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Surviving in a federative organisation

Two factors determine the role of the small local units in a federative organisation: its own expertise and its exposure to the rest of the organisation. Depending on the level of expertise and exposure the unit might take a driving role, simply survive or even exit the organisation. Local units with high exposure interact with many others in the organisation. This might be the case for the Greek sales organisation which receives its products from different European manufacturing sites. External factors, such as EU membership, can change the level of exposure significantly. For example, when Sweden and Finland joined the EU in 1995, multinational companies were able to extend their integrated European manufacturing networks. At the same time, local units were able to release their synergy potentials and play a more active role in the organisation.

Turning now to the issue of expertise, sustained growth in stagnating markets, continuous productivity improvement, the development of new technologies and a broad human resource basis are the main characteristics of a local unit with a high level of expertise. The key aim is to link local values and experiences with existing corporate competencies. Small local units moving along the expertise axis, have identified their local potential and are now ready to take a more active role in the next step. In the absence of expertise, the local unit might also try to keep a low profile within the organisation in order encounter as little pressure or attention as possible. There is, of course, the threat of being sold or operated as a satellite from a geographically adjacent unit, even if there is a steady stream of profit. In order to avoid the exit option, small units have to build their own expertise and manage the right exposure. This is the best way to safeguard their own local heritage.


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