Chapter 9 Organizing Strategy

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<ul><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 1/30</p><p>Slide 9.1</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Organizing strategy</p><p>Chapter 9</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 2/30</p><p>Slide 9.2</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Organizing strategy</p><p>Objectives Introduction</p><p> Organizational structures</p><p>Strategic management and organizing strategy.</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 3/30</p><p>Slide 9.3</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Objectives</p><p> Examine organization structures used byenterprises that are just beginning their</p><p>international expansion.</p><p> Describethe international division and global</p><p>structures that are used as firms increase theirinternational presence.</p><p> Analyzethe key structural variables that</p><p>influence international organization designs. Reviewthe role of the organizational processes</p><p>in ensuring that the structure is both effective and</p><p>efficient.</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 4/30</p><p>Slide 9.4</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Introduction</p><p>The FSA and CSA framework is related to theissues of organizational structure.</p><p> A centralized and hierarchical structure is usually</p><p>followed by firms in cell 1 pursuing economic</p><p>integration. In cell 4, the strategy of national responsiveness</p><p>may require a decentralized organizational</p><p>structure.</p><p> In cell 3, it may be necessary to combine the</p><p>advantages of both a centralized and</p><p>decentralized organizational structure.</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 5/30</p><p>Slide 9.5</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Organizations that have decided to expand internationallydo it in a number of ways.</p><p> Some companies ship their goods to a foreign market</p><p>and have a third party handle sales activities.</p><p> If the firms international market continues to grow, the</p><p>enterprise will need to review this strategy and decide</p><p>whether to play a more active role in the distribution and</p><p>sale of its products. As this happens, the companys</p><p>organizing strategy will change.</p><p> Major MNEs such as IBM, GM and Mitsubishi havesophisticated global structures that form the basis of their</p><p>organizing strategies. Sometimes these firms will also</p><p>have subsidiaries or affiliates that are integrated into the</p><p>overall structure.</p><p>Introduction (Continued)</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 6/30</p><p>Slide 9.6</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Organizational structures</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 7/30</p><p>Slide 9.7</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Early organization structures</p><p>When a company first begins internationaloperations, it is typical for these activities to be</p><p>extensions of domestic operations.</p><p> Primary focus continues to be the local market.</p><p> As international operations increase, however, the</p><p>MNE will take steps to address this growth</p><p>structurally.</p><p>For instance, by having a marketing or exportdepartment handle international sales or by using</p><p>an overseas subsidiary.</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 8/30</p><p>Slide 9.8</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.1 An export department structure</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 9/30</p><p>Slide 9.9</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.2 Use of subsidiaries during the early stages of internationalization</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 10/30</p><p>S</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 11/30</p><p>Slide 9.11</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.3 An international division structure</p><p>Slid 9 12</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 12/30</p><p>Slide 9.12</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Global organization structures</p><p>As MNEs generate more and more revenuesfrom their overseas operations, their strategies</p><p>and the structures used to implement these</p><p>strategies become more global in focus.</p><p> There are six basic types of global structures.</p><p>Slid 9 13</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 13/30</p><p>Slide 9.13</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>1. Global product structure</p><p>An arrangement in which domestic divisions aregiven worldwide responsibility for product groups.</p><p>Slide 9 14</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 14/30</p><p>Slide 9.14</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.4 A global product structure</p><p>Slide 9 15</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 15/30</p><p>Slide 9.15</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>2. Global area structure</p><p>Primary operational responsibility is delegated toarea managers, each of whom is responsible for</p><p>a specific geographic region.</p><p>Slide 9 16</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 16/30</p><p>Slide 9.16</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.5 A global area structure</p><p>Slide 9 17</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 17/30</p><p>Slide 9.17</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>3. Global functional structure</p><p>Builds around the basic tasks of theorganization. For example, in manufacturing</p><p>firms, production, marketing and finance are the</p><p>three primary functions that must be carried out</p><p>for the enterprise to survive.</p><p>Slide 9 18</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 18/30</p><p>Slide 9.18</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.6 A global functional structure</p><p>Slide 9.19</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 19/30</p><p>Slide 9.19</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>4. Matrix structure</p><p>An organizational arrangement that blends twoorganizational responsibilities such as functional</p><p>and product structures or regional and product</p><p>structures.</p><p>Slide 9.20</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 20/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.7 Geographic matrix structure</p><p>Slide 9.21</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 21/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.8 A multinational matrix structureSource: Allan R. Janger, Matrix Organizations of Complex Business (New York: The Conference Board, 1979), p. 31</p><p>Slide 9.22</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 22/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>5. Mixed structure</p><p>A hybrid organization design that combinesstructural arrangements in a way that best meets</p><p>the needs of the enterprise.</p><p>Slide 9.23</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 23/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.9 A mixed structure</p><p>Slide 9.24</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 24/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>6. Transnational network structure</p><p>Designed to help MNEs take advantage of globaleconomies of scales while also being responsiveto local customer demands. Relies on a network arrangement to link the various</p><p>worldwide subsidiaries.</p><p> Three components: Dispersed subunits Specialized operation Interdependent relationships.</p><p>At the center of the transnational networkstructure are nodes, which are units charged withcoordinating product, functional and geographicinformation.</p><p>Slide 9.25</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 25/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Figure 9.10 Transnational network structure</p><p>Slide 9.26</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 26/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Strategic management andorganizing strategy</p><p>Slide 9.27</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 27/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>From strategy to structure</p><p>Effective organizations begin by formulating astrategy and only then design a structure that willefficiently implement this plan.</p><p> In determining the best structure, three questions</p><p>must be answered: Can the company operate efficiently with domestic</p><p>divisions or are international divisions alsonecessary?</p><p>On what basis should the organization bestructured: product, area, function, mixed ormatrix?</p><p> How can the necessary coordination andcooperation be most effectively achieved?</p><p>Slide 9.28</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 28/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>These answers are usually determined through acareful analysis of five key variables.</p><p> The relative importance of international operations</p><p>at the present time and what the projected</p><p>situation might be within three to five years. The firms past history and experience in the</p><p>international arena.</p><p> The companys business and product strategy.</p><p> The managements philosophy of operating.</p><p> The firms ability to adjust to organizational</p><p>changes.</p><p>Analysis of key structural variables</p><p>Slide 9.29</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 29/30</p><p>Rugman and Collinson, International Business,6th Edition, Pearson Education Limited 2013</p><p>Coordination processes</p><p>The structure is designed to answer the question:What is to be done? The organizational</p><p>processesdecision making, communicating and</p><p>controllinghelp to make the structure work</p><p>efficiently. Decision making:the process of choosing from</p><p>among alternatives.</p><p> Communication: the process of transferring</p><p>meanings from sender to receiver.</p><p> Controlling: the process of determining that</p><p>everything goes according to plan.</p><p>Slide 9.30</p></li><li><p>8/10/2019 Chapter 9 Organizing Strategy</p><p> 30/30</p><p>R d C lli I t ti l B i 6th Editi P Ed ti Li it d 2013</p><p>Table 9.1 Factors that encourage centralization or decentralization of decision making</p><p>in multinational operations</p></li></ul>