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GLOBALLY DISTRIBUTED KNOWLEDGE
By Frans van den Heuvel, Niek den Teuling and Esther Verhoef
PROBLEM STATEMENT
What type of strategy is best used for a multinational corporation?
OVERVIEW
• MNCs• Knowledge management on a global scale• Knowledge management strategies
o Storing and managing knowledge o Managing knowledge at different levels
• Case study: an international pharmaceutical company• Conclusion• Questions • Discussion
MNCS
Advantages on the developed countries: Generating tax revenues Lower prices Products do not so much on price of materials
Advantages on the developing countries: Greater level of employment Provide access to management and organizational skills Training and skill creation Provide host country with foreign exchange
MNCS
Disadvantage on the developed country Decreasing employment Decreasing bargaining power of labor
Disadvantage on the developing country Hurt domestic firms by eliminating competition Worsen balance between rustic and urban areas Environment costs Avoid tax by practicing transfer pricing
KNOWLEDGE MANAGEMENT ON A GLOBAL SCALEKey issues that companies need to address in
global knowledge capture and management (Klahr, 1996): Knowledge distribution Localizing knowledge Maintaining knowledge Organizing and managing knowledge Distributed authoring
KNOWLEDGE MANAGEMENT ON A GLOBAL SCALE
Problems regarding global companies (Desouza and Evaristo, 2002):• Knowledge is shared between two persons, leaving the
rest of the company out • People might not share the same language, place and
behavior (Kiesler and Sproull, 1992)• Culture• Time zones• Language• Redundancy
STRATEGIES FOR STORING AND MANAGING KNOWLEDGE
• Two strategies for storing and exchanging knowledge (Martin Schulz and Lloyd A. Jobe, 1998): oCodification strategyoTacitness strategy
• Two knowledge management strategies (Martin Schulz and Lloyd A. Jobe, 1998):oFocused knowledge management strategyoUnfocused knowledge management strategy
• Combining the strategies
CODIFICATION STRATEGY
Codification strategy• Advantages
• Codify your knowledge• Codified knowledge can easily be stored and exchanged between
subunits• Maintaining knowledge becomes easier
• Disadvantages• Information overload (Horton, 1989; Stuller, 1996)• Cost• Knowledge leakage
TACITNESS STRATEGY
Tacitness strategy• Advantages
• Keep your knowledge tacit• Less costs than the codification strategy• Stimulates creativity (Nonaka and Takeuchi, 1995)
• Disadvantages• Knowledge loss• Slower flow of knowledge
FOCUSED AND UNFOCUSED KM STRATEGIES Focused knowledge management strategy:• Focus on a few forms of codification• Carefully choose and plan which forms to used
Unfocused knowledge management strategy:• Do not focus on specific forms of codification• The forms of codification used are a result of other
decisions
COMBINING THE STRATEGIES
Unfocused strategy
Focused strategy
Codification strategy
Increase the level of codification across all forms
For each type of knowledge, increase the level of codification only on those forms which transfer knowledge fastest and most accurately
Tacitness strategy
Decrease the level of codification across all forms
For each type of knowledge, decrease the level of codification on those forms that pose the greatest risks of involuntary transfer of knowledge
MANAGING THE GLOBAL DISTRIBUTION OF KNOWLEDGE
3 Common strategies (Kevin C. Desouza et al. 2002)Headquarter Commissioned & ExecutedHeadquarter Commissioned & Regionally
Executed Regionally Commissioned & Locally Executed
HEADQUARTER COMMISSIONED & EXECUTED
All the knowledge management initiatives come from the head office
Knowledge exchange goes "through" the head office Good for standardizing 1 product across countries
HEADQUARTER COMMISSIONED & REGIONALLY EXECUTED
Knowledge exchange guidelines are being commissioned by the head office
Each regional head office uses these guidelines and can adapt them a little
Focus on sharing the knowledge regionally but through compatibility international knowledge exchange still possible
REGIONALLY COMMISSIONED & LOCALLY EXECUTED
Each region decides their own way of knowledge exchange
Most of the knowledge exchange locally Very fast knowledge exchange NOT really global knowledge exchange
QUESTIONS THAT CAN HELP YOU TO CHOOSE A STRATEGY• How beneficial is it to codify (too expensive/difficult/much time)? • How important is the distributed knowledge flow?• What type of knowledge do you have? • How important is it that everybody has exactly the same
knowledge?• What are the consequences and how high is the possibility of
knowledge leak age?• How big is the threat of competitors?
• At what scale is the exchange of knowledge most important?• How uniform does your product have to be?
Codification Tacitness Focused Unfocused
Beneficial to codify
Very Not much Very Very
Importance knowledge flow
Very Not much Very Between very and not much
Type of knowledge
Formulas Experience Shared databases
No information
Exactly the same knowledge
Yes No Yes Yes
High possibility of leak age
Good Not good Good Good
Threat of competitors
Not much Very Not much Not much
CASE STUDY: AN INTERNATIONAL PHARMACEUTICAL COMPANY• Everybody has to have the exact same knowledge• Competitors are not a big threat• Knowledge flow is important• Type of knowledge is recipes
• Differences in the product cannot be tolerated• Having the facilities working with each other is very
important internationally.
CONCLUSIONS
The best strategies for an international pharmaceutical company are:• The focused, codification strategy• Headquarter Commissioned & Executed
But in general, it is better to use a combination of strategies.
QUESTIONS
?
DISCUSSION
• It is better to use a combination of strategies than one strategy
DISCUSSION
The tacitness strategy has too much disadvantages compared to advantages to use that strategy as the only strategy
DISCUSSION
Why would company's use a Regionally Commissioned & Locally Executed strategy often ?