Module 8B - Global HR MGMT PDF

16-03-2020
International Organisational
Structure &
Global HR Management
International Business
In this session
 International Organizational Structure
 Initial
Division Structure
 International Division Structure
 Global Structure
1. Product Division
2. Area Division
3. Functional Division
 Mixed/ Matrix Structure
 Transnational network Structure
 Global Human Resource Management - Staffing
policy
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Initial Division Structure

– Export arrangement
• Common among manufacturing firms, especially those
with technologically advanced products
– On-site manufacturing operations
• In response to local governments when sales increase
• Helps to reduce transportation costs
– Subsidiary
• Common for finance-related businesses or other
operations that require onsite presence from the start
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Initial Division Structure
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International Division Structure

 Structural arrangement that handles all
international operations out of a division
created for this purpose.
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Organisation
International Business Structure –
India & S Asia
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 Advantages
– Assures international business receives top
management attention
– Unified approach to international operations
– Often adopted by firms still in developmental states
of international business operations
 Disadvantages
– Separates domestic from international managers
– May find it difficult to think and act strategically, or to
allocate resources on a global basis
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Global Structure - Product Division

 Structural arrangement in which domestic
divisions are given worldwide responsibility
for product groups. Adopted by firms that
are reasonably diversified
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Product
International Business Division
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 Advantages
– Global product divisions operate as profit centers
– Provides a direct line of communication from customer
– Helps R&D to work on development of products that
serve the world customer
– Permits managers to gain expertise in technical and
marketing aspects of products
– helps realize location and experience curve economies
– facilitates the transfer of core competencies
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 Disadvantages
– Duplication of facilities and staff personnel within
divisions
– Division manager may pursue currently attractive
geographic prospects and neglect others with long-term
potential
– Division managers may spend too much time tapping
local rather than international markets
– Does not allow for local responsiveness
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Global Structure – Area/ Geographical

Division
 Structure under which global operations
organized on geographic basis rather than a
product basis.
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Global Structure - Geographical Division
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President & CEO –

James Quincey
APAC Group, Europe, Middle Latin America North America

President - East & Africa, Group, President - Group, President -
Manuel Arroyo President - Alfredo Rivera James L. Dinkins
Nikos Koumettis
ASEAN Central and Brazil USA

Eastern Europe
Greater China &

Middle East and Latin Centre Canada
Korea
North Africa
India & S West

South and East Mexico
Asia
Africa
Japan Turkey, Caucasus South Latin Global Structure

and Central Asia
- Geographical
South Pacific
West Africa Division
Western Europe
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Global Structure – Area/ Geographical
Division
 Advantages
– Gives global area managers more authority to adapt activites for specific
geographies
– International operations put on same level as domestic operations
– Often used by firms in mature businesses with narrow product lines
– Firm is able to reduce cost per unit and price competitively by
manufacturing in a region
– facilitates local responsiveness
 Disadvantages
– Administrative inefficiency due to configuring similar activities in many
places; Replication is expensive
– Difficult to reconcile a product emphasis with geographic orientation
– New R&D efforts often ignored because divisions are selling in mature
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Global Structure – Functional Division

 Structure that organizes worldwide
operations primarily based on function and
secondarily on product.
 Approach used mainly by extractive companies
such as oil and mining
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Domestic Foreign
Marketing Marketing
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 Advantages
– Emphasizes functional expertise
– Centralized control
– Relatively lean managerial staff
 Disadvantages
– Coordination of manufacturing and marketing often
difficult
– Managing multiple product lines can be very challenging
because of separation of production and marketing into
different departments.
– Only the CEO can be held accountable for the profits.
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Mixed/ Matrix Structures

 Combination of global product, area, or
functional arrangements.
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North Quaker Frito Lay Asia, Middle Europe &

Latin
America Foods North North East & North Sub-Saharan
America
Beverages America America Africa Africa
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Mixed/ Matrix Structures

 Advantages
– Designed to be both cost efficient and locally responsive
– Gives functional, product, and geographic groups a
common focus
– Allows the organization to create the specific type of
design that best meets its needs
 Disadvantages
– Violates the unity of command principle
– Difficult to deliver in practice
– As matrix design’s complexity increases, coordinating
personnel and getting everyone to work toward common
goals often become difficult.
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Transnational Network Structure

 Transnational network structure
 arranges differentiated elements in patterned
flows of activity that allocate people and
resources to problems and projects in a
decentralized manner
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Network Structure
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Strategy & Structure
The relationship between strategy and structure

is reciprocal.
Neither strategy nor structure is static.

It is often necessary to change one,
the other, or both.
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International Staffing Policy

 Ethnocentric
 Polycentric
 Geocentric
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Ethnocentric Policy
 Key management positions filled by parent-country
nationals
 Best suited to international businesses
Advantages Disadvantages
Overcomes lack of qualified Produces resentment in
managers in host nation host country
Unified culture Can lead to cultural myopia
Helps transfer core
competencies
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Polycentric Policy
 Host-country nationals manage subsidiaries
 Parent company nationals hold key headquarter
positions
 Best suited to multi-domestic businesses
Alleviates cultural myopia Limits opportunity to gain
experience of host country
nationals outside their own country
Inexpensive to implement Can create gap between home and
host country operations
Helps transfer core
competencies
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Geocentric Policy
 Seek best people, regardless of nationality
 Best suited to global and trans-national
businesses
Enables the firm to make best National immigration policies may
use of its human resources limit implementation
Equips executives to work in a Expensive to implement due to
number of cultures training and relocation
Helps build strong unifying Compensation structure can be a
culture and informal problem
management network
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To recap
 International Organizational Structures
 Initial Division Structure – Ex. HCL
 International Division Structure – Ex. Airtel
 Global Structure
1. Product Division – Ex. P&G, Siemens, GE
2. Area/ Geographical Division – Ex. Coca Cola
3. Functional Division – Ex. BP, Royal Dutch Shell
 Mixed/ Matrix Structure – Ex. Wipro, Pepsico
 Transnational network Structure
 International Staffing Policy
 Ethnocentric
 Polycentric
 Geocentric
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16-03-2020

Initial Division Structure

Initial Division Structure

International Division Structure

International Division Structure

International Division Structure

Global Structure - Product Division

Global Structure - Product Division

Global Structure - Product Division

Global Structure - Product Division

Global Structure – Area/ Geographical

Global Structure - Geographical Division

President & CEO –

APAC Group, Europe, Middle Latin America North America

ASEAN Central and Brazil USA

Greater China &

India & S West

Japan Turkey, Caucasus South Latin Global Structure

Global Structure – Functional Division

Global Structure – Functional Division

Global Structure – Functional Division

Global Structure – Functional Division

Mixed/ Matrix Structures

North Quaker Frito Lay Asia, Middle Europe &

Mixed/ Matrix Structures

Transnational Network Structure

Strategy & Structure

The relationship between strategy and structure

Neither strategy nor structure is static.

International Staffing Policy

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