MIT Sloan Management Review

Corporate Strategy, International Business

 

Making Global Strategies Work

By W. Chan Kim and Renee A. Mauborgne

April 15, 1993

WHAT MOST MOTIVATES THE TOP MANAGERS OF MULTINATIONAL SUBSIDIARIES TO EXECUTE THE GLOBAL STRATEGIES FORMULATED AT HEADQUARTERS? IS IT compensation, monitoring systems, or the magnitude and precision of rewards and punishment? It’s none of these, argue the authors. Subsidiary top managers are most concerned that the global strategic decision-making process employs due process. That is, they want an open process that is consistent and fair and that allows for their input. The authors describe their research on this subject and urge companies to pay more attention to how they make strategic decisions.

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It is hardly a novel insight that global competitive forces compel multinationals to fully leverage the distinctive resources, knowledge, and expertise residing in their subsidiary operations. Questions of what are “winning” global strategic moves for the modern multinational have increasingly intoxicated international executives.1 Yet for all the fanfare about global strategies and their increasingly undeniable link to multinational success, little has been said or written about how to make global strategies work. The key question we address here is just that: What does it take for multinationals to successfully execute global strategies?

Our research results paint a striking picture of the importance of the strategy-making process itself for effective global strategy execution. Over the last four years, we have done extensive research to understand how multinationals can successfully implement global strategies. Because subsidiary top managers are the key catalysts for, or obstacles preventing, global strategy execution, we asked them directly just what it was that motivated them to execute or to defy their companies’ global strategic decisions.

Subsidiary top managers were quick to rattle off a series of well-established implementation mechanisms: incentive compensation, monitoring systems, and rewards and punishments. They were equally quick to add that they did not believe these control mechanisms alone to be either sufficient or that effective. The general consensus was that these mechanisms were not particularly motivating and... To read the complete article, login or sign-up using the form below.

 
 

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