But managing globally is complex and this has been obscured by creating polar opposite strategies, between centralised and decentralised or between global or multidomestic (Hout et al, 1982). A simplifying model paints it as a choice between four alternate options depending on the pressures for cost reduction and the pressures for local responsiveness, namely international, multidomestic, global and transnational.
Companies that pursue an international strategy attempt to create value by transferring valuable skills and products to foreign markets where individual companies lack the skills and products. Manufacturing and marketing functions are usually set up in other countries. However, product development and marketing strategy are centralised at home. Any local customisation that takes place will be limited in scope. Product standardisation worldwide is at the core of this strategy (Levitt, 1983). Traditionally, US multinational corporation such as McDonald's and Kellogg have followed this strategy. An international strategy makes sense if a company has a valuable distinctive competency that indigenous companies in foreign markets lack, especially if there is little pressure for local responsiveness and cost reduction (Hill and Jones, 1998).
Firms that pursue a multidomestic strategy orient themselves to gain maximum local responsiveness. Unlike companies following an international strategy, they tend to customise the product offering and marketing strategy to the different national conditions. They may also establish production and R&D in all countries in which they operate. As a result they seldom benefit from experience-curve effects or location economics, and as a result have a high cost structure. A multidomestic strategy only makes sense where there are high pressures for local responsiveness and low pressures for cost reduction. A multidomestic structure is a multidivisional structure, the so-called M-form that was developed in the post war years and applied to many multinational companies (Bartlett and Ghoshal, 1998). This structure was first studied in detail by business historian, Alfred Chandler (1962). By modelling human behaviour, Cyert and March (1963) analysed how decisions were made in complex organisations. Bower (1970) applied this theory of decision making to the corporate model outlined by Chandler (1962). Their work clearly elucidates how complicated effective decision making can be in large multidivisional organisations such as multidomestic multinational corporations.
Companies pursuing a global strategy focus on increasing profitability by exploiting the cost savings that accrue from the experience-curve effects and location economics. Production, marketing, and R&D activities are concentrated in a few favourable locations. There is a tendency not to tailor products and marketing to local conditions because customisation raises costs by shortening productions runs and duplication of functions. Global companies prefer a standardised product worldwide to reap the benefits from the economies of scale that underlie the experience curve. This strategy makes sense when demands for local responsiveness are minimal and there is strong pressure for cost reduction. This has been increasingly the case over the last two decades for industrial goods. Global standards have been pursued. The semiconductor industry is a good example of a global industry with Intel, Mororola and NEC selling the same microchips worldwide. However, in many industries such as the car industry and processed food local responsiveness remains how limiting the extent of success of globalisation. Bartlett and Ghoshal (1989) argue that companies going into this new century must be able to exploit experience-based cost economics, location economics, transfer distinctive competencies within the company, and at the same time pay attention to pressures for local responsiveness. They also note that in many modern multinational companies distinctive competencies do not all reside in the home country, but can develop at any of the foreign subsidiaries. The flow of skills and product offerings should not be all one way as in the case of a company pursuing an international strategy. The flow of knowledge should also be from foreign subsidiary to home and from foreign subsidiary to foreign subsidiary. This process is called global learning. Firms pursuing all these objectives are referred to as transnational. A transnational strategy makes sense when faced with high pressure for local responsiveness and strong cost reduction pressure. This is a difficult strategy to follow.
A good example of the benefits of transnational strategy for product development was the development on Liquid Tide by Proctor and Gamble in 1985 (Ghoshal, 1998). A new ingredient to suspend dirt in water was developed at Proctor and Gamble's Cincinnati headquarters. The surfactant (cleaning agents) formulation was developed by Proctor and Gamble in Japan. The ingredients to fight hard water were developed by Proctor and Gamble scientists in Brussels. Japan had developed a competence in surfactant technology because of the need to wash clothes in colder water in Japan. The Belgian scientists a competence with water softening because water mineral content in Europe is twice as high as in the USA.
Human physiology is much alike worldwide, so there should not be much pressure for different medical device and pharmaceutical products in different countries. And the concern individuals have for their own health is usually greater than financial concerns. Therefore, there is seldom as much pressure for cost reductions as in other industries. The development of new medical products by the major Western healthcare and pharmaceutical companies, especially American companies, is unmatched in other parts of the world. This low degree of pressure for local products, low cost pressure and one-way product development should makes medical device and pharmaceutical device manufacturers good candidates for pursuing an international strategy. However, because of differences in markets due to healthcare regulation, many pharmaceutical and healthcare companies have had to follow more multidomestic strategies in some areas, especially in dealing with regulators and the medical profession. Most have still followed centralised product development strategies and developed products for sale worldwide with minimum customisation.
While there has not been much pressure for cost reductions, pressure from Wall Street for profit maximisation did encourage multinational pharmaceutical companies to follow a more global strategy for manufacturing. Ireland benefited enormously from these globalisation strategies since the 1970's with many multinational pharmaceutical companies, mostly American, locating bulk pharmaceutical and intermediate manufacturing facilities in Ireland. These manufacturing sites generally produced bulk pharmaceuticals for the markets outside the USA which would be tableted elsewhere, usually in the country of sale. There were major cost benefits due to low Irish taxes which were exploited by the transfer pricing policies adopted by the firms. This global strategy was pursued for bulk pharmaceutical and intermediate manufacture. The international strategy for product development and multidomestic strategies for final manufacture into tablets, marketing and dealing with clinical issues were still in place. However, the increasing costs of developing pharmaceutical products and the goals of synergy in this expensive process have resulted in a number of major mergers in the pharmaceutical industry. Some of these have been transnational such as that of German company Hoechst and French company Rhone-Poulenc into Aventis. Even the mergers of firms within the one country such as Swiss companies Ciba Geigy and Sandoz, the British companies SmithKine Beecham and Glaxo Wellcome or the American companies Pfizer and Warner Lambert have major ramifications abroad because of the number of foreign interests each company has. This high cost of developing revolutionary new pharmaceutical products is increasingly forcing pharmaceutical and healthcare companies to adopt a more transnational strategic approach to Research and Development. Pharmaceutical companies are increasing foreign direct investment in R&D to augment domestic research (Kuemmerle,1999).
Each has advantages and disadvantages which must be considered carefully.
There are significant disadvantages to exporting. If the company were to set up manufacturing in the host country there may be savings if manufacturing costs are lower than in the home country. However, there may be other even lower cost locations from which the company could export. For instance, US sporting goods behemoth, Nike, manufactures in South East Asia for export to all countries, including the USA. A second disadvantage is shipping costs. However, this is more of a problem for bulky goods. A way around it is to establish a small number of regional manufacturing sites, such as one for Europe, one for Asia and one for North America. Japanese car producers are increasingly adopting this strategy. Tariffs and other regulatory barriers are also a disadvantage with exporting. Some countries require a significant local input before imports are allowed. An example of this was the pre EU requirement in Ireland for car companies to manufacture some cars in Ireland in order to be allowed import other cars. Hence there was factory in Wexford manufacturing Renault 4's for export to Spain.
There are disadvantages. As for licensing there is the problem of loss of control of the technology. A way of countering this may be to have a controlling interest. However, it is difficult to get local partners to agree to this. The second disadvantage is that the company may not be able to realise location or scale economics or experience curve effects.
The disadvantage is that the company must bear the full costs and risks. It is the most costly mode of entry into foreign markets.
There are many parallels between these stages and the strategies and modes of globalisation identified above. Exporting is the first stage and is also the least committed mode of entry into foreign markets. It is used by firms using an International or Global strategy where the pressure for local responsiveness is low.
As a firm's commitment to a market increases it will move to the second stage and introduce some marketing functions into country. This may now be associated with any of the other four modes, depending on the degree of commitment. It may also indicate that the firm is moving towards a multidomestic strategy.
The third stage is overseas manufacturing. The licensing, joint venture or subsidiary mode may be used. It may indicate a move to a more multidomestic or global strategy from an International strategy, although many companies following an international strategy have manufacturing overseas, e.g. bulk pharmaceutical factories in Ireland.
The fourth stage of globalisation is the transfer of other head office functions to the subsidiaries. The transfer of R&D, engineering, finance etc. may end up forming a smaller clone of the head office, so-called insiderization. Many pharmaceutical and medical device subsidiaries in Ireland have reached this stage.
The fifth stage is to transfer functions back to the centre. The centre may not be to the head office but to a subsidiary that has shown a flair for a competence. This is similar to Ghoshal and Bartlett's (1989) transnational strategy. The functions transferred back may be human resources, finance functions from a shared service operation, R&D back to a small number of site to better exploit synergies, etc. There is some evidence that this is starting to occur, especially in competitive industries such as cars and microelectronics. There is some evidence of it occurring in the pharmaceutical industry. The recent large mergers are a symptom of this.
Reasons for centralising R&D include economies of scale, synergies between researchers, better control of results, no cases of 'not invented here' syndrome, and common R&D culture. Reasons against international R&D include language and culture problems, political risks etc. Kuemmerle (1999) found in an extensive study of foreign direct investment in research and development laboratories in the pharmaceutical and electronics industries that the relative market size and relative strength of a country's science base determined whether research is carried out in order to exploit existing firm specific advantages or to build new firm specific advantages. These are referred to as home base exploiting (HBE) and home base augmenting (HBA).
A study by Fors (1997) analysed the utilisation of R&D results by Swedish multinationals and found that four fifths of the gain in value-added was attributed to home plants and the remainder benefited foreign plants. R&D in foreign plants was not used as an input in home plants.
Taggart (1998) studied the degree of complexity of R&D conducted by foreign firms in Britain and related the complexity to activity, autonomy, co-ordination, integration, and local responsiveness of the subsidiaries. The complexity scale used was no R&D (1), basic customer technical services (2), ability to adapt manufacturing technology to local needs (3), capability of creating new and improved products and processes for UK and European markets (4), capability of creating new and improved products and processes for world markets (5), and competence to generate new forms and levels of technology (6). Taggart developed a model that could predict whether the subsidiaries were likely to increase or decrease the complexity of R&D.
| 1. The formation of organisational policy and strategy, and its implementation, evaluation and improvement are consciously structured as a learning process. |
| 2. There is wide participation and identification in the debate over policy and strategy. Differences are recognised, disagreements aired and conflicts tolerated and worked with in order to reach decisions. |
| 3. Management systems for accounting, budgeting and reporting are organised to assist in learning from the consequences of decisions. |
| 4. Information systems should informate as well as automate. They should allow staff to question operating assumptions and seek information for individual and collective learning about the organisation's goals, norms and processes. |
| 5. Information on expectations and feedback on satisfaction should be exchanged by individuals and work units at all levels to assist learning. |
| 6. Employers with external links – such as sales representatives and delivery agents – act as environmental scanners feeding information back to other staff. 7 |
| . There is a deliberate attempt to share information and learn jointly with significant others outside the organisation, such as key customers and suppliers. |
| 8. The organisation's culture and management style encourage experimentation, and learning wand development from successes and failures. |
| 9. Everyone has access to resources and facilities for self-development. |
The learning organisation concept was popularised by the publication in 1990 of The Fifth Discipline by Senge. He presents an alternate set of characteristics to those of Pedler.
| 1. There exists a shared vision upon which everyone agrees. |
| 2. People discard the old ways of thinking and the standard routines they use for solving problems or doing their jobs. |
| 3. Members think of all organisational processes, activities, functions, and interactions with the environment as part of a system of interrelationships. |
| 4. People openly communicate across vertical and horizontal boundaries without fear of criticism or punishment. |
| 5. People sublimate their personal self-interest and fragmented departmental interests to work together to achieve the organisation's shared vision. |
Garvin (1993) highlights three key areas of the learning organisation.
Meaning. A learning organisation has the ability to create, acquire and transfer knowledge. It can modify the behaviour to accommodate new knowledge and insights.
Management. The organisation shows evidence of learning from others, systematic problem-solving, experimentation and internal transfer of information, for example by job rotation.
Measurement. The organisation possesses mechanisms which assess the rate and level of learning. By taking practical aspects of its key functions, such as quality and innovation, managers can ensure that gains are made from the learning process within an acceptable timescale.
Studies of learning organisations continued through the 90's. Nevis, DiBella and
Gould (1995) recommend that companies focus on either knowledge acquisition,
dissemination, or utilisation. While it is possible to look at all three areas simultaneously,
it is more manageable to concentrate on one of these areas at a time. A further study by
the same authors examined the factors and processes that facilitate and impede learning
(DiBella et al, 1996). Seven orientations are identified for describing organisational
learning capabilities.
Each of these orientations is perceived as a bi-polar continuum that reflects the learning process.
Barrett (1995) goes beyond learning organisations to expand the concept of
appreciative learning cultures. Companies with appreciative learning styles practice four
competencies:
Nonaka and Takeuchi (1995) introduce several models for product development based on sporting analogies. The traditional American approach is the relay approach. After each stage of the development the process will be passed from one department to the next with clear separation, much as a baton is passed in a relay. A typical Japanese development process, the rugby approach, would include overlap of the various stages much as the ball is moved in rugby from forwards to half-backs to three-quarters with support from players of all positions. An alternate process between the two is the sashimi system, named after a dish where one slice of raw fish overlaps the next. In this approach there is some interaction between stages which smoothes the transition. A newer more modern approach is introduced and, continuing with sporting analogies, is referred to as the American Football approach. It is so called because separate specialists teams are used for each stage of the process and are co-ordinated by a project manager. This is similar to American Football where there are separate teams for offence, defence, kick- offs, punts etc., co-ordinated by the coach on the sideline. Nonaka and Takeuchi consider this approach to include the best parts of the relay and rugby approaches.
They also discussed three management models, namely top-down, bottom-up, and middle-up-down, and proposed that the latter was the best for knowledge creation. In a top-down autocratic system the boss exerts strong control on all processes. This can inhibit the people lower down. In the bottom-up model chaos can reign. While many ideas will be initiated, they can be inefficiently developed. In the middle-up-down development is driven by middle managers. They can interpret the vision and goals of upper management and efficiently convert the ideas of the individuals lower down into these.
Nonaka and Takeuchi (1995) present seven guidelines to be adopted to implement an
organisational knowledge programme within a company.
The top management should create the knowledge vision and communicate it within the organisation. It should provide corporate members with a mental map to provide a general direction as to the type of knowledge they ought to seek to create. A knowledge vision helps to foster a high degree of personal commitment from middle-managers and front-line workers.
A knowledge-creating company needs a diverse pool of talent. To ensure that such a pool of talent is available, the company must maintain the freedom and autonomy of the knowledge crew. It should offer separate career ladders for line managers, functional specialists and for project leaders. Project leaders would be intrapreneurs. Crew- members need to be encouraged to carry out innovative projects without fear of being penalised.
To nurture the highly subjective and personal mindset of individuals, the company should provide a place where a rich source of original experience can be gained. This high-density field is an environment in which frequent and intensive interactions among crew-members takes place. This can take the form of group meetings, "camp sessions", etc.
New organisational knowledge creation is a "derivative" of new-product development. Thus, how well a company manages the new-product development process is a critical determinant of how successfully organisational knowledge creation can be carried out.
The process of organisational knowledge creation is often triggered by a sense of urgency or crisis. One of the most effective ways of managing this chaos is by middle-up- down management, as presented above. Top management articulates the vision. Frontline employees in the trenches look at reality. In between middle managers synthesise the tacit knowledge of both top and bottom, make it explicit and incorporate it into new technologies, products and programs. In contrast to many US companies, especially those applying reengineering, who see middle managers as an expense to be cut, in knowledge creating companies they act as the bridge between visionaries at the top and the doers at the coalface.
To function properly as a knowledge-creating company, an organisation must have the capability to acquire, accumulate, exploit and create new knowledge continuously and dynamically. A hierarchy is the most efficient structure for acquiring, accumulating and exploiting knowledge. A task force is better for creating new knowledge. Therefore the organisation must also be able to recategorise and recontextualise the knowledge strategically for use by other in the organisation and at future times. This requires the development of another level in the organisation called the knowledge base. Nonaka and Takeuchi name an organisation with all three levels as a hypertext organisation after the links in web pages. The development of such a structure is difficult and takes time. Crew members of a knowledge creating organisation should also be able to mobilise the tacit knowledge held by outside stakeholders, such as customers, suppliers, competitors, channel members, the community and government. Most customers' needs are usually tacit, and they can not say exactly what they want. An interactive methodology is needed to properly elucidate such information Zander and Kogut (1995) studied the effect of the ease of creation, replication and transfer on the speed of internal transfer and imitation by competitors. These two processes, internal transfer and imitation, are the twin elements of competition in innovative and growing markets. They found that if a process is easily understood and communicated, it is easier to transfer internally and easier for competitors to imitate. Zander (1998) from the same study examined the effect of multinationality on the technological capabilities of multinational corporations. Kogut and Zander (1993) also proposed the theory that multinational corporations are social communities that specialise in the creation and transfer of knowledge. Their study investigated the effects of the five variables, namely codifiability, teachability, complexity, age of technology at time of transfer, and number times transferred, on the ability to transfer a manufacturing process by either by a subsidiary or under licence.
A study by Bierly and Chakrabarti (1996) linked the generic knowledge strategy of US pharmaceutical companies with their profitability. Based on the balance between internal and external learning, preference for radical or incremental learning, learning speed, and breadth of knowledge base, firms were grouped by cluster analysis into the generic categories 'Explorers', 'Exploiters', 'Loners', and 'Innovators'. Explorers and innovators are more profitable.
How technology is transferred depends on the resources needed. The possible modes of International Technology Transfer considered by Tsang (1997) in order of increasing resource need were (a) exporting, (b) licensing, (c) joint ventures, and (d) wholly owned subsidiaries. Tsang proposed that modes with high resource commitments (especially wholly owned subsidiary) were likely to be favoured: (1) by large firms; (2) for new or complex technology; (3) when the technical absorptive capacity of the transferee country is low; (4) when indigenous technical capability is low; (5) when intellectual property rights protection is poor; (6) when the technology is very important to a firm's business. He also proposed that the cost, likelihood of innovation, and efficiency of technology transfer improve with experience of transferring technology.
But why is International Technology Transfer important? It is not a new idea. In 1848 Marx and Engles wrote "Modern industry has established the world market ... All old established industries have been destroyed or are daily being destroyed ... In place of the old local and national seclusion and self-sufficiency, we have universal inter- dependence of nations. As in material, so also in intellectual production. The intellectual creations of individual nations become common property." (Kobrin, 1991). Firms may wish to be global for a number of reasons. International firms can exploit differences in prices and resource availability between countries. This may mean producing labour intensive goods in countries with cheap labour rates or where raw materials are abundant and cheap, or producing technologically advanced products or conducting advanced research in countries with high levels of education (Kogut, 1985). Firms may want to be multinational to benefit from the transfer of knowledge between subsidiaries in different countries, to increase the return on R&D by being in as many markets as possible, to exploit ambiguous national jurisdictions, to subsidise across markets, to diversify markets so as not to be too dependent on the fortunes of one market, and to scan for new technologies and market opportunities world wide. Firms gain operational advantages from being in all major world-wide markets. There can be significant transnational economies of scale.
In recent years some of the major reasons for locating manufacturing sites have been changing. For many manufactured goods the labour component of manufacturing cost has been decreasing (Aharoni, 1991). With robotics the labour component of car production dropped from 30% in the 50's to 7% in the 80's. Reductions in transport costs have lessened the importance of proximity to markets. The effect of the General Agreement on Tariffs and Trade (GATT), the North American Free Trade Agreement (NAFTA), the European Union (EU) and other international agreement and organisations has been to lower regulatory barriers to the free movement of goods and services.
Typical reasons for companies to locate in certain countries are market size and growth, trade policy including tariff and non-tariff barriers, exchange rate dynamics, taxation and costs (Mudambi, 1998). Inward Investment Agencies such as our own IDA compete to attract foreign investment by making these as attractive as possible. The Irish government tax concession (10% for manufacturing industry) is not a new idea. In 1160 Bishop Ugoccione attracted wool weavers to the Piedmont town of Biella with tax incentives (Castronova, 1996). Fiscal incentives are important to US Multinationals investing in Ireland (Karthigasen, 1994). In his survey of foreign companies with subsidiaries in the English West Midlands, Mudamba (1998) found that no individual policy was particularly effective in attracting investment. However, mature firms were more likely to increase their investment, suggesting that nurturing existing firms is an effective way of increasing inward investment. There is still reluctance to transfer the most advanced technology to third world countries (Glass and Saggi, 1998).
Many consider the seminal study on technology transfer by multinational firms to be the study by Teece (1977). Teece studied the cost of transferring technology in chemicals and refining and machinery industries. He found that the conventional wisdom, which held that the cost of transferring technology was costless, was untrue. Costs ranged form 2- 59% of the total project cost for the transfers studied. The transfer costs varied depending on the numbers of previous transfers of the same technology and on how well the technology was understood by both parties. Emphasis on skills accumulation lowered costs. The costs were lower for the chemical and refining industries.
Ghoshal and Bartlett (1988) studied the organisational attributes that facilitate creation, adoption and diffusion of innovations by subsidiaries of multinational companies. Four attributes were thought to be important, namely (1) extent of local slack resources, (2) local autonomy in decision-making, (3) normative integration of the subsidiary with the goals and values of the parent company, and (4) densities of internal communication among managers in the subsidiary and with managers at headquarters and other subsidiaries. The latter two attributes were found to unambiguously contribute to different innovation tasks. The effect with respect to the former two attributes was less consistent and mediated by the levels of normative integration and organisational communication.
Other methods of technology transfer that have been studied include use of the Internet (Hoetker, 1997). Rogers and Valente (1991) discussed technology transfer in high technology industry including such topics as personal networks. For instance informal technology transfers in The Wagonwheel Bar in Mountain View in Silicon Valley is legendary. Tsang (1997) proposed that the ability of companies to transfer technology improves with experience.
Szulanski (1996) measured the stickiness of practice transfer by it eventfulness, i.e. a 'stickier' transfer is more eventful. There may or may not be a cost associated, but there will be a perception of difficulty. Four sets of characteristics were investigated for causes of stickiness. Characteristics of the knowledge transferred are causal ambiguity and unproveness. Causal ambiguity refers to differences in perception between the source and recipient of how the knowledge is of benefit. Unproven knowledge is more difficult to transfer than proven knowledge. Characteristics of the source of knowledge that can cause stickiness are lack of motivation and perception of unreliability. The knowledge source may be unmotivated to share crucial knowledge out of fear of losing advantage. This applies especially to transfer of knowledge to lower cost manufacturing sites. Alternatively the recipient may perceive the source as unreliable. Characteristics of the recipient of knowledge that can cause stickiness are lack of motivation, lack of absorptive capacity, and lack of retentive capacity. The recipient may be unmotivated because of NIH syndrome (not invented here) or some similar reason. Or the recipient may not have the ability to either absorb or retain the knowledge. This is presented as a major reason why multinational companies do not transfer their latest technology to third world countries (Glass and Saggi, 1998). Characteristics of the context that can cause stickiness are barren organisational context and arduous relationship. If such transfers seldom occur, the context will not be well developed. If there are difficulties in terms of communications or social interactions between the units, knowledge transfers will be difficult.
This study found that the recipients lack of absorptive capacity, causal ambiguity, and arduous relationship were the most important impediments to internal transfer of best practice within the firms investigated (Szulanski, 1996). This is contrary to conventional wisdom that primarily blames motivational factors.
Kostova (1999) examined transnational transfer of practices within multinational corporations. She studied the degree of success of the transfer based on the embeddedness of the transferred practice. Factors at three levels, country, organisation, and individual affect the success of the transfer in social, organisational and relational contexts. The success of the transfer is negatively associated with the institutional distance between the transferor and transferee. It is more likely to be successful if the unit to which it is transferred is generally supportive of learning, change and innovation. The transfer will benefit if it is perceived to be compatible with the unit's organisational culture.
Hansen (1999) examined the roles of weak ties in sharing knowledge across organisational sub-units. There is a theory that distant and infrequent social contact is efficient for knowledge sharing bridging otherwise disconnected groups, while strong ties, in contrast, are likely to lead to redundant information (Granovetter, 1973). Hansen found that weak interunit contact speeds up projects when knowledge transferred is not complex but slows down projects when it is. Strong ties are necessary for the transfer of complex information. Nonaka and Takeuchi (1995) support this.
Kelly (1985) studied technology transfer in the Irish chemical industry. The objective was to ascertain if any technology was diffusing from subsidiaries of foreign multinationals to the sector in Ireland as a whole. He examined the effect of staff mobility and found that staff turnover was too slow to have this effect. Spin-off companies, industry linkage, and licensing were not important.
Karthigasen (1994) examined the use of incentives to attract US multinationals to Ireland and Singapore. While studying at UCD El-Harabi (1996) investigated technology transfer to Libya.
Many other terms have been used for the concept including business transformation, performance excellence, business excellence, and six sigma.
| 1. Identify benchmark subject |
| 2. Identify benchmark partner |
| 3. Determine data collection method. Collect data |
| 4. Determine competitive gap |
| 5. Project future performance |
| 6. Communicate results |
| 7. Establish functional goals |
| 8. Develop action plans |
| 9. Implement plans and monitor results |
| 10. Recalibrate benchmarks |
After success in the Japanese car industry, the lean thinking approach is now being applied to many industries. It encompasses many other cost saving principles such as JIT, kanban, etc.
The Irish chemical and pharmaceutical industry has been the object of business studies. One study examined technology transfer (Kelly, 1985). Another examined the development of generic manufacturing capability (Hannigan, 1996).
The product lifecycle of the healthcare and pharmaceutical industries is longer than electronics and computer industries. Many of the biggest firms attracted by the IDA in recent years have been in this area. Intel and Hewlett Packard are two of the largest manufacturing employers in the country. But a few years ago Digital, Seagate and Apple were. These industries are in a greater state of flux because of very short product cycles. Much of what has been written in recent year about technology transfer has concentrated heavily on the electronics and computer industries (e.g. books by Agmon and von Glinow, 1991, and Chen, 1996) because of the need to get products onto the market as quickly as possible.
In contrast with the electronics industry, it is apparent that the regulation of pharmaceutical and healthcare industries and the conservatism of the medical profession can restrict entry to the marketplace and lengthen product cycles. The length of time from initial development to market is long allowing plenty of time for transfer of technology from R&D to manufacturing. But patent expiry and advances in technology do limit product life and compress the traditional six-stage international product life cycle somewhat (Aggarwal, 1991, p. 64).