Analysis of the Bartlett and Ghoshal Model of New Management Structure - Research Paper Example

Analysis of the Bartlett and Ghoshal Model of new management structure Following the Second World War, large diversified companies flourished in the20th century and the organizational structure of these companies providing for a multidivisional enterprise was incapable of meeting the demands of the changed world environment. Since the Second World War, there have been several changes in the organizational structure although the changing world economy has called for newer organizational structures within the multidivisional enterprises. This is in accordance with the requirements of the global environment as the changing global economy has placed new demands on organizational structure. Within any organization, the structure and management approaches needs to change in accordance with global changes and requirements and despite several changes, since the World War, companies have failed to meet the demands of the changing world economy. According to Bartlett and Ghoshal (1995) companies seem to have become fossilized and unable to adapt to slower growth so there is much instability in the market. Cost reduction programs tend to provide only short term relief, to the markets and companies so different business and organizational strategies are required to focus on long term gains and benefits to bring about growth and organizational stability. Successful companies like GE, ABB and Toyota seem to have rejected the principles of multi divisional enterprising according to Bartlett and Ghoshal and these companies employ an emerging management model which is not a new organizational structure but brings out a set of management processes and new roles and tasks for managers at different levels. Within any organization, the changes in the managerial structure are based on the core processes of entrepreneurial or encouraging initiatives, integrative and leveraging competence, renewal as in managing, rationalization and revitalization and a new management approach (Bartlett and Ghoshal, 1995). The core processes within an organization tend to integrate theory and practice to build up new management roles and new management roles would be essential for development of management structure and changes within an organisation. The Bartlett and Ghoshal typology of multinational companies or MNCs tend to show a global, multidomestic and transnational aspects of interdependence and local responsiveness. The relationship between local and global corporate social responsibility with international organizational strategy shows that the strategic logic of Bartlett and Ghoshal could be applied to the realm of corporate social responsibility and multinational firms tend to respond to pressures for integration and responsiveness (Husted and Allen, 2006). Multinational firms tend to replicate the product market organizational strategy in the management of corporate social responsibility and these alternative approaches are also followed by MNEs. Institutional pressures, strategic analysis of social issues and stakeholders tend to guide decision making in CSR. Management of multinational enterprises is thus largely dependent on the strategies in management and corporate social responsibility, the analysis of social issues, the human resource management approach, and shows the implications of marketing management and public policy. Harzing (2000) used data from 166 subsidiaries of 37 MNCs in 9 countries and show how the MNCs tend to differ in aspects of interdependence and local responsiveness. International management assumes the existence of different types of MNCs that are polycentric, ethnocentric, geocentric, global as well as transnational. Multinational organizations are complex and manageable with a number of related characteristics and a typology for MNCs could help in explaining the functioning of such companies. The lack of conceptual integration and empirical corroboration in international business and management could be corrected with the reinforcing characteristics of MNCs. MNCs that bring about a balance between environment, strategy, structure and processes would perform better than MNCs that do not have a balance and do not show a fit between the environment and processes. The comprehensive strategies of MNCs tend to deal with extensive typologies of MNCs and Bartlett and Ghoshal (1989) provide the typologies of MNCs and their work remain influential (Harzing, 2000). The research is based on case studies in MNCs that tend to combine the characteristics of MNCs in a systematic manner. The Individualized Corporation by Bartlett and Ghoshal explores the collapse of corporate organizations that are outmoded and old and show the fundamentally different management philosophy that tends to drive value creation and focuses on the power of the individual and importance of individuality in management. In today's service based, information intense, competitive environment, corporate leaders recognize human creativity and individual initiatives as a source of competitive advantage. A homogeneous corporate mould could be based on company strategy, structure and system and corporate managers tend to embrace a philosophy of purpose, process and people focusing on developing individual talents and skills (Ghoshal and Bartlett, 1997). The Individualized corporation deals with the 'what' and 'how' of managing a corporation and develops a model of organization as a portfolio of processes and hierarchy of tasks. The roles of middle, frontline and top level managers could be delineated on the basis of their skills and attributes, knowledge and attitudes and show how the new moral contract could be useful to companies that contribute to the development of society and employees. The rapid growth of international business and business people is associated with new competitive advantages through international operations and a study by Takeda (2005) shows the influences of HRM's strategic intent in MNE. Within any organization, the attempt is to synthesize environment, organization and individual typology, by explaining relationships between levels and interactive influence on strategic decision making. Organizational strategy is based on integration of closely related variables into a conceptual whole. Takeda (2005) tends to bridge the gap in current conceptualization of HRM strategy and examines the influence of environmental, organizational and individual influences on HRM strategic decision making within the MNE. A typology of HRM identity and synthesis of human resource management could highlight the characteristics of organizational behavioral perspectives. To be successful in a global playing field, development and marketing of new products would depend on customs, tastes, habits and regulations. Multinational enterprises are considered to be internationally competitive with a need to be managed globally and also locally as the world is perceived as consisting of loosely connected markets or is considered as one vast global market (Bartlett and Ghoshal, 1991). Effective competition of multinational companies seeks management solutions and frameworks of MNEs with a focus on human resource management. Managing global business seems to have different and unique solutions and differences exist at the theoretical and conceptual levels. MNEs tend to have characteristics which are different from local organizations and enterprises tend to carry out transactions and operate within a system of decision making that permits influence over resources. The competition of MNEs is carried out in different forms with strategic and organizational responses and according to Bartlett and Ghoshal (1991), 'Even within particular industries, worldwide companies have developed very different strategic and organizational responses to changes in their environment (p.37)'. Bartlett and Ghoshal (1991) describe different strategic and organizational responses played out as MNEs are represented by units and coordinated and integrated in a certain form. The integration of such units at MNEs should be done in a way that would make such enterprises globally competitive, efficient, responsive and flexible to local needs and conditions. Multinational enterprises need to be global and local at the same time and need to achieve varying levels of global and local attributes although there are ways to attain global and local characteristics (Bartlett and Ghoshal, 1991). Several strategic concerns and issues would arise in human resource management and MNEs tend to link globally dispersed units through human resource policies and practices. Strategic international human resource management decisions and issues tend to vary in accordance with the specific characteristics of the multinational enterprises. The importance of strategic international human resource management for MNEs has been considered as a key factor in identifying management framework and characteristics. Allen et al (2004) bring out the differences between traditional models of executive compensation and Bartlett and Ghoshal's model of transnational strategy that proposes global compensation based on managerial roles as operational entrepreneur, managerial developer and leader. The model focuses on pay emphases in areas of experiences and inputs, activities and processes and rewards or outputs in the global context with integrative pay configurations. However further developments in the area of global pay and firm control could be derived from the model. The model proposed by Bartlett and Ghoshal seems to be fundamentally different from traditional models proposing global compensation on managerial roles, activities and inputs. Bartlett and Ghoshal discussed the possibilities of a transnational corporation and brings out the possibilities of a radically different corporate model as mentioned in their book on Managing Across Borders: The Transnational Solution (HBS Publishing: 2001). This different corporate model is based on a company that is big or small, global or local and decentralized yet have a form of central control. Bartlett and Ghoshal's research has competed solely on the basis of national market responsiveness and efficiency and has transferred specialized knowledge worldwide. Modern transnational firms tend to develop the capabilities of an evolving global market and are sensitive to market responsiveness. The term transnational is part of the business lexicon and companies work in accordance with market needs. The links between corporate strategy and organizational structure bring out the effects of differences in cultural, national and corporate heritage. Bartlett and Ghoshal add their insights on the development of transnational managers and explore the critical roles, tasks and responsibilities that people have in a successful transnational organization (Ghoshal and Bartlett, 1995). In each organization, groups of specialists tend to share a transnational perspective and the authors bring out the roles and responsibilities of business, country, functional and corporate managers. According to Bartlett and Ghoshal, '"Firms must recognize that success relies not only on the strategies, structures, and systems typically controlled by senior management but on effecting changes in individuals' behavior." The thoughts and actions of managers in hierarchical bureaucracies have been studied for replacing the context of compliance and control with internalized models of behavior. The focus is on the challenge of establishing strong norms of self discipline within the context of support and encouragement (Bartlett and Ghoshal, 1999). The transformation process within an organization helps in pushing managers towards ambitious goals within any environment and the bias is towards inclusion and involvement, fairness and equity and belief in competence with increased strife to keep up with the global markets and economy. In the regeneration phase of an organization, the management's attention is focused on maintaining the momentum of change and achieving the ideal of a self driven, self renewing organization. Bartlett and Ghoshal have observed that large companies employ a gradual approach to transformation and attempts of organizations to accelerate the processes of transformation has been largely considered as counterproductive. In fact if transformation and building support stages are done simultaneously, there could be a management overload leading to a breakdown of systems and relationships. The requirement for success as a transnational could make implementation of a management strategy more challenging. It is important for managers to think holistically in terms of historic and cultural heritage of a nation and industry and identifies the role of a company in shaping the capabilities of an organization. Innovative companies are positioned for success in the new millennium and Bartlett and Ghoshal bring out the approach to transformation and productivity within an organization. Bartlett and Ghoshal discussed strategic and organizational responses to transformation management and identified the role of managers and a company in shaping the capabilities of an organization. Several transnational firms tend to develop the critical tasks and roles of organizational managers and the transformational process of an organization depends on global markets and economy. Bartlett and Ghoshal's model is thus quite different from traditional models as it focuses on change and critical roles of managers and a company. The management strategy for success brings out the hierarchical models of behavior and market needs in accordance with cultural and corporate objectives. Bartlett and Ghoshal bring out the strategies related to market position and responsiveness and emphasizes on the need for equity and belief in the global markets and economy. According to Bartlett and Ghoshal's model, the changes in management structure bring out the management processes and tasks for managers at different levels. Bartlett and Ghoshal's model highlights the fact that the structural and functional models of a management organization should be changed in accordance with changes in the global economy. The synthesis of the environment and organization is the focus of Bartlett and Ghoshal's model and it is important for companies to develop a corporate as well as social structure and different businesses tend to focus on long term growth and organizational structure and changes. The comprehensive strategies of MNCs if planned in accordance with Bartlett and Ghoshal's model could suggest an improvement in decision making and corporate social responsibility. Multinational enterprises would be based on local and global needs and would follow the principles of transformation, innovation and organizational responses to global markets. According to Bartlett and Ghoshal, companies have not been able to adapt to slower growth patterns or global changes and there is a need for encouraging a new management approach within business organisations. Bartlett and Ghoshal's model bring out the factors responsible for organizational and social issues that can affect an organization or company. Large companies tend to focus on management strategies and capabilities that would focus on growth patterns and global changes. MNEs coordinate and integrate their activities in certain forms and the Bartlett - Ghoshal model only provides a guideline to the new management structure. Their model suggests that slow growth of the market structure is due to traditional models of management followed by companies and a new management strategy would be necessary for better performance of companies. Bartlett and Ghoshal model remains one of the most influential models of management studies. Bibliography Allen D Engle Sr;Mark E Mendenhall (2004) Transnational roles, transnational rewards: global integration in compensation Employee Relations, Volume 26,Number 6, pp. 613-625(13) Bartlett, C and Ghoshal, S. (2001) Managing Across Borders: The Transnational Solution by Christopher A. Bartlett and Sumantra Ghoshal, (HBS Publishing) BartlettC.A and Ghoshal, S - Transnational Management: Text, Cases and Readings in Cross Border Management. 3rd ed., by Christopher A. Bartlett and Sumantra Ghoshal (Irwin/McGraw-Hill: 1999). Ghoshal S.;Bartlett C. (1995) Building the Entrepreneurial Corporation: New Organizational Processes, New Managerial Tasks European Management Journal, Volume 13,Number 2, pp. 139-155(17) Ghoshal S. (1997) The Individualized Corporation: An Interview with Sumantra Ghoshal European Management Journal, Volume 15,Number 6, pp. 625-632(8) Harzing A-W (2000) An Empirical Analysis and Extension of the Bartlett and Ghoshal Typology of Multinational Companies Journal of International Business Studies, Volume 31,Number 1, pp. 101-120(20) Husted, Bryan W;Allen, David B (2006) Corporate social responsibility in the multinational enterprise: strategic and institutional approaches Journal of International Business Studies, Volume 37,Number 6, pp. 838-849(12) Takeda, Margaret (2005) How do managers conceptualise international human resource policy Presenting and validating a typology of human resource management identity International Journal of Human Resources Development and Management, Volume 5,Number 1, pp. 16-40(25) Read More