International Business

Environments and Operations

Part 5
Global Strategy, Structure, and
Implementation

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 Chapter 15
The
Organization
of
International
Business

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 Chapter Objectives
• Profile the evolving understanding of organizing a
company for international business
• Describe the antecedents and features of traditional
structures
• Describe the antecedents and features of
contemporary structures
• Study the systems used to coordinate and control
international activities
• Profile the role and characteristics of organization
culture
• Link the ideas of strategy and organization in the
international company

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 Organizing Operations

Organizing is the process of creating

the structure, systems, and culture
needed to implement the company’s
strategy.

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 Factors
Affecting Organizing
Operations

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 Change: The Critical Factor

Changes in the market environment and nature of work push

managers to rethink how they organize their workplace .
• Trends inducing change:
– Expansion of International Business
– Importance of Knowledge as a Competitive Advantage
– The Internet as a Design Standard
– Workplace Adjustments
– Managerial Adjustments
– Changing Social Contract
– Global Credit Crunch and Rising Unemployment

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 Organization Structure

Structure: formal arrangement of jobs within a

company that specifies roles, responsibilities,
and relationships
• Vertical Differentiation
• Horizontal Differentiation

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 Vertical Differentiation

• Centralization versus Decentralization in

Organizational Design
– Centralization: degree to which high-level
managers make strategic decisions and
delegate them to lower levels for
implementation.
– Decentralization: degree to which lower-
level managers make and implement
strategic decisions.
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 Horizontal Differentiation

• Functional Structure
– Advantages and Disadvantages
• Divisional Structure
– International Division
– Product Division
– Geographic Division
• Matrix Structure
– Unity of Command Principle
• Mixed Structure

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 Contemporary Structures

• Network Structure
• Virtual Organization
• Pitfalls of Contemporary Structures

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Coordination and Control Systems

• Approaches to Coordination:
– Standardization
– Plan
– Mutual Adjustment
• Control Methods:
– Market
– Bureaucratic
– Clan
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 Control Tools

• Reports
• Visits to Subsidiaries
• Cost and Accounting Comparisons
• Evaluative Metrics
• Information Systems

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 Organization Culture

• The Importance of Culture

– Culture and Values
– Culture and the Value Chain
• Challenges and Pitfalls
• Organization Culture and Strategy

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 Future: The Role and Rise of
Corporate Universities
• Managers believe companies must
purposefully develop shared values
• Worldwide, more than 1,000 new corporate
universities have begun operations
• Corporate universities—physical and virtual
institutions that:
– Lead training efforts
– Facilitate learning
– Help upgrade competencies
– While advocating the philosophical ideals of the
company’s culture
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All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or
transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise,
without the prior written permission of the publisher.
Printed in the United States of America.

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