Managers of the various subunits have different orientations, partly because they have different tasks.For example, production managers are typically concerned with production issues such as capacity utilization, cost control, and quality control, whereas marketing managers are concerned with marketing issues such as pricing, promotions, distribution, and market share. These differences can inhibit communication between the managers. Quite simply, these managers often do not even “speak the same language.” There may also be a lack of respect between subunits (e.g., marketing managers “looking down on” production managers, and vice versa), which further inhibits the communication required to achieve cooperation and coordination.Differences in subunits’ orientations also arise from their differing goals. For example, worldwide product divisions of a multinational firm may be committed to cost goals that require global production of a standardized product, whereas a foreign subsidiary may be committed to increasing its market share in its country, which will require a nonstandard product. These different goals can lead to conflict.Such impediments to coordination are not unusual in any firm, but they can be particularly problematic in the multinational enterprise with its profusion of subunits at home and abroad. Differences in subunit orientation are often reinforced in multinationals by the separations of time zone, distance, and nationality between managers of the subunits.For example, until recently the Dutch company Philips had an organization comprising worldwideproduct divisions and largely autonomous national organizations. The company has long had problems getting its product divisions and national organizations to cooperate on such things as new-product introductions. When Philips developed a VCR format, the V2000 system, it could not get its North American subsidiary to introduce the product. Rather, the North American unit adopted the rival VHS format produced by Philip’s global competitor, Matsushita. Unilever experienced a similar problem in its detergents business. The need to resolve disputes between Unilever’s many national organizations and its product divisions extended the time necessary for introducing a new product across Europe to several years. This denied Unilever the first-mover advantage crucial to building a strong market position.
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