Despite this diversity, most of these companies had developed their international operations around two common assumptions on how to organize. They were selected from three areas of origin-the United States, Europe, and Japan. Our study covered nine core companies in three industries and a dozen secondary companies from a more diverse industrial spectrum. Indeed, the top management in almost every one of the MNCs we have studied has had an excellent idea of what it needed to do to become more globally competitive it was less clear on how to organize to achieve its global strategic objectives. With all the current attention being given to global strategy, companies risk underestimating the organizational challenge of managing their global operations. While the demise of its scanner business represents an extreme example, the problems EMI faced are common. The managerial initiative, motivation, and capability in its overseas operations to respond imaginatively to diverse and fast-changing operating environments. The resources to analyze data and develop strategic responses to competitive challenges that were emerging worldwide. The ability to sense changes in market needs and industry structure occurring away from home. In the final analysis, it was EMI’s limited organizational capability that prevented it from capitalizing on its large resource base and its strong global competitive position. When General Electric eventually brought out a competitive product with a shorter scan time, customers deserted EMI. For example, medical practitioners in the United States, the key market for CAT scanners, considered reduction of scan time to be an important objective, while EMI’s central research laboratory, influenced by feedback from the domestic market, concentrated on improving image resolution. The centralization of decision making in London also impaired the company’s ability to guide strategy to meet the needs of the market. Corporate management would not allow local sourcing or duplicate manufacturing of the components that were the bottlenecks causing delays. managers that these delays were opening opportunities for competitive entry, headquarters continued to fill orders on the basis of when they were received rather than on how strategically important they were. As worldwide demand built up, delivery lead times for the scanner stretched out more than 12 months. The concentration of EMI’s technical, financial, and managerial resources in the United Kingdom made it unresponsive to the varied and changing needs of international markets. How could such a fairy-tale success story turn so quickly into a nightmare? There were many contributing causes, but at the center were a structure and management process that impeded the company’s ability to capitalize on its technological assets and its worldwide market position. Ironically, the takeover was announced the same month that Godfrey Hounsfield, the EMI scientist who developed the CAT scanner, was awarded a Nobel Prize for the invention. Thorn immediately divested the ailing medical electronics business. Nevertheless, by mid-1979 EMI had started losing money in this business, and the company’s deteriorating performance eventually forced it to accept a takeover bid from Thorn Electric. The scanner enjoyed a dominant market position, a fine reputation, and a strong technological leadership situation. The medical community hailed the product, and within four years EMI had established a medical electronics business that was generating 20 % of the company’s worldwide earnings. This technological breakthrough seemed to be the innovation that the U.K.-based company had long sought in order to relieve its heavy dependence on the cyclical music and entertainment business and to strengthen itself in international markets.
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