Ch7 Reading 7-2 N

Ch7 Reading 7-2 N - Reading72:TapYourSubsidiaries...

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CHRISTOPHER A. BARTLETT AND SUMATRAN GHOSHAL PREPARE BY: JAN, LUAI & JIRAWONGKAMJORN, ANGKANA MGMT 6543 4/8/2009 Reading 7-2: Tap Your Subsidiaries  for Global Reach 
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Article Summary In 1972, EMI developed the CAT scanner. This  technological breakthrough seemed to be the  innovation that the U.K-Based company had long  sought in order to relieve it heavy dependence on  the cyclical music and entertainment business and  to strength itself in international markets. The  scanner enjoyed a dominant market position, a fine  reputation, and a strong technological leadership  situation. 
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Summary Continue 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. How could  such a fairy-tale success story turn so quickly into a  nightmare? There were many contributing cause but  at the center were a structure and management  process.
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Summary   Continue The concentration of EMI’s technical, financial, and  managerial resources in the United Kingdom made it  unresponsive to varied and changing needs of  international markets.  The Centralization of decision  making in London also impaired the company’s  ability to guide strategy to meet the needs of the  market.    
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Summary Continue  For example, medical practitioners in the United  States, the key market for CAT scanners, considered  reductions 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.
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Summary Continue  While the demise of its scanner business represents  an extreme example, the problems EMI faced are  common.  While all the current attention being given  to global strategy, companies risk underestimating  the organizational challenge of managing their global  operations.  
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United Nations Model and HQ Syndrome Our study   covered nine core companies in three  industries and a dozen secondary companies from a  more diverse industrial spectrum. They were selected  from three areas of origin- The United State, Europe,  and Japan.   Despite this diversity, most of theses  companies had develop their international operations  around two common assumptions on how to  organize. 
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Ch7 Reading 7-2 N - Reading72:TapYourSubsidiaries...

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