CHAPTER 15 COMPARATIVE STRATEGIC MANAGEMENT AND ORGANIZATION DESIGN: UNDERSTANDING COMPETITORS AND COLLABORATORS
Dec 22, 2015
CHAPTER 15
COMPARATIVE STRATEGIC MANAGEMENT AND
ORGANIZATION DESIGN:
UNDERSTANDING COMPETITORS
AND
COLLABORATORS
EXHIBIT 15.1 The Effects of Globalization on
the Convergence of Strategy and Structure
World WideKnowledge of
SuccessfulStrategies and
Designs
GlobalIsomorphism
Managers Copy SuccessfulPractices Regardless of
National Origin
Similar Strategiesand Designs in All
Nations
GLOBALIZATIONGlobal products/
customersSimilar customer
needsCross boardermergers andacquisitions
Rise of "foreign"CEOs and Managers
WHY CONVERGENCE?WHY CONVERGENCE?
• Global customers and products• Growing levels of
industrialization and economic development
• Global competition and global trade
Why convergence? (continued)Why convergence? (continued)
• Cross-border mergers, acquisitions, and alliances
• Cross-national mobility of managers
• Internationalization of business education
WHY DO MANAGEMENT WHY DO MANAGEMENT PRACTICES DIFFER?PRACTICES DIFFER?
• National context - includes national culture, the country’s available labor and other natural resources
NationalCulture
andBusinessCulture
NaturalFactor
Conditions
InstitutionsCreate
IsomorphicPressures
BusinessEnvironment
ResourcePool
StrategyFormulation
StrategyContent
HelpsCreate
National Differences in Strategy Formulation andContent and Organization Design
National Context
InducedFactor
Conditions
Influences
OrganizationDesign
COMPARATIVE STRATEGY COMPARATIVE STRATEGY FORMULATION: FORMULATION:
EXAMPLES FROM EXAMPLES FROM AROUND THE WORLDAROUND THE WORLD
• US model: used as basis for comparison – represents the attempt of a rational decision making process
THE US MODEL OF THE US MODEL OF STRATEGY FORMULATIONSTRATEGY FORMULATION
1-Define the business and its mission
2- Define objectives3- Assess the company's situation:
SWOT, competitors' actions 4- Craft strategy content
DEFINING THE BUSINES DEFINING THE BUSINES AND ITS MISSIONAND ITS MISSION
• The mission statement tells the organizational members and outsiders what the company does and why it exists
US MISSION STATEMENTSUS MISSION STATEMENTS
• Often emphasize market issues closely related to key elements of success in their respective industries
FRENCH AND BRITISH FRENCH AND BRITISH MISSION STATEMENTSMISSION STATEMENTS
• British mission statements–focus on strategic issues, emphasize shareholder returns
• French mission statements–reflect a national context in a social democracy
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EX 15.3
DEFINING OBJECTIVESDEFINING OBJECTIVES
• National differences exist mostly in priorities •financial or strategic
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EXHIBIT 15.4 FINANCIAL AND STRATEGIC OBJECTIVES OF U.S., JAPANESE, AND BRITISH SUBSIDIARIES
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Increase Profit
Increase Cash Flow
Defend and Maintain Market Share
Steadly Grow Market Share
Agressively Grow Market Share
Win and Dominate
Build Upper End Market Share
British
Japanese
U.S.
ASSESSING THE ASSESSING THE COMPANY'S SITUATIONCOMPANY'S SITUATION
• Management's assessment of the situation faced by their companies
• US managers favor techniques such as the SWOT and competitive analyses
GERMAN AND BRITISH GERMAN AND BRITISH EXAMPLES EXAMPLES
• Successful companies from both countries identified the same key success factors
• Differences: the organizational characteristics that managers believe achieve the key success factors
NATIONAL DIFFERENCES NATIONAL DIFFERENCES IN STRATEGY CONTENT: IN STRATEGY CONTENT:
KEIRETSUKEIRETSU
• Compete with a high ratio of
products where the company can add value with knowledge
• Emphasize production to improve productivity
• Use the resources of networks
COMPARATIVE COMPARATIVE ORGANIZATION DESIGNORGANIZATION DESIGN
• Multinational managers must deal with organizations from different societies
• Each society provides a unique national context for the design of organizations
BASIC CONCEPTS IN BASIC CONCEPTS IN COMPARATIVE COMPARATIVE
ORGANIZATIONAL DESIGNORGANIZATIONAL DESIGN
• Vertical differentiation• Horizontal differentiation • Span of control • Integration• Standardization
• Formalization• Mutual adjustment
Basic concepts in comparative Basic concepts in comparative organizational design, continuedorganizational design, continued
TurkeyPakistanChinaIndiaAustriaEthiopiaMexico
NigeriaSpainBelgiumThailandFranceGreeceArgentina
JapanPortugalItalyFinlandIrelandUK
GermanySwitzerlandAustraliaSweden
NorwayDenmarkCanadaUSA
EXHIBIT 15.6 PREFERRED ORGANIZATIONAL HIERARCHIES
CONTROL MECHANISMSCONTROL MECHANISMS
• Link the organization vertically • Five broad types of control:
– personal – output– bureaucratic – decision making – cultural
NATIONAL CULTURE AND NATIONAL CULTURE AND ORGANIZATIONSORGANIZATIONS
• Hofstede: power distance and uncertainty avoidance the most important– influence basic problems of organizational design--differentiation and integration
See Exhibit 15.7 next
Cultural Context: LowPower Distance and LowUncertainty Avoidance
Preferred Design:Adhocracy
Example Country: GreatBritain
Cultural context: HighPower Distance and LowUncertainty Avoidance
Preferred Design: FamilyBureaucracy
Example Country: China
Cultural Context: LowPower Distance and HighUncertainty Avoidance
Preferred Design:Professional Bureaucracy
Example Country:Germany
Cultural Context: HighPower Distance and HighUncertainty Avoidance
Preferred Design:Full Bureaucracy
Example Country: Fran ce
Low PowerDistance
High PowerDistance
Low UncertaintyAvoidance
High UncertaintyAvoidance
ADHOCRACYADHOCRACY
• Low power distance + low uncertainty avoidance = adhocracy
• Fits cultures where people can tolerate ambiguity and have less need for formalized rules and regulations
THE ADHOCRACY DESIGNTHE ADHOCRACY DESIGN
• Vertical and horizontal differentiation: fewer levels and wider span of control
• Control mechanisms: mutual adjustment
• Decision making: Participative or consultative
PROFESSIONAL BUREAUCRACYPROFESSIONAL BUREAUCRACY
• Small power distance + high uncertainty avoidance norms = professional bureaucracy
THE PROFESSIONAL THE PROFESSIONAL BUREAUCRACY DESIGNBUREAUCRACY DESIGN
• Vertical and horizontal differentiation: moderate levels
• Control mechanisms: standardization of skills.
• Decision making: centralized decision making
FULL BUREAUCRACYFULL BUREAUCRACY
• High power distance + high uncertainty avoidance = full bureaucracy
• Full bureaucracy is the most formalized of the Hofstede organization types
FULL BUREAUCRACY DESIGNFULL BUREAUCRACY DESIGN
• Vertical and horizontal differentiation: Tall pyramids and narrow spans of control
• Control mechanisms: Standardization and a high degree of formalized rules
• Decision making: Highly centralized
FAMILY BUREAUCRACYFAMILY BUREAUCRACY
• Occurs in countries with large power distance norms and low uncertainty avoidance norms.
• It most parallels an extended family with a dominant patriarch or father figure.
FAMILY BUREAUCRACY DESIGNFAMILY BUREAUCRACY DESIGN
• Vertical and horizontal differentiation: small and low specialization
• Control and coordination mechanisms: direct contact Decision making: highly centralized
• See key relationships in Exhibit 15.9 next
OlderBrother
Master
Friend
Husband
Father
Wife
Follower
Friend
Son
YoungerBrother
PROTECT & CONSIDER
RESPECT AND OBEY
FOLLOW AND MODEL
TAKE CARE OF
BE LOYAL
BE COURTEOUS
TRUST
TRUST
SUBMIT
MEET OBLICATIONS
THE JAPANESE CONSENSUS THE JAPANESE CONSENSUS BUREAUCRACY: A SPECIAL BUREAUCRACY: A SPECIAL
CASE?CASE?• Should favor the full
bureaucracy • Unique style of group
orientation = consensus bureaucracy
JAPANESE CONSENSUS JAPANESE CONSENSUS BUREAUCRACY DESIGNBUREAUCRACY DESIGN
• Vertical differentiation: little job specialization for individuals
• Control mechanisms: favor cultural control over bureaucratic control
• Decision making: consensual - see Exhibit 15.10 next
4. MakeFormalProposal
Strategic andOperationalIdeas (Mostlyfrom MiddleManagement
1. TheInformalProposal
5. CirculateRingisho
2.Nemawashi
Test Proposal withSupervisors, thoseAffected; Get MoreInformation
3. ReachConsensus
6. Top Mgt.Approval
DISTINCT DISTINCT ORGANIZATIONAL ORGANIZATIONAL
FEATURES FEATURES • Family-dominated and multi-
industry conglomerates• Extensive family control • Paternalistic leadership • Centralized planning - reports
directly to the chairman • Dominated much of Korean
business
INSTITUTIONAL CHANGE AND INSTITUTIONAL CHANGE AND THE THE CHAEBOLCHAEBOL
• Coercive isomorphism - government support fostered the growth of the Korean chaebol–Close relationships with banks for financing
–Protection by the government
Institutional change and the Institutional change and the chaebol, continuedchaebol, continued
• Recent government policies–reduced support–breaking networks–allowed to fail
CONCLUSIONSCONCLUSIONS
• Understanding different approaches to strategy and organization design:– helps to deal with international
competitors– helps a company become better
collaborators– facilitates local operations