chapter  5
20 Pages

Telecommunications and Intelligent Networks: Managing the Transnational Corporation

As internal communieation within a TNC becomes technically easier, it has redefined both strategie decision making as well as the division of labor, production, and manufacturing. The TNC is no longer limited by physieal geography. The TNC can engage in FDI and/or locate foreign operations wherever they can achieve a comparative advantage. The TNC has undergone an evolutionary process of decentralization whereby an increasing amount of critieal decision making and operations are being performed on site. The combination of telecommunieations and distributed data processing have virtually eliminated the distance barriers that once separated a company's strategie center from its affiliate sites. Telecommunieations enables the TNC to communicate in real and asynchronous time with its affiliate sites and thereby makes possible a company that truly operates in a global environment.

Transnational Communication and Decentralization Since the late 1940s, there has been a slow, paradigmatie shift away from top-heavy, centralized decision making toward decentralization where greater responsibility has been given to the regional manager for routine decisions. Implicit in this trend is a growing realization that the regional manager has a doser and perhaps more pragmatie understanding of local market conditions. Equally important was the increased use of foreign staffing, labor, and improved manufacturing techniques that allowed products to be produced at signifieantly lower cost. Early information technology, in the form of telephone and telex communieation, enabled senior management to have direct ties with the company's foreign locations and managers. As Roche (1992) pointed out, the technology that supports today's TNC evolved slowly and was required to "overlay the pre-existing structures and traditions of the corporation."l The telecommunieations and data solutions adopted by the TNC had to be incorporated into the existing methods for doing business on a worldwide basis. The solutions were seldom neat or complete because the multinational was often combining paper-and-pencil accounting systems with highly auto-