Chapter Six Designing Organizations for the International Environment

Chapter Six Designing Organizations for the International Environment © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Entering The Global Arena • More companies are doing business globally • Companies need top leaders who have a global outlook • Advancements in technology and world communications has changed the competitive landscape © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Motivations for Global Expansion Economic, technological, and competitive forces have combined to push companies from a domestic to a global focus. Motivation to Expand: • Economies of Scale • Economies of Scope • Low-Cost Production Factors © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Global Economy as Reflected in the Fortune Global 500 © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Stages of International Evolution • Domestic • International • Multinational • Global © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Global Expansion Through International Strategic Alliance • Licensing – allowing another firm to market your brands • Joint Ventures - separate entity of two or more firms • Consortia – groups of independent companies © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Model for Global vs. Local Opportunities • Global standardization versus national responsiveness – Globalization or multidomestic strategy • Globalization strategy - products are standardized throughout the world • Multidomestic - competition is handled in each country independently © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Fitting Organization Structure to International Advantages © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Global Organization Structure ü International Division ü Global Product Division ü Global Geographic Division ü Global Matrix Structure © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Global Organizational Challenge © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Global Coordination Mechanisms ü Global Teams ü Headquarters Planning ü Expanded Coordination Roles © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Benefits of Collaboration → Cost Savings → Better Decision Making → Greater Revenue → Increased Innovation © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Cultural Differences In Coordination and Control National Value System • Power Distance: people accept inequality • Uncertainty Avoidance: members feel uncomfortable with uncertainty and ambiguity © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

National Approaches to Coordination an Control 1) Centralized Coordination: Japanese Companies 2) Decentralized Approach: European Firms 3) Coordination and Control Through Formalization: The United States © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

The Transnational Model of Organization • Mix in organizational complexity with diverse units and coordination • Combines global learning, knowledge sharing and technological innovation • Structure required in highly complex organizations • An integrated network linked together to achieve multidimensional goals • Based on interdependence • A managerial state of mind, a set of values and shared values toward a worldwide learning system © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Transnational Organizations • Assets and resources are dispersed worldwide • Structures are flexible and ever-changing • Subsidiary managers initiate strategy and innovations that become strategy for the whole organization • Corporate culture, shared vision and management style guide the organization © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Design Elements ü Managers must design organizations for complex international coordination ü Organizations international strategy and structure evolve ü There a diverse options for specific international strategies ü There a variety of challenges for global organizations ü Diverse national and cultural values influence an organization’s approach ü Companies operating globally require broad coordination © 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.