1 / 26

Lecture V

Lecture V. The Organization of Global Operations (ch. 4, make a note here – most of the materials in this lecture are not covered in your text). Structure and Coordination. International corporate structure directly impacts the relationships between headquarters and subsidiaries

kat
Download Presentation

Lecture V

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Lecture V The Organization of Global Operations (ch. 4, make a note here – most of the materials in this lecture are not covered in your text)

  2. Structure and Coordination • International corporate structure directly impacts the relationships between headquarters and subsidiaries • Strategy- Structure – Control /Coordination

  3. Issues complicating the structuring of multinationals’ international organizations • How to coordinate activities of foreign units while permitting each to retain its identity (subsidiary autonomy – innovative, responsive) • How to exhibit local responsiveness while maintaining a global orientation (coordination)

  4. Factors influencing MNC’s Structure External Factors Economic conditions Technological developments Type of industry: product-market characteristics Host government policies

  5. Factors influencing MNC’s Structure Company Factors • Administrative heritage • Company history • Top management philosophy • Nationality, primarily organizational differences associated with nationality • Corporate strategy • Degree of internationalization • Number of overseas subsidiaries • % of sales from overseas markets • Number of product lines marketed abroad

  6. Development of International Corporate Structure • Stopford and Well’s International Structural Stages Model(p. 334, Figure 4-1) Structure evolves over time resulting from the growth of - product diversity - overseas sales

  7. A progression parallels the product life cycle • Stage 1, Introduction – Exporting domestic structure, international operations are treated as appendage • Stage 2, Growth – Expansion to manufacturing in low-cost countries  international division structure with little integration • Stage 3, Maturity – Global operations More sophisticated structures (product division, area division, global matrix/integrated network,etc)

  8. Stage 1 - Extension of the domestic structure • EMC (Export Management Company) • Trading Company (Japanese Sogo Shosha)

  9. Stage 1 - Extension of the domestic structure (Contd..) • International Manager

  10. Stage 1 - Extension of the domestic structure (Contd..) • Export Manager with broad product line

  11. Stage 1 - Extension of the domestic structure (Contd..) • Autonomous foreign subsidiaries: • US (short-lived) • European MNCs

  12. Stage 2 - International Growth / Expansion • International Division Structure • Ethnocentric (domestic orientation) • Centralized control of overseas businesses Examples:

  13. Stage 2 - International Growth / Expansion (Contd..) International Division Structure

  14. Stage 2 - International Growth / Expansion (Contd..) • Geographic (Area) Division Structure • Polycentric • High % sales from overseas markets • Price / product differentiation Example: Nestle (then),now - ?

  15. Stage 2 - International Growth / Expansion (Contd..) Geographic (Area) Division Structure

  16. Stage 2 - International Growth / Expansion (Contd..) • Product Division Structure • Diverse product lines with high technological content • Significant responsibility given to young product managers • Coordination of different product activities in one country? Example: HP – then, now?

  17. Stage 2 - International Growth / Expansion (Contd..) Product Division Structure

  18. Stage 2 - International Growth / Expansion (Contd..) • International Functional Structure • Narrow, standardized product lines • Stable competitive environment Example: extraction industry

  19. Stage 2 - International Growth / Expansion (Contd..) International Functional Structure

  20. Stage 2 - International Growth / Expansion (Contd..) International Mixed Structure

  21. Stage 2 - International Growth / Expansion (Contd..) International Matrix Structure

  22. Stage 2 - International Growth / Expansion (Contd..) Matrix Structure of ABB

  23. Stage 2 - International Growth / Expansion (Contd..) Advantages of Matrix structure • More efficient use of overall resources • Better cooperation and coordination across sub-units • Company’s overall global performance is highlighted (compared to the problems of “sub-optimization” in the product or area division structures) • Conflicts resolved at the lowest possible level

  24. Stage 2 - International Growth / Expansion (Contd..) Drawbacks of Matrix structure • Worldwide responsibility may be given to product managers with relatively weak international experiences • Dual-boss/ dual-communication can be complex and expensive  • Create a mountain of paperwork (?) • Quick decision making is impossible (?)

  25. IBM’s Restructuring

  26. Review of the MNE definitions Attribute Source Perlmutter [1969] Management Style Centocentric Geocentric Ethnocentric Polycentric Coordination/ Configuration needs Porter [1986] Complex Global Multidomestic Global Bartlett & Ghoshal Global Strategy International Multinational Transnational Integrated Network Centralized Hub Coordinated Federation Bartlett & Ghoshal DecentralizedFederation Structure

More Related