Abstract

In the 1960s, the presence of American firms in Europe was described as "the American Challenge." Now, as European and Japanese firms have rapidly increased their investment in the United States, they face a new "American Challenge"-how to deal with the many problems of managing their U.S. affiliates. Some challenges are encountered at entry and include the difficulties of managing on a large scale, the intensity of competition in the U.S., and problems inherent in managing acquisitions. However, once the affiliate has been established, other problems are encountered: hiring and developing local managers, cross-cultural problems stemming from an American tendency for independence, and organized difficulties given the size of the U.S. affiliate. This article offers a set of principles to help foreign MNCs deal with these many challenges. As these firms learn to manage more effectively in the U.S., they will pose an increasing challenge to American firms on their home ground.