To be competitive in an increasingly complex international environment, companies with worldwide operations must achieve global coordination and national flexibility simultaneously. Traditional organizational forms, however, have tended to provide one or the other attribute. The authors illustrate this point through the experience of two major competitors in consumer electronics: Philips, a classic "multinational" company whose decentralized federation structure is well suited to facilitating national flexibility, and Matsushita, a "global" company with a centralized hub configuration that provides it with great efficiency. The authors then describe an emerging model—the "transnational" organization whose structure is based on an integrated network of worldwide operations. The transnational firm requires both effective corporate management that does not impede national flexibility and efficient country management that does not prevent global coordination.
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