Chapter 14-1

The Nature of International

Organization Design

Allocate Organizational
Resources

Assign Tasks
Organization
Design
Provide Information

Collects and Transmits

Information

Chapter 14-2
The Nature of International
Organization Design (Cont.)

International
Division
Export
Department

Corollary
Approach

Chapter 14-3
Global Organization Designs

Area
Knowledge

Global Product
Design Knowledge

Functional
Knowledge

Chapter 14-4
Global Organization Designs (Cont.)

 Common Forms
Product Design
Area Design
Functional Design
Customer Design
Matrix Design
 Managerial Philosophy
Ethnocentric
Polycentric
Geocentric
Chapter 14-5
Global Product Design

Related Unrelated
Products Products

M-Form H-Form
(Multidivisional) (Holding)

Chapter 14-6
Global Product Design (Cont.)

 Advantages
Expertise
Efficiencies
Global Marketing
Geocentric Corporate Philosophies
 Disadvantages
Expensive Duplication
Knowledge Development
Coordination Levels
Corporate Learning
Chapter 14-7
Global Area Design

 Advantages
Marketing-Driven Strategy
Brand-Name Reputation
Expertise about the Local Market
 Disadvantages
May sacrifice cost efficiencies
May slow diffusion of technology
Results in duplication of resources
Raises costs of coordination
Impedes global product planning
Chapter 14-8
Global Functional Design

 Advantages
Transfer Expertise
Centralize Control
Focus on Functions
 Disadvantages
Limited Products or Customers
Difficult to Coordinate
Duplication of Resources

Chapter 14-9
Global Customer Design

 Opportunities
Serve Diverse Customers
Focus Marketing
Approach
 Challenges
Duplication of Efforts
Coordination Issues

Chapter 14-10
Global Matrix Design

Chapter 14-11
Global Matrix Design (Cont.)
 Advantages
Organizational Flexibility
Coordination and Comunication
 Disadvantages
Limited use in firm with few products
Limited use in fairly stable markets
Involves more than one manager
Creates a paradox in authority
Tends to promote compromises

Chapter 14-12
Hybrid Global Designs

 Size
 Strategy
 Technology
 Environment
 Culture

Chapter 14-13
Related Issues in Global Organization
Design

 Centralization versus Decentralization

 Role of Subsidiary Boards of Directors
 Coordination in the Global Organization

Chapter 14-14
Centralization versus Decentralization

Decision Making Local Market Overall Needs of

Focus Response the Firm

Corporate
Lower Higher
Headquarters

Local Subsidiary Higher Lower

Chapter 14-15
Role of Subsidiary Boards of Directors

Little Authority

MNC Board of
Directors

Substantial Decision-
Making Authority

Chapter 14-16
Coordination in the Global
Organization

 Organizational Hierarchy
 Rules and Procedures
 Ad Hoc Coordination Techniques
 Informal Coordination Mechanisms
Informal Management Network

Chapter 14-17
The Control
Function in
International
Business

Chapter 14-18
Strategic Control

 Strategic Control
Formulate Strategy
Implement Strategy
 Role of Strategic Control
Financial Resources
Inventory Management
Exchange Rate Fluctuations
Joint Ventures and Strategic Alliances

Chapter 14-19
Organizational Control

 Responsibility Center Control

 Generic Organizational Control
 Planning Process Control

Chapter 14-20
Operations Control

 Processes
 Performance

Chapter 14-21
Managing the Control Function in
International Business

 Effectively Manage Control

Establishing International Control Systems
Essential Control Techniques
Behavioral Aspects of International Control

Chapter 14-22
Establishing
International
Control
Systems

Chapter 14-23
Essential Control Techniques

 Accounting Systems
 Policies, Procedures, Rules and Regulations
 Performance Ratios

Chapter 14-24
Behavioral Aspects of International
Control

 Resistance to Control
Reaction to Over-Control
Inappropriate Focus
Increased Accountability
 Overcoming Resistance to Control
Participation
Accountability
Diagnostics
Culture

Chapter 14-25