Bài giảng International Business - Chapter fourteen: Organizational Design and Control

Organizational Design and ControlMcGraw-Hill/IrwinInternational Business, 11/eCopyright © 2008 The McGraw-Hill Companies, Inc. All rights reserved.chapter fourteenLearning ObjectivesExplain why the design of organizational structure is important to international companiesDiscuss the organizational dimensions that must be considered when selecting organizational structuresDiscuss the various organizational forms available for structuring international companiesExplain the concept of the virtual corporation3Learning ObjectivesExplain why decisions are made where they are among parent and subsidiary units of an international companyDiscuss how an IC can maintain control of a joint venture or of a company in which the IC owns less than 50 percent of the voting stockList the types of information an IC needs to have reported to it by its units around the world4Organizational StructureOrganizational structureThe way that an organization formally arranges its domestic and international units and activities, and the relationships among these various organizational components5Organization DesignOrganization design for international how an international business is organized in order to ensure worldwide business activities are able to be integrated efficiently and effectivelyStructures and systems must be consistent with each other and with the environmental contextSize and complexity of the organization must be considered Structure must be able to evolve over time in order to respond to change6The relationship among International Environment, Competitive Strategy, and Organizational Structure7Design ConcernsFind the most effective way to departmentalize to take advantage of efficiencies gained from specialization of laborCoordinate the activities of those departments to enable the firm to meet its overall objectives8Design DimensionsProduct and technical expertise regarding the businessesGeographic expertise regarding the countries and regionsCustomer expertise regarding the client groups, industries, market segments, or population groupsFunctional expertise regarding the value chain activities9Evolution of the International CompanyInternational DivisionA division in the organization that is at the same level as the domestic division and is responsible for all non-home country activitiesWorldwide organizations were established, as a result of growthProductFunctionRegionCustomer classes10Evolution of the International Company11Global Corporate FormProductGeographic12Global Corporate FormFunctionHybrid Forms13Global Corporate FormMatrix OrganizationsMatrix overlayAn organization in which top-level divisions are required to heed input from a staff composed of experts of another organizational dimension in an attempt to avoid the double reporting difficulty of a matrix organization but still mesh two or more dimensions14Global Corporate FormStrategic Business UnitBusiness entity with a clearly defined market, specific competitors, the ability to carry out business mission, and a size appropriate for control by single manager15Changes in Organizational FormResult from pressure to act more quickly, reduce costs and improve qualityReengineering to reduce levels of middle managementrestructure work processesreduce fragmenting across departmentsImprove speed and quality of strategy executionEmpower employeesCommunicate instantlyTransmit information swiftly16Current Organizational TrendsVirtual CorporationAn organization that coordinates economic activity to deliver value to customers using resources outside the traditional boundaries of the organizationAdvantagesPermits greater flexibilityForms a network of dynamic relationships taking advantage of the competencies of other organizationsDisadvantagePotential to reduce management’s control over the corporation’s activities17Current Organizational TrendsHorizontal CorporationA form of organization characterized by lateral decision processes, horizontal networks, and a strong corporate wide business philosophyEmployees worldwide create, build, and market products through cultivated system of interrelationships18ControlWhere Are Decisions Made?All at IC headquartersAll at subsidiary levelCombination19ControlVariables determining the location of decision makingProduct and Equipment Competence of subsidiary managementSize of international company and durationDetriment of a subsidiary for the benefit of the enterpriseLevel of subsidiary frustration20ControlSubsidiariesCompanies controlled by other companies through ownership of enough voting stock to elect board-of-directors majoritiesAffiliatesA term sometimes used interchangeably with subsidiaries, but more forms exist than just stock ownership21ControlProduct and EquipmentExistence of global product policyDegree standardized or localized22ControlCompetence of Subsidiary Management depends onHow well executives know one anotherHow well executives know company policiesWhether headquarters management feels it understandsHost country conditionsDistances between home and host countriesSize and age of parent company 23Benefiting Enterprise Detriment of SubsidiarySubsidiary detrimentSituation in which a small loss for a subsidiary results in a greater gain for the total IC Moving Production FactorsCost, labor, taxes, market, currency, political stabilityWhich Subsidiary Gets the Order?Transportation, production, tariffs, currency, backlogsMulticountry ProductionEconomies of scaleWhich Subsidiary Books the Profits?Taxes, currency controls, labor relations, political climate, social unrest24Subsidiary FrustrationSubsidiary FrustrationManagement of subsidiaries must be motivated and loyalIf all decisions made at HQ they can lose incentive and prestige or face with their employees and the communityThey may become hostile and disloyal25Joint Ventures and Subsidiaries Less than 100 Percent OwnedA joint venture may beA corporate entity between IC and local owners A corporate entity between two or more companies that are both foreign to the area where the joint venture is locatedOne company working on a project of limited duration in cooperation with one or more companies26Joint Ventures and Subsidiaries Less than 100 Percent OwnedLoss of freedom and flexibility shareholders can block HQ efforts toMove production factorsFill an order from another affiliate or subsidiaryShareholders may bringLegal pressuresPolitical pressures27Joint Ventures and Subsidiaries Less than 100 Percent OwnedControl Can Be HadManagement contractControl of financesControl of technologyPeople from IC in important executive positions28Effective ReportingOperating units must provide headquarters with timely, accurate and complete reportsFinancialTechnologicalMarket OpportunitiesPolitical and Economic29De-JobbingReplacing fixed jobs with tasks performed by evolving teamsHierarchy not maintained30Traits of De-jobbed WorkersThey make operating decisions that used to be reserved for managersThey have the information they need to make such decisionsThey have training so that they understand the business and financial issues that used to concern owners and executivesThey have a stake in the fruits of their labor, share of profits31