Academic Discussion

This chapter examines the dynamics involved in the formulation and implementation of strategy by global companies. As already mentioned in the case study presented above, the challenge of corporate strategy in an intercultural management context is finding a balance between global policy and local approach. The balance in reality is in a state of flux.

Transnational aspects of corporate strategy

Certain tools and techniques of corporate strategy contribute to the effectiveness of organizational functioning, irrespective of culture. Practically all the global managers interviewed for this book concur that the following techniques of corporate strategy can be adopted in any culture.

Action planning

This ensures that the various strategies formulated by a transnational corporation are implemented in every culture, and the appropriate managers are held accountable for their responsibilities.

Action planning is particularly efficacious if it is formulated in a clear fashion. This reduces misinterpretations arising out of cultural differences. Generally, the first step in action planning is conceptualizing how the project should be executed from beginning to end. This is followed by a description of how each project task is to be performed. The description contains the names of managers who will perform the tasks, as well as those who will provide support functions. Care should be taken to ensure that all the necessary tasks have been included.

At this stage, the MASTERS criteria referred to by Cushway and Lodge (1999) can be used. The acronym MASTERS stands for measurable, achievable, specific, time related , encompassing, realistic, and stretching. These criteria are used to assess whether the task descriptions have been formulated properly.

The next step is to ensure that everybody's assumptions about the business programme being operationalized are congruent. The tasks then have to be arranged in a proper sequence, with the tasks that have to be completed before subsequent tasks can be started being performed first. Tasks that can be performed parallel to other tasks should be identified as well. The time required for the execution of each task also has to be gauged and recorded. The date on which each task has to be initiated and completed has to be noted. The managers and other resources required for task completion have then to be deployed. Finally, the managers have to decide on a reasonable time frame for reviewing the action steps.

The balanced scorecard

This is a corporate strategy tool that has been developed by Kaplan and Norton (1996) so that global companies can be more competitive in modern times. This tool enables global companies to optimize the use of their intangible assets. The balanced scorecard also places a lot of emphasis on the key drivers of a company's performance. This enables planners to focus their efforts instead of spreading themselves thin by trying to fulfil too many objectives.

Kaplan and Norton recommend four key measures. These are the customer perspective, the internal perspective, the innovation and learning perspective, and the financial perspective. The customer perspective is concerned with how the global company is perceived by its customers in all the cultures in which it has operations. The internal perspective examines the extent to which the global company is leveraging its core competencies. The innovation and learning perspective is concerned with continuous improvement. The financial perspective investigates whether the financial performance of the company is aligned to shareholder expectations.

Kaplan and Norton assert that the balanced scorecard is being used with telling effect. It enables global corporations to update strategies, communicate strategies effectively to all their branches in different cultures, align the goals of branches in different cultures to the corporate strategy, align strategies with long- term goals, conduct periodic reviews and take remedial action if necessary.

Kaplan and Norton have also argued that the balanced scorecard can be used for developing a global corporation's long-term strategy. Usually, there are four stages involved: one, translating the vision; two, communicating and linking; three, business planning; and four, feedback and learning. Translating the vision involves obtaining the necessary commitment to accomplish the strategy from branches in all cultures. It also entails getting managers from various branches to agree what the corporate strategy should be. Communicating and linking refers to communicating the strategy to all employees worldwide, and tying up rewards with performance measures. Business planning entails the establishment of appropriate milestones to gauge progress, as well as the setting of achievable targets. Feedback and learning is achieved through strategic feedback and strategic learning.