CHAPTER 2: Creating the international organization: Strategy and structure

1. CHAPTER 2: Creating the international organization: Strategy and structure

2. Learning objectives (chapter 2) • Describe the evolution of the multinational enterprise and explain the global organizational structures used by MNEs • Describe the choices for entry into international business • Explain the IHR implications of cross-border acquisitions, IJVs, and alliances • Describe the record of success and failure of cross-border acquisitions and joint ventures • Design a proper due diligence program in cross-border acquisitions and partnerships and explain its importance • Describe the HR issues in managing cross-border acquisitions and partnerships

3. Overview chapter 2: • Global organizational structure • Managing the cross-border acquisition and joint venture/partnership • Organizational structure and design • IHRM and global organizational design • Research on structure and performance of the MNE • The global learning organization: The tie that binds

4. Complexities of international business • Number of countries involved • Protection of foreign investments • Political uncertainty • Competitors • Operational differences abroad

5. Global competitive advantage • Adapt to local market differences • Exploit global economies of scale • Exploit economies of global scope • Tap into the best locations for activities and resources • Maximize knowledge and experience transfer between locations.

6. Global organizational structure

7. Evolution of the MNE • Stages of internationalization • Eight strategies: • Internationalization through export • International division or global product division • Multi-country/multi-domestic strategy • Regionalization • The global firm • The transnational firm • The born global firm • The globally integrated enterprise

8. 1. Export • Little impact on HR and the organization of the firm

9. 2. International division or global product division • International responsibilities of the HR department can expand dramatically and become much more complex

10. 3. Multi-country/multi-domestic strategy • Coordinate HRM activities and practices of the many subsidiaries • International assignees from the home office will be relocated

11. 4. Regionalization • Manage HR from a regional headquarters

12. 5. The global firm • The world is one market • Dominant HQs • Strong organizational culture • Global organizational branding

13. 6. The transnational firm • Final stage of globalization (Bartlett & Ghoshal) • Balance of global integration, local responsiveness and knowledge sharing

14. 7. The born global firm • Operate instantly around the globe • IT focus

15. 8. The globally integrated enterprise • Integrated approach to deliver value to employees and customers worldwide • Talent and expertise within the MNE flow to where it creates most value

16. Choice of method of entry into international business (IB) • Licensing and sub-contracting • Outsourcing • Off shoring • Wholly owned subsidiary • Mergers and acquisitions (M&As) • International joint ventures (IJVs) • Strategic alliances, partnerships (e.g. research) and consortia

17. Maquiladora • Unique form of international partnership between the U. S. and Mexico • Special form of foreign subsidiary with special characteristics favorable to the foreign parents • Take advantage of low-cost Mexican labor

18. Managing the cross-border acquisition & joint venture/partnership • Record of success and failure • Higher rate of failure than success • HR implications and considerations • Due diligence • Process of integration • Process of acculturation

19. Organizational structure and design

20. Designing the organizational structure of global firms • Integrates activities • Coordinates policies and practices • Organizational components • Additional factors

21. Coordination mechanisms • Balance common policies with local approaches • Reduced size of business units • Informal linkages • Global networks

22. IHRM and global organizational design

23. IHRM and the management of global organization structure • Shared services model • Linkages • Networks

24. Research on structure and performance of the MNE

25. Empirical shortcomings • Manufacturing industry slant • More emphasis placed on strategy issues rather than management and organization issues • Failure to capture temporal context

26. The global learning organization: The tie that binds

27. Knowledge is power • Intellectual and social capital • Knowledge sharing • Facilitate learning on a global basis • Utilize full skill sets

28. Key terms • Export • International division or global product division • Multi-country and multi-domestic organizations • Regionalization • The global firm • The transnational firm • The born-global firm • The globally-integrated enterprise • Licensing and sub-contracting • Outsourcing • Off-shoring • Wholly-owned subsidiary • Global mergers and acquisitions • International joint ventures • International alliances, partnerships, and consortia • Maquiladoras • Cross-border/dispersed/virtual teams • Informal global networks • Global learning organization • Global integration • Local responsiveness • Due diligence