Positives and Negatives of a Global R&D Network
Regional development center (R&D) network has several advantages to a company. Applying global R&D strategy enhancesfirms’ capability to tap local talents, access cheap labor, and hire regional expertise at reasonable rates. Setting up regional operations facilitates engineers, managers, and technicians to take advantage of facilitating rapid response to local challenges leading to faster customizations. As a result, an organization enjoys growth, customer satisfaction, and competitive advantage. Shifting autonomy to regional centers strengthens the global presence of a firm (Thomke, 2002, p. 6). R&D centers can integrateconsumer interests during products’ development phases, leading to improved product features and enhanced sales. Although foreign subsidiaries have enhanced preparedness and resources to venture in new markets, an effective corporate culture and governance strategy enhances the quality of work and productivity.
Global R&D networks are characterized by some negatives. .If subsidiarydoes not break even, it transfers its losses to the parent company (). According to Thomke (2002), providing strategic and technical advice on parameters and project specificity is a significant challenge to various destinations despite the importance it has to value and products quality. However, Thomke (2002) illustrates that the greatest challenges to operations of global R&D centers is the interdependency of sub projects, contracting relevant employee from the different locations, and coordination of cost variable within the centers (Lehdonvirta et al., 2018, p. 568). Another challenge include competitive work environment that subsidiaries operate in. For instance, the Indian market had competitors, such as Cisco and Lucent, bidding for talent and capability of new employee at better rates. Regional development centers encounter operational risks that require effective strategy to mitigate.
Governance and Cultural Problems in the Siemens Centers
Governing organization with subsidiaries require an integrated approach that cover the cross-cultural, legal, and political environment. For instance, the Germany government compounded governance challenges of the Siemens Company through stringent migration laws barring entry to Indian software developers for learning and experience gains (Thomke, 2002, p. 11). The denial of Visas and other relevant travel support to professionals from Indian subsidiaries denied the company an opportunity to integrate services through tests runs (Thomke, 2002, p. 11). Experience is an important aspect in managing international business. Liou, Rao-Nicholson, and Sarpong (2018) illustrate that international organization experience challenges of inadequate management experience on global assignment (p. 301). Offshore subsidiaries should develop strategies to manage interest of stakeholder, such as employees, customers, local communities, and local governments (Liou, Rao-Nicholson & Sarpong, 2018, p. 303). Accordingly, companies should develop effective governance principles for subsidiaries and a stronger relationship with the parent organization for effective coordination and growth.
Culture and cross-cultural dynamics of people also affect the operation of international companies. For instance, although Indians and Germans had mutual respect, the culture of strictness from the Germans often caused displeasures within the operations (Thomke, 2002, p. 1). Patrucco, Scalera, and Luzzini (2016) demonstrate that variations in employee cultures are a source of conflict among employees of offshore firms (p. 5). Achieving a positive culture between workers and other stakeholders has significance influence to growth and competitive advantage of a company. Hence, integrating cultures is an important strategy to manage cultural variances in a workplace.
References
Lehdonvirta, V., Kässi, O., Hjorth, I., Barnard, H., & Graham, M. (2018). The global platform economy: A new offshoring institution enabling emerging-economy micro providers. Journal of Management, 45(2), 567–599, doi: 10.1177/0149206318786781
Liou, R. S., Rao-Nicholson, R., & Sarpong, D. (2018). What is in a name? Cross-national distances and subsidiary’s corporate visual identity change in emerging-market firms’ cross-border acquisitions. International Marketing Review, 35(2), 301-319. doi.10.1108/IMR-10-2015-0225
Patrucco, A. S., Scalera, V. G., & Luzzini, D. (2016). Risks and governance modes in offshoring decisions: linking supply chain management and international business perspectives. In Supply Chain Forum: an International Journal, 17(3), 170-182. doi:10.1080/16258312.2016.1219616
Thomke, S. (2002). Siemens AG: Global development strategy (A). Harvard Business School. 1-27.
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