Managerial Functions in MNC
The managerial functions in MNC, i.e. of a Multinational Corporation are:-
1. Planning in the MNC
Planning involves analyses of international and external environment to find out the strengths, weaknesses, opportunities and threats. After conducting the SWOT analysis, the management sets the objectives. It is very difficult to analyse the external environment. This is because the world markets, are changing continuously.
Even large MNCs find it difficult to compete in the world markets. Therefore, they form Global Strategic Partnerships (GSPs) with local companies. Due to GSPs, planning becomes easier. That is because the managers of the local branches have full knowledge about the local environment. Some MNCs use consultants to study the external environment of foreign countries.
2. Organising in the MNC
Organisation is a structure, which helps to achieve corporate objectives.
A MNC can select an organisation structure from the following options:-
- A MNC may appoint one Vice-President for all its foreign branches. He will control all the foreign branches from the MNC's head office.
- A MNC may use geographic structures. It may appoint a head in every single country or region in which it operates. For e.g. A manager may be appointed as a Head for the Asian region or for India; another manager may be in-charge of the European region, etc.
- A MNC may also organise the structure on the basis of production lines. For eg., One manager may be incharge of one product. Another manager may be incharge of another product, etc.
3. Staffing in MNC
Staffing involves selecting the right man for the right job. It also includes manpower planning, promotion, transfers, training and development, compensation, etc.
Staffing function of an international business is very important, especially while appointing the top-level managers. The top-level managers must be competent and committed persons.
A MNC has three options to select managers :-
- Managers from the home country who are working in the headquarters of the MNC. These managers know about the MNC's policies and operations.
- Managers from the host-country can be selected to manage the operations in that country. These managers know their countries environment, i.e. culture, legal, educational, political, etc. This environmental knowledge is very important for the success of the MNC.
- Managers from a third country who have worked in the MNC's parent headquarters, or experienced managers from some other MNC, can be selected.
The MNC must select the right managers to manage the international business. They must consider factors, such as compensation, labour laws of the host country, level of competence of the managers in the host country, etc.
4. Leading in the MNC
Leading is the process of influencing the subordinates to perform willingly towards group objectives. Leading involves motivating and communicating. Managers must have effective leadership qualities.
Leading and motivating employees require an understanding of employees and their cultural environment. For eg., Participative management may work well in democratic countries, but it may confuse the employees in a country having a dictator.
Communication is a problem for MNCs because they do business in countries where different languages are spoken. However, their communication problems can be solved by having local managers.
5. Controlling in MNC
Controlling involves monitoring actual performance and taking corrective measures, to correct deviations, if any.
Controlling is a bit difficult in international business due to certain reasons:-
- Revenues, costs, and profits are measured in different currencies.
- The ratios between currencies are subject to foreign exchange fluctuations.
- Accounting practices, and financial reporting differ from country to country.
The above problems can be easily solved with the help of computers.