Transcript c hapter 14 international organization design

international
organization design
and control
international business, 5th edition
chapter 14
Chapter Objectives 1
• Define and discuss the nature of
international organization design and
identify and describe the initial impacts of
international business activity on
organization design
• Identify and describe five advanced
forms of international organization design
and discuss hybrid global designs
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Chapter Objectives 2
• Identify and describe related issues in
global organization design
• Explain the general purpose of control
and the levels of control in international
business
• Describe how international firms manage
the control function
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Organization Design
Organization design (or organization
structure) is the overall pattern of
structural components and
configurations used to manage the
total organization.
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Factors Affecting Design
Country
culture
Environment
Strategy
Technology
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Size
Functions of Firm Design
• Allocates organizational resources
• Assigns tasks to its employees
• Informs employees about firm’s rules,
procedures, and expectations
• Collects and transmits information
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Types of Knowledge
Affecting Design
Area
knowledge
Product
knowledge
Functional
knowledge
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Forms of Global
Organization Design
Product
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Matrix
Area
Customer
Functional
Managerial Philosophies
Affecting Design
Ethnocentric
Polycentric
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Geocentric
Global Product Design
The global product design
assigns worldwide responsibility for
specific products or product groups to
separate operating divisions
within a firm.
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Figure 14.1 Samsung’s
Global Product Design
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Global Product Design
Advantages
Disadvantages
• Managerial expertise
• Unnecessary
duplication
• Production efficiencies
• Production flexibilities
• Flexible response to
change
• Marketing flexibility
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• Coordination and
cooperation difficult
The Danone Group uses a
global product design.
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Global Area Design
The global area design organizes
the firm’s activities around specific
areas or regions of the world.
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Figure 14.2 Global Area Design
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Disadvantages of
Global Area Design
• Firm may sacrifice cost efficiencies
• Diffusion of technology is slowed
• Design unsuitable for rapid technological
change
• Duplication of resources
• Coordination across areas is expensive
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Global Functional Design
The global functional design calls
for a firm to create departments or
divisions that have worldwide
responsibility for the common
organizational functions—finance,
operations, marketing, R&D, and
human resources management.
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Figure 14.3 Global
Functional Design
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Global Functional Design
Advantages
Disadvantages
• Transference of
expertise
• Practical only when
firm has few products
or customers
• Highly centralized
control
• Focused attention of
key functions
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• Coordination difficult
• Duplication of
resources
Global Customer Design
The global customer design is used
when a firm serves different
customers or customer groups, each
with specific needs calling for special
expertise or attention.
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Figure 14.4 Eastman Kodak’s
Global Customer Design
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Global Matrix Design
A global matrix design, the most
complex of designs, is the result of
superimposing one form of
organization design on top of an
existing, different form.
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Global Matrix Design
Advantages
Disadvantages
• Brings together the
functional area and
product expertise
• Appropriate for firms
with many products
and unstable
environments
• Promotes
organizational
flexibility
• Provides access to
all advantages of
other designs
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• Employees
accountable to
multiple supervisors
• Decisions may take
longer
Figure 14.5 A Global
Matrix Design
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Global Hybrid Design
Most firms create a hybrid design,
rather than pure design, that best
suits their purposes, given the firms’
size, strategy, technology,
environment, and culture, and blends
elements of all the designs discussed.
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Figure 14.6 Nissan’s
Hybrid Design
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Coordination
Coordination is the
process of linking and integrating
functions and activities of different
groups, units, or divisions.
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Control
Control is the
process of monitoring
ongoing performance and
making necessary changes
to keep the organization
moving toward its
performance goals.
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Control Function
• Process of monitoring ongoing
performance and making necessary
changes to keep the organization moving
toward its performance goals
• Three levels
– Strategic
– Organizational
– Operations
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Figure 14.7 Levels of
International Control
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Figure 14.8 Steps in
International Control
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Essential Control Techniques
Accounting systems
Procedures
Performance ratios
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Reasons for
Resistance to Control
Overcontrol
Inappropriately focused control
Increased accountability
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