Strategic Issues Facing Large Multinational Enterprises

Introduction

The tumultuous economic times of the current era have presented a number of strategic issues and challenges to the managers of large enterprises, as well as a host of opportunities for those who can most successfully navigate the variations and uncertainties of the period. Stunning collapses as well as record-breaking profits have been witnessed over recent years across various firms. While industry specifics have a major impact on the risks and opportunities available to large multinational corporations, the disadvantages of any situation can be minimized and the advantages maximized through proper internal controls. In order to create and implement these internal controls, an understanding of the issues currently facing these enterprises and their managers is required.

This paper provides a brief overview of five strategic issues identified in two prominent scholarly business publications: the Harvard Business Review and the Sloan Management Review. A survey of article titles in both publications over the past several months reveals certain trends in attention and reporting that can be used to identify the key strategic issues currently facing large corporations, allowing managers and consultants to focus their efforts on the most pressing areas. Summaries of five strategic issues, as identified in articles from these publications, are provided below, along with a discussion of their implications.

Summary of Strategic Issues

Social consciousness and innovation are two major themes in the current literature regarding management in large enterprises. Both are addressed in an article appearing in the Harvard Business Review entitled "How Great Companies Think Differently" (Kanter, 2011). The author argues that most high-performing and enduring large companies see themselves not only as vehicles of profit-making — the traditional and dominant view in the American capitalist system — but also as vehicles of social change and growth (Kanter, 2011). Six facets of "institutional logic" that help these companies and their leaders innovate and remain socially conscious are identified: a common purpose, a long-term focus, emotional engagement, partnering with the public, innovation, and self-organization (Kanter, 2011).

The April edition of the Harvard Business Review is entirely devoted to the issue of failure, in both an organizational and an individual sense. This topic has been on many meeting agendas of late, and the case of Blockbuster's bankruptcy highlights many of the issues related to organizational failure. Former CEO John Antioco identifies a combination of market forecast missteps, industry trend misanalyses, and interpersonal issues as all contributing to the company's collapse (Antioco, 2011). All of these factors are more consequential to management and company success during turbulent times than in stable periods, and interpersonal issues can radically affect even the largest organizations (Antioco, 2011).

An issue of direct concern for today's large multinational corporation is identifying potential growth markets and the most rewarding locations for foreign investment. By examining a host of factors — including macroeconomic features, government regulation and other interventions, and labor conditions — an article in the first issue of the Harvard Business Review that year develops recommendations for the best places to engage in foreign investment (Newman et al., 2011). It is essential for managers to understand the specific risks of any foreign investment decision and to act in ways that minimize those risks while maximizing profit and growth potential. With so many changes being made to national economic policies, this task can be especially difficult (Newman et al., 2011). Following the guidelines and supporting research provided in that article can help large enterprises avoid common pitfalls (Newman et al., 2011).

An article in the Sloan Management Review examines the internal rather than the external risks facing an organization. The article divides these internal risks into three categories: risks created by the unwanted or unauthorized actions of employees, risks of not achieving strategic objectives that are inherent to any ambitious strategy, and risks caused by completely uncontrollable external events (Mangelsdorf, 2011). Only by understanding how each type of risk might affect the organization — and by working to minimize exposure to each, often through the creation of contingency plans — can organizational success be reasonably assured (Mangelsdorf, 2011).

In another article appearing in the summer issue of the Sloan Management Review, the critical issue of information management is addressed. Information is central to the survival of any organization, and the processes of its acquisition, transfer, communication, and utilization are all essential to organizational success — particularly within the complex networks of large multinational organizations (Riaz et al., 2011). Many corporations are finding that an excessive focus on data precision is slowing them down relative to their competitors. Those interviewed for the article assert that what is needed is "fast info," not "perfect data": overall trends and indications need to be captured, but exact quantification is not always necessary (Riaz et al., 2011). This does not suggest that accuracy is unimportant; rather, the argument is that it is more valuable to act quickly once sufficient information is available for a reasonable appraisal of the situation than to delay action in pursuit of ever-more-precise measurements (Riaz et al., 2011). In essence, the article stresses the need for efficiency over exhaustiveness in information acquisition and processing (Riaz et al., 2011).

Conclusion

Taken together, however, these issues paint a vivid picture of what managers in large multinationals must contend with — and how they should contend with them. Managing risks in both internal and external environments requires the proper and efficient processing of information, and includes identifying and addressing interpersonal issues and other potential sources of organizational failure. Foreign investment decisions depend on both the internal strengths of the company — achieved through effective information processing and problem identification — and on the information gathered from the external environment, including the cultural and interpersonal challenges likely to be encountered in foreign markets. All of these factors are ultimately inextricably intertwined in building effective managers and leaders for large multinational corporations, and thus in creating profitability, stability, and long-term success for these enterprises.

Understanding the key strategic issues that businesses face is the only way to develop effective strategies and objectives for any organization. For large multinational enterprises, establishing such strategies and ensuring they are properly implemented could mean the difference between immense profits and bankruptcy. The lessons of the current era, if properly applied, can do much to strengthen individual businesses and the broader practice of management itself.