Emergic: Rajesh Jain's Blog

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Stateless Transnationals

September 23rd, 2003 · No Comments

[via Reuben]Business Week writes:

[A] new breed of high-tech companies is defying conventional wisdom about how corporations ought to operate. While most large companies have extensive worldwide operations, these companies go much further — aiming to transcend nationality altogether. C.K. Prahalad, a professor at the University of Michigan Business School, calls this the fourth stage of globalization. In the first stage, companies operate in one country and sell into others. Second-stage multinationals set up foreign subsidiaries to handle one country’s sales. And the third stage involves operating an entire line of business in another country.

What’s different about these outfits — call them transnationals — is that even the executive suite is virtual. They place their top executives and core corporate functions in different countries to gain a competitive edge through the availability of talent or capital, low costs, or proximity to their most important customers.

An example: Trend Micro, whose “financial headquarters is in Tokyo, where it went public; product development is in PhD-rich Taiwan; and sales is in Silicon Valley — inside the giant American market.” India’s Wipro is also mentioned in the article.

Tags: Management

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