International Business

9e

By Charles W.L. Hill

McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
Chapter 13

The Organization of
International Business
 WHY IS STRATEGIC
POSITIONING IMPORTANT?
Michael Porter argues that firms need to choose
either differentiation or low cost, and then
configure internal operations to support the choice

So, to maximize long run return on invested capital

(ROIC), firms must
1. pick a viable (terus berjalan) position on the
efficiency frontier
2. configure internal operations to support that position
3. have the right organization structure in place
to execute the strategy
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 WHAT IS ORGANIZATION
 Organization is Peoples to make
agreement working together (as
Entity/institutional) to achieve their goals.
1. People.
2. activity, working together
3. to achieve their goals.

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 What Are Elements Of The
Organization Architecture?
 Organizational architecture is the totality of a
firm’s organization including
1. Organizational structure,
2. Control systems and incentives (giv e a reward),
3. Processes, organizational culture, and people,
 To be the most profitable, Organizational
architecture the company :
1. the elements of the organizational architecture must
be internally consistent
2. the organizational architecture must fit the strategy
3. the strategy and architecture must be consistent with
each other, and consistent with competitive conditions
(externally consistent)

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What Is Organizational
Architecture?
Organizational Architecture

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 What are elements of the
Organizational Architecture?

1. Organizational structure : a), the formal division of the

organization into subunit, b) location of decision making
responsibilities and c). The establishment of integrating
mechanisms to coordinate the activities of subunits
2. Control systems : are the metrics used to measure the
performance of subunits and make judgments about
how well managers are running those subunits.
3. Incentives : are the devices used to reward appropriate
managerial behavior.

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 What are elements of the
Organizational Architecture?
4. Processes : are the manner in which decisions are
made and work is performed within the
organization.
5. organizational culture: refers to the norms and
value systems that employees of an organization
share.
6. People : People in mean not just of the employees
of the organization but also the strategy used to
recruit, compensate, and retain those individual,
and type of people (their skills, values, and
orientation)

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 What Are The Dimensions Of
Organizational Structure?
Organizational structure has three dimensions
1.Vertical differentiation - location of decision-making
responsibilities within a structure
a. Centralized decision-making
b. Decentralized decision-making
2.Horizontal differentiation - formal division of the
organization into sub-units. The decisions is normally
made on the basis function, type of business, or
geographical area.
3.Integrating mechanisms - the mechanisms for
coordinating sub-units

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 Why Is Horizontal
Differentiation Important?
1. Initially, most firms have no formal
structure, but as they grow, develop a
functional structure (formal)
2. Firms may switch to a product divisional
structure where each division is
responsible for a distinct product line
3. When firms expand internationally, they
often group all of their international
activities into an international division

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