Transnational is a term that has been around for a long period of time. Corporate society defines transnational as being registered to perform business functions in other countries in addition to the organization’s home country. Information technology views transnational as providing technology services in other countries for conducting business activities. However, the corporate and information technology views digress in regard to strategic planning.
Corporations will engage in transnational business for various reasons. Two reasons are legal and resource considerations. Legal considerations include tax advantages, legislation and trade agreements. Resource considerations include human and product. Here is an example.
Corporation “A” manufactures tires. Strategic planning indicated the price of rubber will increase over the next few years, thus placing a upward pressures on the cost-per-unit. By placing a factory in India, the tire company will be able to secure the rubber required for the product and also incur lower costs-of-labor. Procuring the human and material resources will offset the additional finished goods transportation, local labor taxes and tariff costs. So, by engaging in transnational corporate practices, the organization can maintain and potential increase profit margins.
Transnational information technology in regard to strategic planning is involuntary. Strategic planning indicates the organization requires specific software to perform enterprise resource planning (ERP). The organization purchases the software based upon price and organizational requirements. The software vendor may provide transnational resources and services. Here is an example.
Company “A” requires enterprise resource planning (ERP) software for continuing operations. The software provider presents a requirements list to the organization for deploying the software. The hardware and software may be distributed by a transnational company; however, the only concern of company “A” is that the software performs according to specifications.
I do not consider transnational outsourcing of information technology services as beneficial to strategic planning. Any manager who has actually researched transnational outsourcing of information technology understands it actually weakens the organizations ability to respond to emerging markets. Just speak to the numerous organizations who engaged in transnational IT outsourcing about the capital lost through the outsourcing project and moving the services back “in-house.”
Transnational corporations and information technology digress in regard to strategic planning. The digression is in regard to voluntary vs. involuntary actions. Corporations engage in transnational activities due to legal and resource considerations. Transnational information technology is due to vendor supply lines and software support. The ability to identify the digression between the two should be on every manager’s mind while engaging in strategic planning.
Enjoy,
Mike Kniaziewicz, MIS