Evaluate the strategy of a well-known multinational company for organizing and structuring its

global operations. Explain the choices it has made to maximize its opportunities for success?

TABLE OF CONTENT

1. Introduction

2. Case Study: Volvo Truck Corporation

3. Conclusion
References:

1. Introduction

A key issue in foreign business studies is the manner in which the MNC arranges and
conducts its foreign functions. Considering the eternally expanding regional and
global patterns, the duties of branches have altered from being autonomous
independent entities to more involved and co dependent hubs (Ghoshal & Barlett,
1990).. A growing school of thought in this direction concentrates on the
characteristics of national branches and the duties of the branches in MNC vision.
Many scholars have located types that try to classify the main aspects that are specific
to branches (e.g. White & Poynter, 1984).

While a great deal of the previous studies are linked to theories, some scholars have
attempted to certify branch classifications practically. New studies have mostly
concentrated on the outlines of MNCs mainly the method of organising and authority
to categorise MNC branches or on evaluating particular duties of branches such as
functioning as centres of excellence or on how these duties are acquired or lost. These
methods have the assumption that classifications are practically certified events which
are apt from more formulations and the simultaneous branch duties are a
manifestation of the basic range duties of branches.

The global frameworks (Bilkey and Tesar 1977, Johanson and Vahlne 1977) are alike
in terms of attitudes and dearth of exposure by companies is cited as a reason for slow
globalization. They are linked the idea of development of the company suggested by
Penrose (1959) and the attitudes of companies (Cyert and March 1963), and argue
that globalization of a company is a value added procedure. Choices are made based
on difficulties faces and chances. The procedure depends on the notion that
companies do not have absolute accessibility to data about international markets
which generates the psychic distance (Johanson and vahlne 1977).The basic assertion
in this idea is that foreign extension is restricted by lack of information about markets
and this kind of data can be known through exposure to actual functions in other
countries. This is experience based information.

2. Case Study: Volvo Truck Corporation

In June 1998, VTC set up an output cell in Bangalore India. VTC established a 100
per cent internationally possessed branch as the domestic makers were not looked as
appropriate for a JV. This was the foremost fully owned branch setup by an
international MNC in the automobile industry in the country. The VTC setup in
Hosakote was constructed in a little over a year and was thought to be remarkable
even as per VTC levels. The initial investment was US$80 millions. The firm has a
capability to generate 4000 automobiles annually. Currently, they are making 250
automobiles every year. VTC India has employed 200 blue collar staff and 100 white
collar workforce. With reference to the staff, roughly 10 per cent are foreigners while
the remaining are Indiana. VTC India is working on a vendor initiative for
international sourcing, the object is to sell components from here to other producing
factories in Asia as output expenses are lower here.

The vehicles manufactured in our country which are doing well are tractor-trailers and
multi-axle heavy trucks. VTC concentrates primarily on long-haul trucks (2000- 2500
km) but is thinking of shifting to the lighter automobile section. VTC stresses on
service and post sale facilities. This is because it wants to negate the possibility of
breakdown and wishes to cut back on operating expenses. A VTC automobile is thrice
as costly as a truck of Indian make. VTC makes efforts to capture the market by
giving consumers new technology and providing them with the capacity to make
ferrying of items more viable as simple. The dominant players in the Indian context
are TATA, Ashok Leyland and a few international producers who have entered into
JVs with domestic makers. VTC is concentrated in west India and does not own as
many service outlets as others, their trucks last much longer and also a great deal of
expertise is needed to mend and upkeep these trucks.

3. Conclusion
At the time of evaluating India, one has to think about the extent and diverse nature of
the country. There are so many dialects, faiths and regional traditions. Hence India is
almost a continent rather than a nation. It is federally managed but the States do have
a lot of autonomy.

The procedure of loosening up of financial controls of the Indian economy has posed
Indian business with new regulations. The state is slowly disengaging itself from
industries and selling firms in its possession which are making losses. The process of
financial reforms is irreversible although its speed may change as there are varying
views on this. A number of businessmen are doubtful about venturing into the Indian
market owing to India’s infamy for being narrow minded, complicated, bureaucratic
and inefficient. A lot is changing soon. Even if some difficulties are there, they can be
managed with local talent. There are lots of chances for investors here. The mantras of
now are dismantling controls, private sector and free market. However, MNCs must
plan and be patient.

Based on our research of MNCs functioning in India, we can say that these entities do
not have to be criminal to flourish. One must acknowledge that the crime is there and
methods exist to avoid this by being accountable and honest, following laws and by
going by the norms. Further, one has to comprehend the causes for criminal attitudes
in out country, though these are not justifications. As financial reforms take place,
there will be less scope for crime as the norms of functioning become clearer and the
end of license permit era of the government.

References:
Nonaka, I., The Knowledge-Creating Company, Harvard Business Review, 69, 6,
1991, pp. 96-104.

Picard, J., Organizational Structures and Integrative Devices in European

Multinational Corporations, Columbia Journal of World Business, 15, 1, 1980, pp. 30-
35.