As we have already seen that knowledge management is very important for the multinational companies to succeed. Let us start with understanding what knowledge management is. In the fast moving world, the only competitive edge of big firms is the knowledge they have of different markets, knowledge of the needs of the consumers in different market, knowledge of different legal policies and the knowledge of their employees from different regions of the world. This was very well known from long back to the consulting and the R&D companies (Mudambi, 2002). They have recognized the importance of knowledge asses as one of the important step toward achieving success. The problem companies’ face today is to manage this knowledge base and put it to use.
Knowledge management comprises of basically three components. Firstly it includes, the betterment of the flow of knowledge between each and every individual in large firms. Secondly it includes of making robust and efficient systems for sharing knowledge within the firm and lastly gathering new knowledge from the external sources outside the firm. In many of the companies this knowledge management is eventually a by-product of the information management but surely these two concepts of knowledge management and information management are very close to each other (Gupta, 1991).