Multinational Corporate Strategy and Organization: An Internal Market Perspective

The objective of this chapter is to describe and interpret some of the recent changes observed in the strategy and organization of large multinational corporations (MNCs). The argument is that there have been a number of important but subtle changes over the last decade, including an increasing emphasis on the geographical location of value-adding activities, an increasing disaggregation of value-chain activities, and increasing competition between subsidiary units. Together, these changes indicate the need for new conceptual models. In the second half of the chapter one such model is proposed based on the concept of ‘Internal Markets’ . Three different types of internal market are described, and their implications for subsidiary strategy and corporate strategy are discussed.