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The discussion provided by Mihir A. Desai entitled “The Decentering of the Global Firm” is a rational approach toward the contemporary flow of companies in the worldwide strategy of globalization. The work is structurally well-composed with points on the argumentative base of the theme outlined. Moreover, the ability of the author to use direct examples according to each peculiarity in the provision of worldwide policy by major players in the world arena is colored with the assumption of his thorough observation of how business is promoted in the present time in contrast with the previous times.
All in all the flow of the author’s thoughts is built in a rather comprehensive key so that to identify the main reasons for “decentering of a global firm” with peculiar actions provided by its administration. The paper briefly reviews the work by Desai in terms of whether a multinational firm with a particular national identity and a corporate headquarters fixed in one country is obsolete today, and what factors should be taken into account while arguing this issue.
With regards to the active use of information systems and high technologies, the implementation of strategic management with its risks and advantages seems in the article one of the main prospects for decentering of large companies. There are several reasons which state the necessity of global transformation in a firm with a national identity. Among them are: taxation conditions in different countries, labor costs, proved reputation of a country according to financial activities, close location to financial, transportation and other hubs or centers, etc.
It is vital to define what reasons drive the corporate structures of the major companies in their spread of headquarters and subsidiaries? There is a need for a strategic management department in a company to place its key representatives in the most advantageous points of the world to provide verification and stability of management processes. Also, the managerial power should be in the dynamics of world processes and events for decision making and in-time reaction wherever in the world to be first in a definite field of activities.
Desai (2008) in this respect rightly uses the division of global multinational companies in terms of their location into three major approaches, namely:
- Financial home;
- Legal home;
- Home for managerial talent.
Thereupon, the author insists on the stability of this tripartite structure, for the relocation may cause organizational change. It is true, as for me, because such an example is seen in the case of organizational change provided in the Boeing Company in 2004 when the headquarters were relocated from Seattle to Chicago, which made the Seattle relations of the personnel severed (Sweetman, 2004). Though, turning to the homes of MNC HQ Desai outlines that a financial home is a place where a company’s shares are saved; a legal home is a location for convenient tax obligation for a company and an investor; a home for managerial talent is placed in the locations with relevant labor markets, and local regulations (Desai, 2008).
It is seen that a large company should follow the direction of global decentering of main powers of it around the world because those which are faithful toward the national identity only lag behind the leaders and are also obsolete for contemporary conditions of world business strategy. According to this Desai (2008) underlines a statement that the “notion of a firm with a unique national identity is quickly fading” (19).
Desai, M. A. (2008). The Decentering of the Global Firm. Cambridge, MA: Harvard University and NBER.
Sweetman, B. (2004). ‘Boeing, Boeing, Gone?’ Popular Science, 264(6), 95-99.
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