Discuss the Management Problems Facing Multinational Companies and Companies with an International Dimension in Various Parts of the World

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MAR 23

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WORKING PAPER
SLOAN SCHOOL OF MANAGEMENT
A FRAMEWORK FOR
STRATEGIC PLANNING
IN MULTINATIONAL CORPORATIONS

Peter Lo range*
Revised, January 1976

WP 821-75

MASSACHUSETTS
INSTITUTE OF TECHNOLOGY
50 MEMORIAL DRIVE
CAMBRIDGE, MASSACHUSETTS 02139

MAR 23
DtWEY

LiSlJARY

A FRAMEWORK FOR
STRATEGIC PLANNING
IN MULTINATIONAL CORPORATIONS

Peter Lorange*
Revised, January 1976

WP 821-75

Assistant Professor of Management Science, Sloan School of Management, Massachusetts Institute of Technology.

A revised version of this paper will appear in the June 1976 issue of the Journal of Long Range Planning.

1976

M.I.T.

UBRARiES

MAR 2 3

1976
RECEIVED

Introduction

Strategic planning in a multinational corporation has a two-fold task:

to identify the strategic options most relevant to the corporation

and to "narrow down" these options into the one best plan.

Stated this

way there is of course nothing fundamentally different between the strategic planning task of a multinational corporation and that of any other large corporation.

However, since multinationals offer several complex

and distinctively different approaches to organizational design and

planning, it is useful to examine some of the problems of strategic

planning in the context of the multinationals.
The broad definition of the strategic planning tasks given above has several implications.

In order to be able to identify the most

relevant strategic options, the corporation needs to adapt continuously to the environment.

Also, in order to narrow down the strategic options

into the one best plan, the corporation must be able to integrate its

many diverse activities.

In this article we shall attempt to clarify

the major purposes of planning in the multinationals in terms of adap-

tation and integration needs.

Given the diversity of settings in which multinationals operate, the adaptation and integration tasks will not be the same for all

multinationals.

Indeed, the opposite is true; each multinational will

be faced with unique adaptation and integration tasks.

However, in

order for us to develop some generalizations about the adaptation and

integration tasks of planning in multinationals, we shall start out by identifying a few multinational corporate archetypes, followed by a

discussion of their planning purposes in terms of adaptation and integration.

We shall then present some normative propositions about

adaptation/integration and the costs of striking a reasonable balance

between the two in planning systems.

Empirical findings on long-range planning in multinationals reported by others indicate that (a) it is hard to find actual examples of multinationals that in all respects fit into any of the archetypes to be suggested

and (b) the formal planning systems of multinationals

seem to be much less developed than those we recommend here.

2

However,

we do not see this as limiting the value of the arguments to be presented.

We intend to propose some fundamental dimensions of planning

for multinationals that might be useful to improve the understanding of the planning phenomenon.

Obviously the proposed normative framework

is not intended for uncritical adaptation in specific cases.

See Channon, Derek F., "Prediction and Practice in Multinational Strategic Planning," paper presented at the 2nd Annual European Seminar on International Business, European Institute for Advanced Studies in Management, 1974.

^

See Schwendiman, John S., "International Strategic Planning: in Its Infancy," Worldwide P&I Planning , Sept. -Oct. 1971.

Still

A Taxonomy of Multinational Corporations
We shall distinguish between types of multinational corporations according to the...