The Tortuous Evolution of Multinational Corporation

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Reading 1-1 The tortuous evolution of the Multinational Corporation

In these days, almost of companies in the world desire to becoming multinational corporation. They know that multinational corporation tend to be regarded as more progressive, dynamic, geared to the future than provincial companies. They want to spread their subsidiaries not only all over the country, but also all over the world. Usually, the multinational corporation has headquarters in one country and operates subsidiaries in other countries. However, globalization is going faster, management strategy has a great change. According to the article, there are three identifiable attitudes; ethnocentrism, polycentrism and geocentrism, toward to building a multinational enterprise. The article said that Ethnocentrism can be found in companies that have many nationalities and foreign partner. It has complex organization in home country, but very simple in subsidiaries. Because ethnocentrism is based on the attitude that one’s own group is superior to others, headquarter decide and control their management strategy, subsidiaries just follow their decision. In this attitude, executives decision in headquarters is most important. As a second attitude, polycentrism is begin with the assumption that culture of various coutries are different and that foriegners are difficult to understand. So local nationals occupy all of the key position in their local subsidiaries and they operate company with their own management strategy. Compare to ethnocentrism, headquarter control just financial decision. Becuase of low relative between headquarter and subsidiaries, polycentrism is easy to immediately resonse to unexepectable accident happen in their location. The third attitude is geocentrism. The concept of geocentrism is to globally unite both headquarters and subsidiaries. They form a collaborative network to establish world standards and make key business decisions. In geocentrism, power of...
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