Week 7 International Management

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MGF3681: International Management

Week 7:Organisational Structure

and Control Systems

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Week 6 Lecture

• Contrast foreign, minireplica and transnational subsidiaries. • Define Global Product and Global Area structures and give an

example of when an organisation would use each one. • What is an export department? What is an international

division? What are the advantages in having an international division?

• Describe, using examples, of how a matrix structure works in an international organisation.

• Evaluate the arguments in the centralisation / decentralisation debate.

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Organisational Structures

• The Export Department• The International Division• Global Product Structure• Global Area Structure• Matrix Structure

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What is this?

Chief Executive Officer

General Administration

R&D Manufacturing Marketing ITExport

Department

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Export Department!

• Usually the first foreign market entry mode for manufacturing

• At low levels, may not require a change to organisational structure

• When exports increase, a separate export division may be set up

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What is this?

Chief Executive Officer

Domestic Operations International Operations

AsiaEurope

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International Division

• A separate division is dedicated to managing the firms international operations

• Typically headed by a vice-president who reports to the CEO

• Usually accompanied by a significant shift in resource allocation

• Still best suited to companies with relatively low international sales

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Advantages

• It helps to concentrate managerial expertise and know-how

• Increased coordination of overseas functions

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Disadvantages

• Battle for resources between domestic and international sales

• Knowledge transfer between domestic and international departments can prove difficult

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What is this?

Chief Executive Officer

Vice President

Asia Pacific

Vice President

Middle East

Vice President

South America

Vice-President

North America

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Global Area Structure

• Divides the entire world operations of a firm into countries or regions, with each area having a fairly high degree of functional autonomy

• The role of headquarters is to maintain overall strategic direction and control of the MNEs finances

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Advantages

• Because operational and strategic decision making is delegated to regions or countries, this companies are allowed high levels of local responsiveness

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Disadvantages

• It can be inefficient due to repetition of efforts

• It may become difficult to transfer learnings and knowledge across regions

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What is this?

Chief Executive Officer

InternetFixed Line DevicesNetworksMobile Devices

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Global Product Structure!

• A structure whereby the multinational organises around what is usually a fairly diversified set of products

• Each product division has responsibility for producing and marketing a certain group of productions worldwide– E.g. P&G: Shavers, Shampoo, Snack Food

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Advantages

• All support functions (R&D, marketing, etc.) are focussed on the product and therefore more specialised

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Disadvantages

• Duplication of corporate support functions

• Tendency for managers to focus on subsidiaries with the greatest potential for sales

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What is This?

Corporate TVsApplianceCell Phones

North America

Europe

Asia

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Global Matrix Structure

• Comprised of overlapping geographic and product division structures in which decision making is shared between product and geographic managers

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Advantages

• If implemented well, it can help achieve both global integration and local responsiveness

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Disadvantages

• Very complex and difficult to implement

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Australia

1.What type of organisational structure arrangement is the MNC going to use in setting up its Australian operation?

2.Can this MNC benefit from any of the new organisational arrangements, such as joint venture, the Japanese concept of Keiretsu, or electronic networks?

3.Will this operation be basically centralised or decentralised?

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Next Week

• Motivation Across Cultures• Need to have your textbook

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Week 7 Lecture

• What are the four components of the Basic Work Motivational Process? Provide an example of how cultural differences can influence each of these.

• Explain Expectancy Theory of motivation. Using one or more of Hofstede’s dimensions, discuss the influence of cultural differences have on this process.

• Explain Equity Theory of motivation. Using one or more of Hofstede’s dimensions, discuss the influence of cultural differences have on this process.

• Explain Goal-Setting Theory of motivation. Using one or more of Hofstede’s dimensions, discuss the influence of cultural differences have on this process.