Middle Managers Contribution to the Growth of the Multinational Organization in the Global Market Place - Term Paper Example

?Running head: MIDDLE MANAGER’S IN MULTINATIONAL ORGANIZATIONS Middle Manager’s Contribution to the Growth of the Multinational Organization in the Global Market Place Student Name: Professor: Abstract Globalization has come to change how organizations operate internally. Multinational organizations are the ones that have been heavily affected by globalization trends. Multinationals operate in an intensely competitive business environment. Their nature of business demands that they become local, global and learn from global experiences. For these organizations to respond effectively to the global market environment they have been forced to embrace new strategies as both domestic and global organizations. Transnational strategies seem to be more popular with multinationals where they endeavor to meet local market needs by adapting to them while meeting global demands. At this level the organization is supposed to have efficient coordination mechanisms for all the subsidiaries that facilitate integration and specialization. It is at this level that the roles of a middle manager are concentrated making them quite important in ensuring that the multinational operates within strategies laid down by the senior management. Middle Manager’s Contribution to the Growth of the Multinational Organization in the Global Market Place Multinational companies are mostly driven by quality production which is a fundamental reason behind their current position as global leaders. Managing of quality has a direct impact on customers’ perceptions and reactions towards the product. The responsibility of the top or executive management is to formulate policies and to draw strategies which they later leave to middle managers to implement. Middle managers act as interpreters of management policy and try to make it alive in the eyes of junior employees and junior managers. Implementation process involves tracking performance to ensure compliance and to develop solutions in case of hitches after the evaluation process. The success factor in relation to quality therefore rests squarely on the middle manager’s shoulders (Rudd, Greenley, Beatson, and Lings, 2008). Considering that multinational organizations are competing right, left and centre on the quality of goods, the role of a middle manager becomes increasingly important. The global market place is wide with a huge customer base. However, few organizations have managed to tap the huge potential even after establishing themselves globally basically because of producing poor quality products or products that are not matching with customer tastes. Strategy formulation and strategies themselves can be superb and capable of steering a multinational organization to more markets abroad but if they are poorly implemented, the results can be disastrous. Middle managers ensure that strategies are effectively implemented by ensuring and maintaining competence within teams and in individuals. This paper will look into the Middle Manager’s contribution towards the growth of a multinational organization in the global market place. For a multinational to be fully global it is required to expand its wings either through acquisitions or by replicating its business operations. The best businesses to acquire are those that are already heavily involved in the value chain in countries or regions the multinational intends to venture into. As such it will be relatively easy to take up the pace in developing brands in foreign markets. The top management of a multinational organization considers two variables in constructing the organizational framework. These are the company’s strategic positioning in all regions of operations and company history coupled with its administrative heritage (Delany, 2000). All the subsidiaries’ operations need to be harnessed to match those of the major organization. As a result, globalization has made multinational organizations to reduce variability in operations of their subsidiaries by rationalizing their activities especially the duplicated ones. This popular model develops into a geographically stratified value chain design. This is a model that is quite delicate considering the distribution of the value chain and its inherent problems of wide geographical distribution. Coordinating and controlling such a distributed value chain proves to be a challenge for many multinational organizations. Central coordination is however important in such a case where the management centralizes a number of services e.g. information management systems and HR functions (Chung, Gibbons and Schoch, 2006). Coordination of the production strategies is then done either at regional or global levels for example procurement and purchasing. This model results in gradual organization of all subsidiary operations which are centrally coordinated. Subsidiaries at this point become engulfed in a myriad of activities that are part of the bigger value chain. As such they lose their independence more so their managers who are essentially middle managers. These managers’ power in decision making is curtailed to the extent of the decisions made by the top management regarding the flow in the value chain. As such they compensate this diminished power to decision making by forwarding the decisions made to junior managers and other staff. This is essentially being implementers of top management’s decisions. However, if this process is not well managed the loss of power to make decisions upstream usually triggers pessimistic attitudes from middle managers (Bouquet and Birkinshaw, 2008). Although the aim of central decision making especially at the headquarters of the multinational is to ensure uniformity in strategy formulation, the message sent to middle managers is that they are mere executives in their respective subsidiaries. Middle managers in subsidiaries stand the best chance of knowing their local market and when blanket-like strategies are formulated, it becomes hard for them to implement. In order to foster business in all regions of operations the top management at the headquarters is forced to seek audience with the middle managers in strategy and policy formulation. They are key stakeholders in such meetings as their input reflects the reality on the ground within which all decisions should be made. Involving middle managers in decision making rather than taking them as just implementers focuses their attitudes towards optimum implementation as their core duty rather than as an executive order from above (Hornsby, Kuratko and Shaker, 2002). Since subsidiaries’ businesses are operational centered their management enhances coordination which is crucial for operational activities of any business. Nowadays multinationals are faced with challenges of developing acquired knowledge from individual markets and coordination of operations in all subsidiaries across geographical barriers. These are crucial in developing a sustainable competitive advantage. In order to achieve this multinational’s top management has to be actively involved in all these activities which are beyond the control of the subsidiaries although they are key contributors to overall organization’s business. This results in subsidiaries becoming open organizations to other multinational organizational units and not just to customers and suppliers as it is normally the case (Rugman and Verbeke, 2001). This openness makes subsidiaries and mostly the middle managers to adopt a proactive attitude helping in pushing forward the overall company mission and goals. In light of the above processes, in regards to a multinational organization there is constant change in the role that middle managers play in ensuring that the company grows in the global market place. In actual sense these managers’ role of delivering results is undergoing metamorphosis with the onset of globalization. Researches have shown that internationalization of multinationals entail dichotomizing the roles of these managers into two: advisory and executive roles (Bailey, Johnson and Daniels, 2003). Of the two, internationalization has increased advisory roles more for the middle managers. As earlier mentioned, one of the key roles of middle managers is to coordinate tasks in the subsidiaries to match those of others and more so from the directives of the multinational’s top management. They manage to do so through mediation, negotiations and by interpreting connection that their subsidiaries have with others mostly at the operational level. In taking such roles middle managers primarily implement the strategic direction at the local market level. With internationalization comes geographical distribution of the entire value chain which in turn increases the relevance and importance of the roles of middle managers. Middle managers are believed to be important contributors towards overall company strategy. They hold interface positions which facilitate their power to mediate between various variables that are of importance to strategic formulation. This position also facilitates acquisition of necessary knowledge to back the basis of strategy formulation making them important stakeholders in decision making processes. They are also the link between the internal and external environments of an organization and as such are able to develop more credible PESTLE and SWOT analyses (Balogun, 2003). For example, for those managers involved in marketing and in research and development initiatives, they stand a better chance to analyze external relations and offer better guidance. It is this understanding of the environment that places middle managers at a key position in redefining strategic content. Consequently, they end up having a stronger voice in the implementation of the adopted strategies. Since multinationals operate in highly dynamic environments these managers come in handy as they are constantly in contact with this environment. As a result, they are also divergent thinkers who help subsidiaries in adapting the to the changing business climate which in totality translates to the whole multinational organization being able to do the same (Pappas, and Wooldridge, 2007). Middle managers in these circumstances act as change agents not only for their subsidiaries but also for the entire organization. These managers are consequently receiving increasing attention and their variable relationship with the environment can either determine failure or success of the organization. At this point it is important to analyze the most important strategic roles of middle managers in ensuring success in the global market. Strategic roles that facilitate successful business operations are categorized into upward and downward influences. Upward influences regard the tasks and communications toward the top management while downward influences entail those toward the lower level staff directly under the middle management. The following diagram illustrates these influences: Fig. 1. Upward and Downward Influences. (Rugman and Verbeke, 2001) Upward Influences Championing alternatives As earlier mentioned middle managers think in a divergent manner. This instills in them some level of creativity and innovativeness which enable them to develop strategic options for their subsidiaries and the entire organization (Birkinshaw, Hood, and Young, 2005). Considering the increased competitive business arena on a global scale these qualities and skills are crucial if the subsidiary and the entire company are to have sustainable competitiveness in regards to quality of products and cost effectiveness. Information synthesis Middle managers come into contact with a great deal of information regarding business information and environment on daily basis. Top management therefore relies heavily on their knowledge on both internal and external environments (Bouquet and Birkinshaw, 2008). Technology intense companies for example, rely on sufficiently knowledgeable staff at the subsidiary level to relay information regarding rapid changes in the industry. Transactive mode For there to be effective strategic development an organization needs to have good interaction between the top and middle managers (Bailey, Johnson and Daniels, 2003). When this relationship thrives the middle managers open up more in regards to strategies that best suit their subsidiaries and which can help the multinational organization move up the global competitive ladder. In essence they become more resourceful in strategic development. Control/ autonomy The top management in many multinationals tends to assert control over the management of subsidiaries. On the contrary the middle managers contribute better towards strategy formulation when they enjoy some considerable level of autonomy. Downward Influences Facilitation of adaptability Middle managers are left with the critical role of facilitating learning. The rapid changes in technology and product development techniques necessitate that employees be well versed with the current trends to avoid their knowledge and skills becoming redundant. Implementing deliberate strategy Strategy implementation is actually the most important of all roles. Middle management acts as a link between the top management and the rest of the workforce and this link is used to pass down strategies (Balogun, 2003). They are responsible of mapping out schedules and budgets that drive operations in the subsidiaries on a daily basis. Conclusion The role of middle managers in the growth of multinational corporations has increasingly become relevant as global competition intensifies. Organizations need to utilize their knowledge and expertise in order to understand both the local and global markets. With the rapid changes in technology and product development better strategies need to be formulated and implemented appropriately so as to achieve competitive advantage. The realization that this is only possible with the involvement and dedication from the middle managers has shifted the direction from which valuable strategic information emanates from. It is now the onus of these managers to embrace the difficult multifaceted tasks in driving forward their global organizations to the next level in the global competitive ladder. References Bailey, A., Johnson, G. and Daniels, K. (2003). Validation of a multi-dimensional measure of strategy development process. British Journal of Management. 11, 151-162. Balogun, J. (2003). From blaming the middle the harnessing its potential: Creating change intermediaries. British Journal of Management. 14, 69-83. Birkinshaw, J. Hood, N. and Young, S. (2005). 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