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The improvements of technologies and world trade agreements created new opportunities for companies to do business globally. Transnational companies are companies which do business in more than one county. Wikipedia, the free encyclopedia (2009) defines transnational companies as “A multinational corporation (MNC) or transnational corporation (TNC), also called multinational enterprise (MNE), is a corporation or enterprise that manages production or delivers services in more than one country. It can also be referred to as an international.”

 

The paper discusses advantages and disadvantage of moving from domestics to transnational company. Issues related to transnational IT operations, transfer of work, quality of work, service levels, cultural diversity, language, technological infrastructure, local customs and control issues. In addition, I will share my personal experience working with transnational company.

Advantages and Disadvantages of Moving Globally

The main advantages for moving from domestics to transnational is increasing profit, reducing cost, improving supply chain, providing better service, understanding markets better, improving operation and attracting global talents.

Disadvantages of moving business globally are political stability in some counties, product liability laws, exporting restriction, variation in language, work ethics, unstable tax rates and availability of raw materials.

IT Operation in Transnational Companies

Working in global environment has its own challenges and issues. Companies have to have clear strategy to manage human resource and information technology (IT) in transnational environment. The firm should have flexible polices for HR and develop sophisticated IT capabilities to match the globalization requirements. Staffs are required to move in different countries. They need to exchange information with head office and be able to access information and services to do their jobs.   The IT operation should be able to develop shared services that are capable to support such requirements. In addition IT team should support the organization employee around the world 24 by 7.

Transfer of Work

            Running sophisticated IT environment is not an easy job. Companies transfer the work or outsource the work to other companies. The most common function transferred support and application development.  Transferring works requires close monitoring of outsource company. Selecting the right company to deliver quality product and has experience in delivering IT function is the success key.

Where I work, we outsources IT infrastructure project, application development and manage operation service. Our arrangement with outsource company is Build, Operates and Transfers (BOT) for four years. We uses BOT concept because not enough IT resource available in the country.  Easier for us to adapt new technology and transfer knowledge to local team through outsourcing.

Quality of Work

            In our case, difficult for us to verify quality of work outsource company is doing. We do not have enough expertise to go deep in application and define quality issues. The team can only verify quality from perspective application meeting our functional specification.

Service Levels Agreements (SLA)

            We have very organized SLA’s to protect our investment. It clearly defines measures and tracks service quality of outsource company.  

Cultural Diversity

Companies have to consider cultural diversity when moving globally. Cultures can be different from country to country. People have different attitudes towards environment, intellectual property, bribery, child labor and punctuality.  In many countries environment regulations does not exist. For example, the concept “Go Green” many people in Oman does not know what it means. In some countries child labor is accepted. One can find children working in factories and shops. In some country one has to give bribery, if he wants his work to happen. The punctuality in some country is not important. A person is late for half an hour for work or appointment is normal. People are used to it and not an issue.

 

References

Wikipedia, the free encyclopedia. Transnational. Retrieved March 28, 2009,

from http://en.wikipedia.org/wiki/Transnational

Pearce, J.A, and Robinson R. B.  Strategic Management, 10/e : Formulation, Implementation and Control.  McGraw-Hill Irwin

Porter M. E. Competition in Global Industries : Google Book Search

Retrieved March 28, 2009, from http://books.google.com/books?id=vhzv3Dfb8MIC&dq=competition+in+global+industries&printsec=frontcover&source=bn&hl=en&ei=Wx7RSdC_K-ComQfyvICQCA&sa=X&oi=book_result&resnum=4&ct=result

Greaver, M.F. Strategic Outsourcing: A Structured Approach to Outsourcing Decisions and Initiatives. AMACOM Div American Mgmt Assn, 1999

 

 

 

 

 

 

 


 

Last Updated (Monday, 23 November 2009 06:34)

 
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