© McGraw Hill Companies, Inc., 2000 The Organization of International Business Chapter 13
© McGraw Hill Companies, Inc., 2000 The Organization of International Business Chapter 13.
Dec 28, 2015
Welcome message from author
This document is posted to help you gain knowledge. Please leave a comment to let me know what you think about it! Share it to your friends and learn new things together.
Transcript
© McGraw Hill Companies, Inc., 2000
The Organization of International Business
Chapter 13
© McGraw Hill Companies, Inc., 2000
Royal Dutch Shell Shell organizational structure
Double matrix: Region/Business Activity. McKinsey and Company
Business consequence: Decision by consensus. Structure decentralized decision making.
Reorganized along divisional lines. No international division.
13-1
© McGraw Hill Companies, Inc., 2000
Shell Organizational Structure - 1998
13-2
© McGraw Hill Companies, Inc., 2000
Wiring Diagrams What are they? Why use wiring diagrams?
Important to the company. Important to the manager
13-3
© McGraw Hill Companies, Inc., 2000
Vertical Differentiation Concerned with where decisions are made.
Where is decision making power concentrated?
Two Approaches Centralization Decentralization
13-4
© McGraw Hill Companies, Inc., 2000
Centralization
Pros: Facilitate coordination. Consistency of decisions. Easier to make changes. Avoids duplication.
13-5
© McGraw Hill Companies, Inc., 2000
Centralization
Cons: Overburdened top management. Motivational research favors decentralization. Decentralization permits flexibility. Decentralization lets decisions be made closer
to the information source. Decentralization can increase control.
13-6
© McGraw Hill Companies, Inc., 2000
Strategy and Centralization Global strategy - centralization. Multi-domestic firms - decentralization. International firms - centralize for core
competencies (R&D) and decentralize for operating decisions.
Transnational - use both.
13-7
© McGraw Hill Companies, Inc., 2000
Vertical Differentiation - Decentralization
Top is over-burdened and makes poor decisions.
Increased motivation at lower levels. Greater flexibility. Better on-the-spot decisions. Increased accountability and control.
13-8
© McGraw Hill Companies, Inc., 2000
Horizontal Differentiation
How a firm divides itself into sub-units - value creation activities. Demands to great for one individual. Firm diversifies its product offerings.
Typically: function, business area or geography.
13-9
© McGraw Hill Companies, Inc., 2000
A Typical Functional Structure
Figure 13.1
Purchasing Manufacturing Marketing Finance
TopManagement
Buying units
Plants Branchsales units
Accountingunits
13-10
© McGraw Hill Companies, Inc., 2000
Horizontal Differentiation Usually firms start with an international
division. Leads to coordination problems, and Conflict between domestic and foreign
operations.
13-11
© McGraw Hill Companies, Inc., 2000
A Typical Product Division Structure
Figure 13.2
DepartmentPurchasing
Departmentmanufacturing
Departmentmarketing
Departmentfinance
Buying units
Plants Branchsales units
Accountingunits
Division productline A
Headquarters
Division productline B
Division productline C
13-12
© McGraw Hill Companies, Inc., 2000
One Company’s International Division Structure
Figure 13.3
DomesticDomesticdivisiondivisionGeneral General manager manager
Product line AProduct line A
InternationalInternationaldivisiondivisionGeneralGeneralmanagermanagerarea linearea line
HeadquartersHeadquarters
DomesticDomesticdivisiondivisionGeneral General manager manager
Product line BProduct line B
DomesticDomesticdivisiondivisionGeneral General manager manager
Product line CProduct line C
Country 1Country 1GeneralGeneralmanagermanager
(product A, B, (product A, B, and / or C)and / or C)
Country 2Country 2GeneralGeneralmanagermanager
(product A, B, (product A, B, and / or C)and / or C)
Functional units
Functional units
13-13
© McGraw Hill Companies, Inc., 2000
The International Structural Stages Model
Global Matrix
(“Grid”)
Area Division
Worldwide Product Division
International Division
Alternate Paths of Development
Foreign Product Diversity
Foreign Sales as a Percentage of Total Sales
Figure 13.4
13-14
Horizontal Differentiation - Two Structures (A)
Worldwide area. Used by firms with
Little diversification. Domestic structure based on function.
Fits multi-domestic strategy because of local responsiveness capability.
13-15
© McGraw Hill Companies, Inc., 2000
Worldwide Area Structure
Europeanarea
Middle East /Africa area
Far East area
Headquarters
Figure 13.5
North Americanarea
Latin Americanarea
13-16
© McGraw Hill Companies, Inc., 2000
Horizontal Differentiation - Two Structures (B)
Worldwide product division. Used by firms with structure based on
product divisions. Fits global strategy because of realization of
experience curve and location economies.
13-17
© McGraw Hill Companies, Inc., 2000
A Worldwide Product Division Structure
Worldwideproduct groupor division A
Worldwide product group or division C
Headquarters
Worldwide product group or division B
Area 1
(domestic)
Area 2
(international)
Functional units
Figure 13.6
13-18
© McGraw Hill Companies, Inc., 2000
Matrix Structures Multinational and Transnational attempt to
use a matrix structure. High failure rate because of bureaucratic
(turf) problems.
13-19
© McGraw Hill Companies, Inc., 2000
A Global Matrix Structure
Figure 13.7
HeadquartersHeadquarters
Area 1Area 1 Area 2Area 2 Area 3Area 3
Product Product division Adivision A
Product Product division Bdivision B
Product Product division Cdivision C
Manager herebelongs to division Band area 2
13-20
© McGraw Hill Companies, Inc., 2000
Dow Chemical Triple matrix structure.
Function Business Geography
Flexibility.
13-21
© McGraw Hill Companies, Inc., 2000
Japanese Organizational Structure
NEC Regional ‘optimum
locations’ manufacture.
Work together, with or w/o support from Japan.
Matsushita Rearranging 69
overseas plants into a ‘global localization’ plan to supply four major ‘poles’: NA, Europe, Japan, rest of Asia.
Japanese accustomed to strong central control.
Problems dealing with minorities.
Problems with labor unions.
13-22
© McGraw Hill Companies, Inc., 2000
Formal Integrating Mechanisms
Increasing complexityof integrating mechanism
Direct contact
Liaison roles
Teams
Matrix structures
Figure 13.8
13-23
© McGraw Hill Companies, Inc., 2000
Formal Integrating Mechanisms
Communications. Inter and Intranets.
Direct contact and liaison - requires leadership.
Management schools. creates networks. imposes culture.
13-24
© McGraw Hill Companies, Inc., 2000
Informal Integrating Mechanisms
Management networks. Organization Culture.
13-25
© McGraw Hill Companies, Inc., 2000
A Simple Management Network
B
C D
A
G
F
E
Figure 13.9
13-26
© McGraw Hill Companies, Inc., 2000
Control Systems Personal.
Personal contact.
Bureaucratic. Rules and procedures.
Output. Goal-setting.
Cultural. Establishment of value system.
13-27
© McGraw Hill Companies, Inc., 2000
Interdependence, Performance Ambiguity, and the Costs of Control for the Four International
Business Strategies
Strategy Inter-depend-ence
PerformanceAmbiguity
Costs ofControl
Multi-domestic Low Low Low
International Moderate Moderate Moderate
Global High High High
Transnational Very high Very high Very high
Table 13.1
13-28
© McGraw Hill Companies, Inc., 2000
A Synthesis of Strategy, Structure and Control Systems
Structure and
control Multi-domesticInternational Global TransnationalVertical
differentiationDecentralized Core competency;
rest decentralizedSomecentralized
Mixedcentralized anddecentralized
Horizontaldifferentiation
Worldwidearea structure
Worldwide productdivision
Worldwideproductdivision
Informal matrix
Need forcoordination
Low Moderate High Very high
Integratingmechanisms
None Few Many Very many
Performance
ambiguityLow Moderate High Very high
Need forcultural
controls
Low Moderate High Very high
Table 13.2
13-29
Related Documents
