Positives and Negatives of a Global R&D Network
A research and development center (R&D) network has several advantages to a company. Applying a global R&D strategy enhances firms’ capability to tap local talents, access cheap labor, and hire regional experts at reasonable rates (Thomke & Nimgade, 2002, p. 6). Setting up regional operations encourages engineers, managers, and technicians to respond to local challenges, which leads to faster customization of product features (Thomke & Nimgade, 2002, p. 6). 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 & Nimgade, 2002). R&D networks can integrate consumer interests during product development phases, which lead to improved device features and better sales. Research and development augment the quality of work and productivity for foreign subsidiaries, especially when venturing into new markets.
Some challenges characterize global R&D networks. For example, if a subsidiary does not break even, it transfers its losses to the parent company (Thomke & Nimgade, 2002, p. 6). In addition, according to Thomke and Nimgade (2002), providing technical advice is a significant challenge to global firms due to limitation of infrastructure to manage the capacity of work (p. 10). Notably, strategic guidance is important in influencing value and product quality, but it can be challenging since, as Thomke & Nimgade, (2002) illustrate, global R&D centers are characterized by interdependence of sub-projects, coordination of cost variances, and provision of contracts to expatriate employee from different countries, which lead to governance challenges (p. 7). Patrucco, Scalera, and Luzzini (2016) provide a model that support companies to manage risks within offshore operations (p. 176). Adopting a captive system of offshoring protects operational knowledge and competency, manages innovations, and avoids risks, such as poor product quality and unresponsiveness (Patrucco, Scalera, & Luzzini, 2016, p. 176). Another challenge includes a competitive working environment that subsidiaries operate in. For instance, the Indian market had competitors, such as Cisco and Lucent, looking for talented employees at better rates (Thomke & Nimgade, 2002, p. 10). Regional development centers encounter operational risks that require an effective strategy to mitigate.
Governance and Cultural Problems in the Siemens Centers
Operating an organization with subsidiaries require an integrated approach that covers the cross-cultural, legal, and political environment. For instance, the German migration laws affected Siemens Company. The regulations were stringent to Indian software developers and denied them entry (Thomke & Nimgade, 2002). The denial of visas and other relevant travel support to professionals from Indian subsidiaries deprived the company an opportunity to integrate services through test runs (Thomke & Nimgade, 2002). According to Liou, Rao-Nicholson, and Sarpong, (2018), offshore subsidiaries should develop strategies to manage interests of stakeholders, such as employees, customers, local communities, and local governments (p. 303). In addition, Siemens ought to have developed partnership and linkages with German government to facilitate its operations and limit risk exposures. Notably, R&D helps a company to project various risks and develop strategies to manage them for growth and sustainability.
Culture and cross-cultural dynamics of people also affect the operation of international companies. For instance, although Indians and Germans had mutual respect, the German culture of strictness affected the operations (Thomke & Nimgade, 2002). Thomke and Nimgade, (2002) demonstrate that variations in employee communication cultures are a source of conflict among workers of offshore firms (p. 12). For example, when Germans’ misunderstood Indian phrases, they made assumptions, which affected product quality and customer relationship (Thomke & Nimgade, 2002, p. 12). Achieving a positive culture between staff members and other stakeholders has a significant influence on growth and competitive advantage of a company. Hence, integrating cultures is an important strategy to manage cultural differences in the workplace.
Since Siemens Company operated various R&D centers, it required a robust research and development department to examine markets. Industry analysis would have allowed the company to understand market dynamics and develop strategies that would help identify and manage risks. For instance, if the company had anticipated the migration issues, it would have been able to negotiate with the authorities to avoid such risks. In addition, Siemens would have empowered local subsidiaries with enhanced technological equipment to limit traveling and hired a few expatriates to provide coaching and mentorship in the R&D centers for capacity building.
References
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. Supply Chain Forum: An International Journal, 17(3), 170-182. doi:10.1080/16258312.2016.1219616
Thomke, S., & Nimgade, A. (2002). Siemens AG: Global development strategy (A). Harvard Business School, 1-27.
Order an Essay Now & Get These Features For Free:
Turnitin Report
Formatting
Title Page
Citation
Outline
