Unit 4 IT Strategies For Transnational Organizations

As a business begins to sell their products/services in other countries, IT needs to develop a strategy in order to keep the growing business connected, running efficiently, and communicating correctly.  Many companies are turning to a transnational strategy (see Figure 1) in which an organization integrates its global business activities through close cooperation and interdependence among its headquarters, operations, and international subsidiaries and its use of appropriate global information technologies. In a transnational company everything must work efficiently and there needs to be cooperation between the headquarters and international operations.   This blog will talk about what will help transnational firms in terms of IT.

 One strategy that is important for a transnational company is to have a global network with only one service provider that is able to get everything done well.  With one single provider every part of the organization will have access to the same service and communication resources.   The fact that there is only one provider also ensures that new networks can be added easily as more subsidiaries are formed by the company.   Even though the business enjoys local responsiveness, it is better to also have a central IT system since in some countries, technology levels and support may be spotty which will affect the entire company.  A collaboration of both a global IT system and the local IT system means that if things go wrong then the local IT system can re access information from the headquarters.  Essentially, a transnational approach is important not only in terms of business strategy but also IT strategy.  This collaboration allows for knowledge sharing between local and global IT sections.

For success, the transnational organization must be concrete in its first strategy which is to balance local uniqueness and global uniformity.  Along with this, the IT structure must facilitate this strategy.  There needs to be international transaction processing systems and customer integrated systems.  The transnational organization needs to watch against duplication since there are global and local resources.  This means that consistent communication is vital. 

A transnational organization needs to combine both local responsiveness and global aspects in its IT, while not facing the disadvantages of local related problems or the problems of the global IT system being too far from the local organizations. Another method that has been used with transnational organizations is multifactor productivity. This method is used with the goal of capturing decision interdependencies driven by information technology and providing management with the information necessary to create policies to deal with these interdependencies. Transnational organizations have their autonomous functions but the method of multifactor productivity uses a system that weights input and output financial factors and attribute a quantitative analysis to IT practices. This process becomes more difficult due to external financial factors relating to global organizations such as exchange rates and inflation. This process becomes more or less intensive depending on the type of transnational organization. For the more centralized organization, it would be more likely to have more interdependent decisions involving information technology and in general while the more decentralized organizations would have less. One main factor or hindrance to the effectiveness of the multifactor productivity method is that there needs to be prior data to work with. This means that if there is not data available for analysis, which is usually the case with IT, this will take more time which equates to more money.

There are many challenges to developing a responsive, efficient and effective application for an international organization.  For instance, a system implementation or maintenance activity at night in United States can pose problems in Asia during the day.  Other problems that may arise with a transnational company is the architecture of data.  Definitions of words do not have a consistent meaning throughout the world.  A sale can be called an “order book” in the United Kingdom or an “order produced” in France.  In order to overcome transnational systems development issues strategies can be implemented.  One strategy includes transforming an application used domestically to a global application. Usually a system that has the best version of a product is globally implemented.  Another strategy is to create a multinational development team.  This team is comprised of several people of different subsidiaries and the purpose of the team is to make sure the system will meet the needs of their respective subsidiary and the corporate headquarters. 

Transnational organizations and the coordination of IT activities is very complex. These are only some of the methods that are used to manage these activities. As we know, the effective use of information technology is critical to the success of any company in this generation and even more so for organizations operating globally.  

 

Works Cited

Bogdan. (2001, January). From transnational organization to the virtual organization. Retrieved from Economy Informatics: http://www.economyinformatics.ase.ro/content/EN1/stoica.pdf

Linton, I. (2014, July 10). Transnational IT Operations as a Strategy. Retrieved from azcentral: http://yourbusiness.azcentral.com/transnational-operations-strategy-4238.html

O'Brien, J. A., & Marakas, G. M. (2011). Management Information Systems 10th Editiom. McGraw-Hill/Irwin.

Reimer, K. (n.d.).Managing Information Technology in the Transnational Organization: The Potential of Multifactor Productivity. University of Bremen. Retrieved from http://www.kai-reimers.net/ManagingInformationTechnologyintheTransnationalOrganization - dpi.pdf