International Strategy and Organization Structure

Course: Fundamental of Global Business

Chapter 11: International Strategy and Organization Structure

Lecturer: Eng KimsanGroup 11

•Roeun Nakry

•Sean Tiheng

PAÑÑĀSĀSTRA UNIVERSITY OF PAÑÑĀSĀSTRA UNIVERSITY OF CAMBODIACAMBODIA

Commitment to ExcellenceCommitment to Excellence

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TableTable ContentContent

I. International Strategy• Strategy formulation Process

• Identify Mission and Goals

• Identify Core Competency and Value-Creating Activities

• Formulate Strategies

II. International Organizational Structure

• Centralization and Decentralization

• Type of Organization Structure

• Team Work

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Learning ObjectiveLearning Objective

• Explain the stages of identification and analysis that precede strategy selection.

• Identify the two international strategies and the corporate-level strategies that companies use.

• Identify the business-level strategies of companies and the role of department-level strategies.

• Discuss the important issues that influence the choice of organizational structure.

• Describe each type of international organizational structure, and explain the importance of work teams.

I. International Strategy• What is International Strategy?

Planning and Strategy

Planning Strategy

Identifying and selecting objectives and deciding how to achieve those objectives

Set of planned actions thatmanagers take to help a

company meet its objectives

Strategy Formulation Process

Identify Mission and Goals

Mission statements must consider:

Company activities Business objectives Stakeholders Stockholders Customers Residents Environment

and much more…

Identify Core Competency

Special ability of a company thatSpecial ability of a company thatcompetitors find extremely difficultcompetitors find extremely difficult

or impossible to equalor impossible to equal

Special ability of a company thatSpecial ability of a company thatcompetitors find extremely difficultcompetitors find extremely difficult

or impossible to equalor impossible to equal

Coordination of multiple skillsCoordination of multiple skills

Lengthy period to developLengthy period to develop

Difficult to imitateDifficult to imitate

Value-Chain Analysis

Divide company activities into primary and support activities and identify those that create

value for customers

Each activity isa source of either

strength or weakness

Insights gained are fed into the strategy formulation process

Value-Chain Components

Primary Activities

• Inbound Logistics.

• Operations.

• Outbound Logistics.

• Marketing and Sales.

• Service.

Support Activities

• Procurement.

• Technology Development.

• Human Resource Management (HRM).

• Firm Infrastructure.

Business Environment• National differences are

inherent in analyzing a company’s unique

abilities Cultural differences

Political processes

Legal matters

Economic systems

Labor issues

Consumer forces

and much more…

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Formulation Strategy

1. Two international strategy:• Multinational Strategy (multidomestic

strategy): adapting products and their marketing strategies in each national market to suit local preferences.

• Global Strategy: Offering the same products using the same marketing strategy in all national markets.

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2. Corporate Level Strategy:

• Growth Strategy: Strategy designed to increase the scale (size of activities) or scope (kinds of activities) of a corporations.

• Retrenchment Strategy: Strategy designed to reduce the scale or scope of a corporation's business.

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• Stability Strategy: Strategy designed to guard against change and used by corporations to avoid either growth or retrenchment.

• Combination Strategy: Strategy designed to mix growth, retrenchment, and stability strategies across a corporation’s business units.

II. International Organizational Structure

• Organizational Structure:

Way in which a company divides its activities among separate units and coordinates activities between those unites to achieve the organization goals.

Centralization & Decentralization

• Centralized decision making is when decision making is centralized at a high level in one location, such as headquarters.

• Decentralized decision making is when decisions are made at lower levels, such as in international subsidiaries.

Centralization Advantages

• Help to coordinate the operation of international subsidiaries.

• Decisions consistent with organizational objectives.

• Top managers may be more experienced and have a better decision making

• Centralization helps strong leadership (power is at the top).

• Some companies maintain strong central control over financial resources.

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Decentralization Advantages

• Help to reduce the top management task because top might be overburdened

• More motivation at lower levels

• More flexibility

• Better decisions on the spot by people directly involved

• Saves time in making decision to respond to local markets (operational decisions).

• Strong commitment on their projects

Type of Organization Structure

• There are many different ways in which a company can organize itself to carry out its international business activities.

• There are 4 most common organizational structure of international companies such as division structure, area structure, product structure, and matrix structure

International Division Structure

International Area Structure

Global Product Structure

Global Matrix Structure

Teamwork

1. Self-managed team: Employees from one department take on responsibilities of former supervisors

2. Cross-functional team: Group of employees from similar levels but different functional departments

3. Global Team: Top managers from headquarters and subsidiaries solve company problems

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II. Summary

In this chapter study about international strategy and organization structure.

There are three stages of Strategy Formulation Process such as identify company mission and goals, identify core competency and value creating activities, and formulate strategies.

Organization structure which focus about centralizes and decentralized decision making, difference type of structure, and teamwork.

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Thank for Your Attention!Thank for Your Attention!