The case to be analysed is the Meridian Magnesium: International Technology Transfer. The company has created a new division that is looking forward to implement a concept of Knowledge Management within the all three subsidiaries in the world; however there have been some operational problems that haven’t make it successful as was expected by its senior managers. The analysis and report is structure in a way in which the reader will be able to understand the problems and key areas of the company based on a International Management Framework in which proposed solutions will be exposed following the guidelines of definitions and theories related to areas such as: Organisational Structure and Corporate Culture, Communications, R&D (Research and Development), KM (Knowledge Management) and HRM (Human Resource Management), following there will be a part of recommendations in which the most relevant aspects will be summarized.
Introduction In today’s global economy and international context, multinational companies need to approach business in a dynamic way that allow them to be competitive both internal and external in order to keep updated with new process, techniques and tendencies that will definitely help them to achieve a competitive advantage. Nowadays, companies have subsidiaries on different locations through out the world and the way they interact each other according to its objectives, goals and purposes will determine its success or failure.
In the case study of Meridian Magnesium we can see a multinational company that has extended its operations to two subsidiaries along with the parent company to be present in the automotive supplier industry of North America and Europe, “with approximately 55 per cent of the global market for magnesium automotive parts”. (Case 5-4a, Meridian Magnesium: International Technology Transfer), however as the case states, technology transfer within the company has failed or hasn’t been as successful as intended and the creation of new divisions for the purpose of technology and knowledge transfer has evidence the weakness of their corporate strategy in areas such as Organisational Structure and Corporate Culture, Communications, R&D (research and development), KM (knowledge Management) and HRM (Human Resource Management).
By analysing the case I will intend to approach within a conceptual framework on corporate strategy a solution to its problem areas and key issues that have stop the company to achieve a successful transfer of knowledge and technology. 1. Identification of Problem Areas When trying to identify the corporate strategy of a multinational company and the way its subsidiaries should be networked its important to understand the following guidelines and concepts that must be followed: “(1) the development and communication of a clear corporate vision: (2) the effective management of human resource tools to broaden individual perspectives and develop identification with corporate goals; and (3) the integration of individual thinking and activities into the broad corporate agenda” (Bartlett & Ghoshal. 1990 p. 138-145), all this under an international perspective and following the companies mission, vision and long-term plans. One of the goals of Meridian is ‘the development of new technologies to provide Meridian with more sources of sustainable competitive advantage’, and it’s the one that it is being brought to our attention in the case.
1.1 Organisational Structure and Culture The effectiveness of the organisation, its leadership and strategic planning is supported in its structure and the way its goals and key ideas are set out through the organisation depend entirely on the persons that held leadership along with an appropriate environment. By organisational structure we recognize “the clarification authority, responsibility, reporting lines, and performance standards among individuals at each level of the organisation. It is also true that effective strategy deployment is also dependent on and tends to shape organisational structure.” (Lindsay & Evans. 2002. p. 255.)
In Meridian we find an organisational structure that follows common hierarchical patterns that obey to a functional structure that “groups people together because they hold similar positions in an organisation, perform similar set of tasks or use the same kind of skills” (George & Gareth. 2002 p. 511), that even though it works in some areas, when it comes to knowledge and technology transfer they have proven to be insufficient or not well design to move towards an international
Corporate strategy based on innovation within all their internal and external processes. At the same time we find that almost all the key positions are centralized within the structure, leaving its European subsidiary isolated. Meridian has created a structure that can be compared or misunderstood as a market oriented structure or as a production structure since its two major facilities are located in the cluster area of North American car production, which is its principal market target; but faces the problem of not being integrated or articulated by a corporate culture that enables all three facilities to act and/or work as whole.
The conception of a new division as it is GTO (Global Technologies Organisation) under VP of Global Technologies, and created under the premises of enabling the company as a whole to interact, share ideas, expertise, knowledge and technology in all fields of production, processes and techniques has not been well implemented because the company faces problems within their structure.
First of all Meridian three facilities, Canada, USA and Italy, have been working all the time following a hierarchical intangible situation in which Canada was the first production plant followed by USA and later Italy. Also its centralised North American, (understanding by ‘North American’ its geographic position) structure concept starting with its Canadian facility has created enormous barriers that don’t help to a corporate integration of all facilities, creating an idea of independent units instead of mutual extensions of one single big company.
All facilities act on their own, and when GTO, which is seen as a “great place to get promoted to” … ” Good Times Club” (Case 5-4a, Meridian Magnesium: International Technology Transfer) try to “facilitate the identification and communication of best practices between the plants” (Case 5-4a, Meridian Magnesium: International Technology Transfer), and immediate negative chain reaction started when it came to share an implement new ideas that were or could be created on each of the different production plants.
There are many possible problems to this negative situation, but the lack of a common perception of ideas and values that enables a corporate culture within all facilities, followed by an organisational structure not properly design, and by an insubstantial centralized hierarchy that has created a division among all units instead of a positive interdependence environment that will benefit the company as a whole.