International Business II #4
Multinational enterprises or corporations are business entity whose economic cycles and processes extend to the ranges of different nations and have their target market in global perspective. These types of company are set and marked up on the global standards of production thus, their processes are generally classified to be in massive range in both its quantitative and qualitative aspect. Due to which, the structure of their organizational process whether centralized or decentralized is indeed important for their own qualitative management.
The concept of centralization is mainly focused on localizing the source of management power and decision-making hierarchy into a single source mainly the main executives or committee of the multinational firm. This approach is known well in its advantage in standardizing the company’s production however, small regional matters tend to be overlooked in this approach. On the other hand, decentralizing the management process tend to increase the quality of the product since regional management sectors do address local diversities thus able to incorporate in them innovations and improvements.
However, on its negative aspect, this approach posts certain inefficiencies in the management and production process such as duplication of functions and the disintegration of the decision power. Each of the said management concepts for multinational corporations does posts their own advantages and disadvantages however, it is generally perceived in the present society that centralizing the management process is better than the other. This approach is indeed more efficient since it will speed up production and development by eliminating the hassles of production diversity by standardizing a single process.
In addition, this approach organizes and maximizes the management aspect by centralizing its system on a single authority and its hierarchy of command.
Bibliography Pheng-Lui Chng, Nitin Pangarkar (2000). Research on Global Strategy. International Journal of Management Reviews 2 (1), 91–110. Sanches-Runde, Carlos (1998). Designing Human Resource Practices in Multinational Firms. IESE. http://www. ee-iese. com/70/afondoart2. html. January 16, 2007.