Question

The strategies that an MNE can take to establish its foreign presence determine how it will share knowledge with its subsidiaries. For example, a home replication strategy features a moderate level of interdependence between a headquarters and its subsidiaries, in which the latter adapt and leverage competencies developed by the former.

For the manager of an MNE, which strategy, in your opinion, offers the optimal mode of knowledge management? Why is this mode better than others? Do you think it is more important for knowledge to flow from local subsidiaries to headquarters or vice-versa? Or, would you prefer a flow of knowledge in multiple directions? If you prefer the last option, what kind of resources would make such communication both effective and efficient?

Answer 1

Knowledge Management Strategy should be able to bring following factors, in order to be successful:

• Knowledge Sharing-     Explicit knowledge, IT systems and content management are crucial to achieve this

• Tacit (embodied) knowledge- comes from company culture and technology practice
• Embedded knowledge- includes scenario planning, action reviews, and management training

• Knowledge Reuse: Involves creating, preparing, and actually reusing the knowledge
• Knowledge Creation: collaboration of relevant information and data and creating suitable work related environments to access and apply knowledge
• Knowledge Acquisition: comes from externally from customers, suppliers, competitors, partners, and mergers etc.

It is important for knowledge to flow from local subsidiaries to headquarters and vice-versa, because in today’s competitive market it is crucial from knowledge to flow from one subsidiary to another and to global Head Quarters. Since, international markets differ from each other, demand and supply vary and so will local strategies differ and hence will consumer preferences and liking for a product/ service. So information, relevant data, converted to knowledge needs to flow in both directions to make the optimum use of competencies, for a fruitful business.

Resources would make such communication both effective and efficient:

• Strong IT infrastructure and technology tools back up like ERP/ CRM/ Salesforce, Financial and operations modules of SAP etc., so that information can be of real time use to different people of different departments, based in different countries
• Accurate tools of collecting primary and secondary data, related to business needs should be used
• Accurate methods of interpreting above data to and competent workforce in management to drive absolute inferences and conclusions, are a must