Reminders 1 Acme Omega revisions due Monday 2

Reminders 1. Acme & Omega revisions due Monday. 2. Rhodes Industries Case due Monday. 3. Please leave your mid-term course evaluations with me at your convenience.

Designing Organizations for The International Environment BA 152

The International Environment l a n o i t a n r e t n I t x e t n o C Government/Political Sector PRIMARY SECTORS Human Resources Organization Financial Resources INPUT THROUGHPUT OUTPUT Customers Material Resources Economic Sector Industry/ Competition Technology SECONDARY SECTORS Cultural/ Demographic Sector

Why Enter the Global Environment l l l Growth opportunities Economies of scale Economies of scope Move expensive operations to lower cost locations – outsourcing Others?

Stages of International Development l Domestic – with modest global efforts • Aware of an export market (might have an Export Department) l International • Multi-domestic thinking - views issues as independent across countries (might have an International Division)

Stages of International Development l Multinational • Marketing and manufacturing facilities are located around the world. l Global • Goods and services are produced to meet the needs of the global market. (“stateless” company)

Fitting Design & International Strategy l Globalization Strategy • Product design, manufacturing, and/or advertising strategies are standardized for world markets.

Fitting Design & International Strategy l Multi-domestic Strategy • Competition in each country is assumed to be independent of competition in other countries. • Product design, manufacturing, and/or advertising strategies are tailored to each country.

Fitting Design & International Strategy l Design Choices will be a function of these two competing demands. • Forces for global integration • Forces for national responsiveness

Fitting Design & International Strategy Forces for Global Integration High Low Global Product Structure Transnational Model Global Matrix Structure International Division Global Geographic Structure Low Forces for National Responsiveness High

A Hybrid Organization with an International Division President Personnel Vice-President Electrical Products Vice-President Scientific Products Finance & Accounting Vice-President Medical Products Vice-President International Ops. Europe Asia

Partial Global Structure use by Eaton Corp.

Colgate-Palmolive’s Global Geographic Structure CEO International Business Development Corporate Staff Worldwide Sales & Marketing Corporate Development Chief Operating Officer North America Europe Latin America Far East South Pacific

GM’s Global Geographic Structure CEO US Division Australia Division Sweden Division South Korea Division German Division

GM’s Global Geographic Structure: The Problems Reversing 80 Years of History GM Is Reining In Global Fiefs Detroit Makes Key Decisions on Design, Manufacturing To Cut Costly Duplication Chinese Build a Chevy Engine General Motors Corp. is the biggest car company in the world. But in many parts of the globe it has long operated like a smaller regional player, with executives in places like Australia and Sweden given wide autonomy over the design of new models. Now GM has put an end to that policy, which dates back to the 1920 s and legendary president Alfred P. Sloan. It's insisting that its world-wide units share basic parts and work together to design vehicles that can be sold, with modest variations, anywhere in the globe. One example: GM wants to reduce the types of radios it uses in its cars to 50 from 270 currently, saving 40% in radio costs. GM's struggle to find the balance between local autonomy and central control is a familiar one for global corporations. Mr. Wagoner says he wants GM to be the winner in what he calls "a race to the middle" in the centralization vs. decentralization debate.

ABB’s Global Matrix Structure Country Managers

The Transnational Model: Philips NV

The Transnational Model l l Highly specialized operations dispersed worldwide and linked through interdependent relationships. Structure is flexible and changeable as needed.

The Transnational Model l l Local managers can initiate strategic changes that may infiltrate the rest of the organization. Coordination is largely a function of strong culture, shared vision and values, and management style.

The Downside Risks of the Global Environment l l l Western business plans may not “translate” well. (Wal-Mart/Disney) Backlash in the home market. Exposure to foreign laws and regulations Political instability Others?

Next Time Rhodes Industries