Dr Andreas Birnik of the NUS Business School , along with Richard Moat, CEO of telecommunications provider Orange ( Romania ), has developed an operating model for companies with international operations. This framework helps executives confronting the challenge of aligning strategy with execution in a cross-border context, and provides clarity regarding the execution of critical activities in the organisation. It has been successfully used in several companies in the telecom and technology sectors, as well as taught to MBA students and executives.
 The framework helps executives map activities that require local versus central (headquarters) decision making, and determine whether the execution of activities should be central, local or outsourced. For MNCs with a layered structure at headquarters, a regional dimension can easily be added to the grid between central and local levels.
The six types of activities in the grid are: Central Strategy with Central Execution - Activities such as corporate logo, recruitment of top management for subsidiary units, global advertising campaigns, and mergers and acquisitions have high pressures for global integration and low pressures for local responsiveness.
Central Strategy with Local Execution - These activities require some standardization for consistency across a multinational firm, such as marketing mix strategies, budgeting and accounting.
Central Strategy with Outsourced Execution – These activities are determined at the central level but are outsourced to a third party, e.g. customer service outsourced to specialized call centers against globally determined service-level agreements.
Local Strategy with Central Execution - Headquarters may occasionally take on the role of a service centre and execute according to local subsidiary specifications, e.g. pooling of purchases across subsidiaries to achieve maximum bargaining power versus the supplier.
Local Strategy with Local Execution - Activities such as tactical advertising and IT support, where there is a high need for local responsiveness and the benefits from global integration are low.
Local Strategy with Outsourced Execution - Activities that do not require standardization across subsidiaries and typically do not have a direct association with the firm's competitive advantage, e.g. office maintenance and canteen services. |