Transcript Document

OHT 9.1
1.1
Chapter 9
Organizing Strategy
OHT 9.2
1.2
Organizing Strategy
Objectives
 Introduction
 Organizational structures
 Strategic management and organizing
strategy
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OHT 9.3
1.3
Objectives
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Examine organization structures used by
enterprises that are just beginning their
international expansion.
Describe the international division and global
structures that are used as firms increase their
international presence.
Analyze the key structural variables that influence
international organization designs.
Review the role of the organizational processes in
ensuring that the structure is both effective and
efficient.
OHT 9.4
1.4
Introduction
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Once an organization decides to go international, it must begin to
implement the decision.
Some companies do so by shipping their goods to a foreign market
and having a third party handle sales activities.
If the firm’s international market continues to grow, the enterprise will
need to review this strategy and decide whether to play a more
active role in the distribution and sale of its products. As this
happens, the company’s organizing strategy will change.
Major MNEs such as IBM, GM and Mitsubishi have sophisticated
global structures that form the basis of their organizing strategies.
Sometimes these firms will also have subsidiaries or affiliates that
are integrated into the overall structure.
OHT 9.5
1.5
Organizational
structures
OHT 9.6
1.6
Early organizational strategies
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When a company first begins international
operations, it is typical for these activities to be
extensions of domestic operations
 Primary

focus continues to be the local market
As international operations increase, however,
the MNE will take steps to address this growth
structurally
 For
instance, by having a marketing or export
department handle international sales or by using an
overseas subsidiary
OHT 9.7
1.7
Figure 9.1 An export department structure
OHT 9.8
1.8
Figure 9.2 Use of subsidiaries during the early stages of internationalization
OHT 9.9
1.9
The international division
The international division structure
centralizes all the international operations
Advantages:
 It reduces the CEO’s burden of direct
operation of overseas subsidiaries and
domestic operations
 It raises the status of overseas operations
to that of the domestic divisions
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OHT 9.10
1.10
Figure 9.3 An international division structure
OHT 9.11
1.11
Global organizational structures
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As MNEs generate more and more
revenues from their overseas operations,
their strategies and the structures used to
implement these strategies become more
global in focus.
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There are six basic types of global
structures:
OHT 9.12
1.12
Global product structure
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An arrangement in which domestic
divisions are given worldwide
responsibility for product groups
OHT 9.13
1.13
Figure 9.4 A global product structure
OHT 9.14
1.14
Global area structure
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Primary operational responsibility is
delegated to area managers, each of
whom is responsible for a specific
geographic region
OHT 9.15
1.15
Figure 9.5 A global area structure
OHT 9.16
1.16
Global functional structure
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Builds around the basic tasks of the
organization. For example, in
manufacturing firms, production,
marketing, and finance are the three
primary functions that must be carried out
for the enterprise to survive
OHT 9.17
1.17
Figure 9.6 A global functional structure
OHT 9.18
1.18
Mixed structure
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A hybrid organization design that
combines structural arrangements in a
way that best meets the needs of the
enterprise
OHT 9.19
1.19
Figure 9.7 A mixed structure
OHT 9.20
1.20
Multinational matrix structure
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An organizational arrangement that blends
two organizational responsibilities such as
functional and product structures or
regional and product structures
OHT 9.21
1.21
Figure 9.9 A multinational matrix structure
Source: Allan R. Janger, Matrix Organizations of Complex Businesses (New York: The Conference Board, 1979), p. 31.
OHT 9.22
1.22
Transnational network
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Combines elements of functional, product, and
geographic designs, while relying on a network
arrangement to link the various worldwide
subsidiaries.
At the center of the transnational network
structure are nodes, which are units charged
with coordinating product, functional, and
geographic information.
Different product group units and geographical
area units have different structures depending
on what is best for their particular operations.
OHT 9.23
1.23
Strategic management
and organizational
strategy
OHT 9.24
1.24
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Effective organizations begin by formulating a
strategy and only then design a structure that
will efficiently implement this plan.
In determining the best structure, three
questions must be answered:
 Can
the company operate efficiently with domestic
divisions or are international divisions also
necessary?
 On what basis should the organization be structured:
product, area, function, mixed, or matrix?
 How can the necessary coordination and cooperation
be most effectively achieved?
OHT 9.25
1.25
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These answers are usually determined through
a careful analysis of five key variables:
 The
relative importance of international operations at
the present time and what the projected situation
might be within three to five years
 The firm’s past history and experience in the
international arena
 The company’s business and product strategy
 The management’s philosophy of operating
 The firm’s ability to adjust to organizational changes
OHT 9.26
1.26
Organizational processes
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The structure is designed to answer the question: What
is to be done? The organizational processes – decision
making, communicating, and controlling – help to make
the structure work efficiently
Decision making: The process of choosing from among
alternatives
Communication: The process of transferring meanings
from sender to receiver
Controlling: The process of determining that everything
goes according to plan