Today growth through replication or through elimination of competition is no longer feasible. The new world realities dictate that MNCs seek evolutionary growth through cooperative competition. To survive, the MNC must grow by cooperating with its competitors. Past organizational design techniques produced too many firms all over the globe, which competed in an ever-shrinking economy. As Michael Dixon put it, "Companies faced by sharpening competition and rapid change are turning from empire-building to empire demolition."
The word that best describes the various new organizational approaches being invented and implemented daily by MNCs worldwide is "rationalization." (Most American writers use the term "restructuring," but rationalization is a more encompassing concept, of which restructuring is a part.) The Oxford English Dictionary defines rationalization two ways. In the area of mathematics, rationalization is "the process of clearing from irrational quantities." In economics, it is "the scientific organization of industry to ensure the minimum waste of labor, the standardization of production, and the consequent maintenance of prices at a constant level." Both the mathematical definition and the economic definition fit the process being followed by contemporary designers of future MNC organizational structures. The new organizational designs aim both at clearing the MNC of "irrational" activities (for example, unrelated companies and offices) and at minimizing waste of labor, standardizing production, and maintaining reasonably constant prices.
Part III of Figure 11.8 depicts conditions that characterize the present Age of Rationalization. The strategies being used by MNCs to accomplish this rationalization include
- Unifying production lines around the globe
- Making parts wherever manufacturing is most economical
- Selling where markets are growing
- Forming global strategic alliances
The emerging organization structures will be dealt with in detail in CONSORTIA AND STRATEGIC ALLCES.
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