ORGANIZATIONS ALIKE GLOBALIZATION AND CONVERGENCE CONVERGENCE F The
ORGANIZATIONS ALIKE: GLOBALIZATION AND CONVERGENCE
CONVERGENCE F The increasing similarity of management practices
EXHIBIT 15. 1 The Effects of Globalization on the Convergence of Strategy and Structure
WHY CONVERGENCE? F Global customers and products F Growing levels of industrialization and economic development F Global competition and global trade
Why convergence? (continued) F Cross-border mergers, acquisitions, and alliances F Cross-national mobility of managers F Internationalization of business education
WHY DO MANAGEMENT PRACTICES DIFFER? F National context - includes national culture, the country’s available labor and other natural resources
COMPARATIVE STRATEGY FORMULATION: EXAMPLES FROM AROUND THE WORLD F US model: used as basis for comparison – represents the attempt of a rational decision making process
THE US MODEL OF STRATEGY FORMULATION 1 -Define the business and its mission 2 - Define objectives 3 - Assess the company's situation: SWOT, competitors' actions 4 - Craft strategy content
DEFINING THE BUSINES AND ITS MISSION F The mission statement tells the organizational members and outsiders what the company does and why it exists
US MISSION STATEMENTS F Often emphasize market issues closely related to key elements of success in their respective industries
FRENCH MISSION FBritish AND BRITISH STATEMENTS mission statements – focus on strategic issues, emphasize shareholder returns FFrench mission statements – reflect a national context in a social democracy
EX 15. 3
DEFINING OBJECTIVES F National differences exist mostly in priorities – financial or strategic
EXHIBIT 15. 4 FINANCIAL AND STRATEGIC OBJECTIVES OF U. S. , JAPANESE, AND BRITISH SUBSIDIARIES
ASSESSING THE COMPANY'S SITUATION F Management's assessment of the situation faced by their companies F US managers favor techniques such as the SWOT and competitive analyses
GERMAN AND BRITISH EXAMPLES F Successful companies from both countries identified the same key success factors F Differences: the organizational characteristics that managers believe achieve the key success factors
NATIONAL DIFFERENCES IN STRATEGY CONTENT: KEIRETSU F Compete with a high ratio of products where the company can add value with knowledge F Emphasize production to improve productivity F Use the resources of networks
COMPARATIVE ORGANIZATION DESIGN F Multinational managers must deal with organizations from different societies F Each society provides a unique national context for the design of organizations
BASIC CONCEPTS IN COMPARATIVE ORGANIZATIONAL DESIGN F Vertical differentiation F Horizontal differentiation F Span of control F Integration F Standardization
Basic concepts in comparative organizational design, continued F Formalization F Mutual adjustment
EXHIBIT 15. 6 PREFERRED ORGANIZATIONAL HIERARCHIES
CONTROL MECHANISMS F Link the organization vertically F Five broad types of control: – personal – output – bureaucratic – decision making – cultural
NATIONAL CULTURE AND ORGANIZATIONS F Hofstede: power distance and uncertainty avoidance the most important – influence basic problems of organizational design-differentiation and integration F See Exhibit 15. 7 next
ADHOCRACY F Low power distance + low uncertainty avoidance = adhocracy F Fits cultures where people can tolerate ambiguity and have less need formalized rules and regulations
THE ADHOCRACY DESIGN F Vertical and horizontal differentiation: fewer levels and wider span of control F Control mechanisms: mutual adjustment F Decision making: Participative or consultative
PROFESSIONAL BUREAUCRACY F Small power distance + high uncertainty avoidance norms = professional bureaucracy
THE PROFESSIONAL BUREAUCRACY DESIGN F Vertical and horizontal differentiation: moderate levels F Control mechanisms: standardization of skills. F Decision making: centralized decision making
FULL BUREAUCRACY F High power distance + high uncertainty avoidance = full bureaucracy F Full bureaucracy is the most formalized of the Hofstede organization types
FULL BUREAUCRACY DESIGN F Vertical and horizontal differentiation: Tall pyramids and narrow spans of control F Control mechanisms: Standardization and a high degree of formalized rules F Decision making: Highly centralized
FAMILY BUREAUCRACY F Occurs in countries with large power distance norms and low uncertainty avoidance norms. F It most parallels an extended family with a dominant patriarch or father figure.
FAMILY BUREAUCRACY DESIGN F Vertical and horizontal differentiation: small and low specialization F Control and coordination mechanisms: direct contact Decision making: highly centralized F See key relationships in Exhibit 15. 9 next
THE JAPANESE CONSENSUS BUREAUCRACY: A SPECIAL CASE? F Should favor the full bureaucracy F Unique style of group orientation = consensus bureaucracy
JAPANESE CONSENSUS BUREAUCRACY DESIGN F Vertical differentiation: little job specialization for individuals F Control mechanisms: favor cultural control over bureaucratic control F Decision making: consensual - see Exhibit 15. 10 next
SOCIAL INSTITUTIONS ANDTHE KOREAN CHAEBOL
DISTINCT ORGANIZATIONAL FEATURES F Family-dominated and multiindustry conglomerates F Extensive family control F Paternalistic leadership F Centralized planning - reports directly to the chairman F Dominated much of Korean business
INSTITUTIONAL CHANGE AND THE CHAEBOL F Coercive isomorphism government support fostered the growth of the Korean chaebol – Close relationships with banks for financing – Protection by the government
Institutional change and the chaebol, continued F Recent government policies – reduced support – breaking networks – allowed to fail
CONCLUSIONS F Understanding different approaches to strategy and organization design: – helps to deal with international competitors – helps a company become better collaborators – facilitates local operations
Conclusions, continued F Pressures for convergence F National cultural and social institutional lead to differences
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