Modern Multidomestic Model
Oct/08/07/20:52 Filed in: MNEs
The
modern multidomestic follows the tradition of the old (pure)
multidomestic but it gives a more significant role to the corporate
headquarters. As such, it is no longer a loose confederation of
assets, but a MNE with a strong culture of operational
decentralization, local adaptation, product differentiation, and
local responsiveness. Having disperse national subsidiaries with
significant autonomy, a strong geographical dimension and empowered
country managers help the modern multidomestics to maintain their
local responsiveness and their ability to differentiate and adapt
to local environments. Contrary to the traditional multidomestic
where the center had very little value added, in the modern
multidomestic the center is critical to enhance the competitive
strength of the multidomestic. While the role of the subsidiary is
to be locally responsive, the role of the center triangle is to
enhance the global integration by developing global corporate and
competitive strategies, play a significant role in resource
allocation, selection of markets, developing strategic analysis,
mergers and acquisitions, decisions regarding R\&D and
technology matters, eliminating duplication of capital intensive
assets, and knowledge transfer. A representative example of the
modern multidomestic is Nestle (Segal-Horn.99,
Yip.96,Yip.91,Yip.91a,Yip.89,Yip.00,Yip.97a,Yip.88,Yip.96a). In
summary:
- Matrix Position: medium global integration / high localization.
- Subsidiary role: local responsiveness, country/region specific strategies.
- Center role: global integration, coordination, resource allocation, R\&D, knowledge transfer
- Management Decisions: bottom--down (differentiation) and top--down (integration).
- Technology & Knowledge Transfer: knowledge transfer across borders.
- Percentage of Foreign Sales: high.
- Example: Nestle.
- Matrix Position: medium global integration / high localization.
- Subsidiary role: local responsiveness, country/region specific strategies.
- Center role: global integration, coordination, resource allocation, R\&D, knowledge transfer
- Management Decisions: bottom--down (differentiation) and top--down (integration).
- Technology & Knowledge Transfer: knowledge transfer across borders.
- Percentage of Foreign Sales: high.
- Example: Nestle.