaries. Rather, victory will go to those who move from designing multinational operations to synthesizing metanational competencies. The metanational seeks unique ideas, activities, and insights that complement its existing operations as well as create new leverage points. It expands its mission from selling stuff worldwide to mining the treasure trove of ideas, resources, and capabilities that emerge anywhere and everywhere. Its managers scan the world, identifying and interpreting the untapped potential of the specialized knowledge that lays latent in unique market situations. Exploiting these opportunities positions managers to build a new kind of competitive advantage by discovering, accessing, mobilizing, and leveraging knowledge from many locations around the world. Metanationals, goes the theory, orient strategic planning to:

Prospect for and access untapped technologies and unidentified consumer trends.

Leverage globally the specialized knowledge scattered throughout local subsidiaries.

Mobilize fragmented knowledge to generate innovations that produce, market, and deliver value on a global scale.

Apply superior project management skills across teams to foster a strong collaborative culture and to engage a robust array of communications tools.

MNEs like Shiseido, ARM, McDonalds, STMicroelectronics, Acer, Procter & Gamble, SAP, Tata, and PolyGram are emergent metanationals, able to turn underused knowledge into global-dominant innovations. Consider the experiences of McDonalds in its fast-growing marketRussia. It has more than 500 outlets and plans to add hundreds more, given that Russia is one of its fastest-growing and most profitable markets. Successfully building its Russian operations required McDonalds to rethink its value chain. In the West, it buys ingredients from third parties, rather than producing its own. Upon entering Russia, the lack of local suppliers required opening the McComplex, a full-scale production system outside of Moscow. Making virtually every ingredient from scratch at the McComplex required rethinking how to reconfigure activities to tap Russias unique market. Besides building better burgers, McDonalds leveraged its Russian experiences worldwide to develop new competencies. In metanational style, McDonalds began its worldwide pushback against coffee chains by tapping knowledge it developed with test runs in Russia. It opened McCafs there in 2003, fine-tuned its espresso-style drinks, and then successfully moved the concept to the United States in 2009 and, from there, to the world. Which sorts of MNEs aspire to be a metanational? Generally, those facing pressures for global integration and local responsiveness yet seeing opportunities in prospecting, leveraging and mobilizing knowledge that is fragmented across countries. Until recently, the metanational option attracted few companies. Communication and collaboration barriers complicated sharing knowledge. Moreover, significant national differences, although shrinking, posed problems. Today, environmental conditions, institutional agendas, and technology trends, by easing sensing, mobilizing, and operationalizing knowledge, steadily support the metanationals emergence.

The Micro-Multinational

The future frontier for the MNE is set by a matter of size, say others. Historically, MNEs were colossi that straddled the globe. Today, the number of MNEs grows worldwide, but the average size is fallingmany of the 80,000 plus firms that operate internationally employ fewer than 250 people. This anomaly signals the era of so-called micro- multinationals: nimble, small firms that are born global, operating internationally from day one. Unlike their bigger counterparts that expanded internationally by gradually entering new markets, micro-multinationals go global immediately. They go where they wish, typically following the circuit paths of the Internet, but always targeting markets with plentiful customers and innovative environments. The born-global does not see international markets as a refuge when sales slow at home. Rather, it begins with the belief that the domestic market is just one of the many opportunities in the world. The micro-multinationals distinctive break from the past follows from its global focus at start-up. Folks who found born-global firms often have a strong international orientation gained from living or studying abroad. Logitech, the Swiss-based maker of computer devices like mice, keyboards, and speakers, was founded by a Swiss and an Italian who met while studying at Stanford University in the United States. Soon after start-up, Logitech was selling its products worldwide and now does business in more than 100 countries. Often, too, we see a seasoned executive, motivated by an entrepreneurial vision, leaving a large MNE and launching a firm that goes global from the get-go. The micro-multinational moves from theory to practice precisely because circumstances let it do so. The ongoing globalization of markets, marked by falling trade barriers, expanding demand for specialized products, and improving technologies, enables born-globals to implement their vision cheaply and quickly. Micro-multinationals exploit these circumstances, building powerful platforms to develop and deliver innovations in niche markets that span the world.

The Glorecalizized MNE

Advocates of regionalization endorse the awkward term Glorecalization as the next logical step of global strategy. Glorecalization, a portmanteau of Globalization- Regionalization-Localization, champions a global vision and customized local tactics through a value chain configured to exploit location economies within a regional market. The glorecalized MNE leverages its regional network to gain the necessary operational efficiencies without forsaking local flexibility. Various conditions support the glorecalized MNE. First and foremost, regional trade blocs (e.g., AU, ASEAN, CARICOM, EU, NAFTA, and TPP) create ample location effects in terms of institutional structure, regulatory framework, and market integration. The European Union, for example, unites 28 countries and creates a common home for more than 500 million who share similar outlooks, overlapping national interests, and convergent consumption preferences. Efficient flows of people, capital, information, products, and processes throughout the EU streamline how an MNE acquires resources, develops capabilities, and crafts competencies. Similarly, regionalizing production exploits location effects and scale economies, but without sacrificing the flexibility to adapt goods and services.

The Cybercorp

The cybercorp, a form unimaginable a generation ago, is increasingly a reality today. The cybercorp does not organize products, consumers, or markets to reflect or respect the physical geography of lines on a map. Instead, the connectivity network of the Internet, not national borders, defines its operational boundaries. Facebook, for instance, exists physically in its California headquarters, but its workforce of about 13,000 runs a company that serves more than 1.5 billion customers in more than 150 nations through a website interface translated into more than 100 languages. Cybercorps develop competencies that help them react in real-time to changes in customers, markets, and environments. They engage perspectives and strategies that bias value chains toward virtuality in order to link capabilities and competencies within dynamic networks. For instance, Reebok owns no plants, instead of relying on contract manufacturers to make and distribute its products. Similarly, Nike, Apple, Cisco, and Qualcomm outsource production to manufacturers in low-cost labor locations in order to do what each does best: maximizing value creation through R&D and marketing. Though nominally independent, communications and collaboration systems integrate agents into the network, thereby creating virtual capabilities. Nike, for example, focuses on increasing value creation by leveraging its competencies in design and marketing, confident in manufacturers expertise to adjust product mixes as consumer preferences evolve. The cybercorp builds on crowdsourcing, swarm intelligence, and artificial intelligence to tap the collective insight developed in self-organizing systems that are remotely executing, global, always-on, and endlessly configurable. It, in collaboration with partners, operates here, there, and everywhere. Many of these agents were, just a decade earlier, far off the global grid. Now, innovations enact a techno-utopia that connects everyone to the evolving nervous system of civilization.130 The cybercorp, built to engage strategies that learn, evolve, and transform, moves business toward the emerging standards of the Singularity Principle.

Make the Call

Yes, the ideal MNE of the future is more speculation than stipulation. No matter the standard that ultimately emerges, we expect it will showcase the historic markers of companies that are built to last: a down-to-earth, pragmatic, committed- to-excellence framework run by bright people who articulate an insightful vision, practical mission, and clever strategy that change the game. Still, we watch, tracking the emergence of the contenders, waiting to see which form sets the standard.

Questions

12-3. You have a choice to work for a globally integrated enterprise, a metanational, a glorecalized MNE, a micro- multinational, or a cybercorp. Which would you choose? Why?

12-4. Looking out over the next decade, estimate the likely standards of how an MNE will create value. In your opinion, which form of MNE is best designed for this scenario? Why?

12-5. The MNE of the future, in whatever form it takes, will face pressures for global integration along with those clamoring for local responsiveness. In your opinion, which form will best reconcile that challenge?