copyright © 2013 pearson education, inc. publishing as prentice hall 15-1 international business...

Copyright © 2013 Pearson Education, Inc. publishing as Prentice Hall

15-1

International Business

Environments & Operations

14e

Daniels ● Radebaugh ● Sullivan


15-2

Chapter 15

The Organization of International Business


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Learning Objectives Profile the evolving process of organizing a

company for international business Describe the features of classical

structures Describe the features of neoclassical

structures Discuss the systems used to coordinate

and control international activities Profile the role and characteristics of

organization culture


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IntroductionLearning Objective 1:Profile the evolving process of organizing a company for international business


15-5

Introduction The goal of MNEs is to standardize

activities to maximize global efficiency and at the same time adapt activities to maximize local effectiveness

To achieve this goal the MNE must establish the right structure to implement it


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IntroductionFactors Affecting Organizing Operations


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Changing Situations, Changing Organizations

Environmental trends, industry conditions, and market opportunities are forcing change Expansion of international business The Internet as a design standard Managerial standards Social contracts Building a ‘magical’ organization


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Organization StructureLearning Objective 2: Describe the features of classical structures


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Organization Structure Organizational structure

the formal arrangement of roles, responsibilities, and relationships in the MNE

Vertical differentiation the balance between the centralization and

decentralization of authority Horizontal differentiation

involves specifying which people do which jobs in which units


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Vertical Differentiation Centralization versus Decentralization

Centralization degree to which high-level managers make

strategic decisions and delegate them to lower levels for implementation

Decentralization degree to which lower-level managers make

and implement strategic decisions


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Horizontal Differentiation Horizontal differentiation

Specifies the set of tasks to accomplish Divides the tasks among SBUs, divisions,

departments, committees, teams, jobs, and individuals

Stipulates superior and subordinate relationships

Classical structures used to achieve this functional, area or divisional, matrix or mixed


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Functional Structure The functional structure

groups people based on common expertise and resources

is popular among companies with narrow product lines


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Functional StructureThe Functional Structure


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Divisional Structure The divisional structure

divides employees based on the product, customer segment, or geographical location

duplicates functions and resources across divisions

International division Global product structure Worldwide area structure


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Divisional StructureThe International Division Structure


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Divisional StructureProduct Division Structure


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Divisional StructureGeographic (area) Division Structure


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Matrix Structure The matrix structure

Institutes overlaps among functional and divisional forms

Gives functional, product, and geographic groups a common focus

Violates the unity of command principle has dual reporting relationships rather than

a single line of command


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Matrix Structure Matrix Division Structure


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Mixed Structure The mixed structure

Combines elements of the functional, area, and product structures

Allows the firm to better adapt to market conditions worldwide


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Neoclassical StructuresLearning Objective 3: Describe the features of neoclassical structures


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Neoclassical Structures Neoclassical structures

emphasize coordination and cultivation not command and control

Network structure arranges differentiated elements in

patterned flows of activity that allocate people and resources to problems and projects in a decentralized manner

keiretsu, sogo shosha, chaebol Virtual organization

dynamic arrangement among partners that efficiently adapts to market change


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Neoclassical StructuresA Simplified Network Structure


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Coordinated SystemsLearning Objective 4: Discuss the systems used to coordinate and control international activities


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Coordinated Systems Coordination by

Standardization relies on objectives and schedules to set

rules and regulations Plan

requires interdependent units to meet common deadlines and objectives

Mutual adjustment depends on managers interacting

extensively with their counterparts


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Control Systems Control systems

define how managers compare performance to plans, identify differences, and where found, assess the basis for the gap and impose corrections

Bureaucratic control Market control Clan control


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Control Mechanisms Control tools include

Reports Visits to subsidiaries Evaluative metrics Information systems


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Organization Culture Learning Objective 5: Profile the role and characteristics of organization culture


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Organization Culture Organization culture

the coherent set of assumptions about an MNE and its goals and practices shared by its members

management values and principles work climate and atmosphere ‘how we do things around’ here patterns traditions ethical standards


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Organization Culture and Strategy

An organization’s culture shapes its strategic moves varies with the strategy the MNE

pursues


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Organization Culture and Strategy

Strategy and Organizational Culture in International Business


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The Rise of Corporate Universities

Corporate universities Expanding mission Integrating diversity Crucible of change Filling gaps


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copyright © 2013 pearson education, inc. publishing as prentice hall 15-1 international business...

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