IT Strategies for Transnational Organizations

As businesses become more globalized, and companies start branches in international markets, the need grows for developing and employing IT strategies for transnational organizations. Multinational enterprises constantly seek business solutions to the impacts of a saturated domestic market, slowed domestic market growth, increased labor costs, and shortage of specialized labor (Chen, 2005). Transnational Organization Strategy is a management approach wherein a business integrates its global business activities through cooperation between headquarters and international operations (Linton, 2015). In this system, centralized resources, such as global information systems, are key to help support this very strategy. It systems allow a company to deliver consistent information services to all locations, with higher levels of collaboration, all the while allowing the individual locations enough flexibility to adapt to their local market conditions.

Business and Information System (IS) executives need to be competent enough to analyze a global strategy from at least five levels: global, regional, national, company, and individual (Chen, 2005). There are a number of advantages to employing these types of strategies. Transnational organizations work with service providers that have the ability to provide global IT and networking services. This proves to be advantageous, for, working with a single provider reduces the cost, as well as the complexity, of managing various providers from the numerous locations. A single network unit is able to offer the same standard of services, and communication resource to each area, while allowing the central operating team to switch resource levels based on demand. The operations team is also able to provide IT resources new locations quickly and efficiently, without having the need to set up and connect to a new network infrastructure.

The Internet accessibility is perhaps the biggest challenge faced by companies these days. For instance, a company from the U.S. will have a difficult time corresponding with its foreign branches where a telephone network is not a viable option. Therefore, the idea is to have a global network of networks to smoothly communicate with one another. For example, OASIS has done a great deal to create interoperable industry specifications based on public standards, such as the XML and SGML. The global telecommunication industry is another key player in the movement of global information systems. There are four key players: communication providers, distribution providers, content providers, and tools providers. Communication providers include local phone, cellular phone, and other wireless service providers. Distribution providers include broadcast, Internet service providers, and long-distance phone service. Networking devices, such as routers and Ethernet cards, are considered communication hardware, while tools providers are manufacturers and suppliers of these products.

One major example of companies that successfully utilize transnational IT strategies is Citibank. The company employs over 250,000 employees in over 100 countries. Their e-business initiative to empower local, regional, and global customers to conduct transactions online is an excellent example of the use of information systems and technology to support international business strategy. Strategic alignment is a pivotal part of ensuring that adequate information systems structure is designed to support an international strategy. If not careful, IT may miss this target, unless it relies on the supply of accurate information. Therefore, transnational organizations must constantly evaluate their strategies of IT against its business strategy and structure.

                                                                                 Citibank

Moreover, organizations that adopt a transnational IT strategy may improve the efficiency of their supply chain operations by extending the network to authorized suppliers, distributors, and business partners over secure connections (Linton, 2015). In the event of a problem in the supply chain, the availability of global networked resources allows the organizations to bring together other suppliers, in an effort to avoid disruptions to operations.

In conclusion, the importance of strategies to support transnational IT operations may not be overstated. With the advent of globalization, companies may benefit greatly from developing strategies that not only support operations at home, but abroad as well. “Instead of having independent IS units, or even a centralized IS operation directed from its headquarters, a transnational business tries to develop an integrated and cooperative worldwide hardware, software, and Internet-based architecture for its IT platform”(O’Brien & Marakas, 2011) These strategies are not only important for a company’s local operations, but more so for beyond borders as well.

Basu, C. (n.d.). What Is a Transnational Business Strategy? Retrieved April 10, 2015, from http://smallbusiness.chron.com/transnational-business-strategy-20950.html

Linton, I. (n.d.). Transnational IT Operations as a Strategy. Retrieved April 10, 2015, from http://yourbusiness.azcentral.com/transnational-operations-strategy-4238.html

Brien, J., & Marakas, G. (2011). Management information systems (10th ed.). New York: McGraw-Hill/Irwin.