Designing Organizations Lecture 10 Designing International Organization Structures II

ODCM
Lecture : Designing International

Organization Structures
Objectives
• To discuss the different structures that
MNCs can adopt
• To discuss the advantages and
disadvantages of those structures
MOTHER-DAUGHTER STRUCTURE
MNCs WITH AN INTERNATIONAL DIVISION
WORLDWIDE FUNCTIONAL STRUCTURE
Questions
• What are the advantages of a world-wide
functional structure?
• What are the disadvantages of a world-
wide functional structure?
WORLDWIDE FUNCTIONAL STRUCTURE
• Similar advantages and disadvantages to

domestic functional structures (economies of
scale within functions, skill development, but
slow response and decision-making).
• But less effective in many MNCs: inability to
adapt readily to the greater local diversity of
business environments.
• Typically found in firms with narrow product
ranges in relatively stable technical
environments where technical excellence is
crucial.
WORLDWIDE GEOGRAPHIC GROUPS
Question
• What sort of industry characteristics might
lead MNCs to establish world-wide
geographic groups?
• Typically found in low technology

industries where sales and marketing are
key functions and vary regionally. Product
range diversity tends to be limited in such
MNCs and products are often modified
extensively to suit local markets.
An Example: Unilever
• Unilever Executive
• is responsible for managing profit and loss, and delivering growth
across our regions, categories and functions.
• Paul Polman - Chief Executive Officer
• James A Lawrence - Chief Financial Officer
• Sandy Ogg - Chief HR Officer
• Professor Geneviève Berger - Chief Research &

Development Officer
• Manvinder Singh (Vindi) Banga - President Foods
• Douglas Anderson Baillie - President of Western Europe

• Harish Manwani - President, Asia Africa
• Michael B. Polk - President, Americas
Worldwide Product Structure
Questions
• When do you think that a world-wide
product structure would be appropriate?
• Why do you think that it might be
appropriate under those conditions?
• Often found in large MNCs that have a

variety of diverse product ranges that
need little adaptation for different markets,
and where technological scale economies
are important.
An Example: Lafarge
• Chairman and Chief Executive Officer
• Chief Financial Officer
• Vice-President Organization and Human
Resources
• Vice-President Strategy, Business Development
and Public Affairs
• Vice-President Communications
• Co-President of the Cement Business * 3

• Co-President of the Aggregates and Concrete
Business * 2
• President of the Gypsum Business
Worldwide Matrix
Proctor and Gamble – A Matrix?
• Chairman of the Board
• President and Chief Executive Officer
• Senior Vice President and Treasurer
• Chief Technology Officer
• Global Product Supply Officer
• Vice Chair - Global Operations
• President - Global Prestige Products
• Group President - Global Hair Care
• Group President - Global Fabric Care
• Vice Chair - Global Health and Well-Being
• Group President - Global Home Care
• President - Greater China
• President - Western Europe
• Group President - North America
• Group President - Asia
• Group President - Central and Eastern Europe, Middle East and Africa
• President - Latin America
• President - Global Wal*Mart Team
• President - Special Assignment
• Corporate Officer - Special Assignment
Questions
• What information on the preceding slide
suggests that Proctor and Gamble has a
matrix structure?
• What reasons lie behind this choice of
structure?
Question
• Take a look at the next two slides on
Google and Microsoft.
• Why do they appear to have different
organizational structures?
Google’s Executive Officers
• Eric Schmidt, Chairman of the Board and Chief Executive
Officer
• Sergey Brin, Co-Founder and President, Technology
• Larry Page, Co-Founder and President, Products
• Nikesh Arora, President, Global Sales Operations and
Business Development
• Shona L. Brown, Senior Vice President, Business Operations
• David C. Drummond, Senior Vice President, Corporate
Development and Chief Legal Officer
• Alan Eustace, Senior Vice President, Engineering and
Research
• Patrick Pichette, Senior Vice President and Chief Financial
Officer
• Jonathan Rosenberg, Senior Vice President, Product
Management
Microsoft’s Senior Leaders
• Steve Ballmer Chief Executive Officer
• Lisa Brummel Senior Vice President, Human Resources
• Jean-Philippe Courtois President, Microsoft International
• Kurt DelBene President, Microsoft Office Division
• Peter Klein Chief Financial Officer
• Andrew Lees President, Mobile Communications Business
• Qi Lu President, Online Services Division
• Mich Mathews Senior Vice President, Central Marketing Group
• Don A. Mattrick President, Interactive Entertainment Business
• Bob Muglia President, Server and Tools Business
• Craig Mundie Chief Research and Strategy Officer
• Ray Ozzie Chief Software Architect
• Rick Rashid Senior Vice President, Research
• Eric Rudder Senior Vice President, Technical Strategy
• Steven Sinofsky President, Windows and Windows Live Division
• Brad Smith (LCA) General Counsel and Senior Vice President, Legal and
Corporate Affairs
• B. Kevin Turner Chief Operating Officer
• Hank Vigil Senior Vice President, Consumer Strategy and Partnerships
Question
• Look at the next slide on Subway.
• What does the information tell us about
Subway?
Subway’s Departments
• Franchise Sales
• New Business Development
• Subway Real Estate Corp
• Store Design
• Franchisee Services
• Operations
• Creative Services
• Customer Care
• Public and Community Relations
• Publications
• Profit Building & Local Marketing
• Meetings and Events
• Research & Development
• International
Subway Stores Locations –
Selected Countries
Country # of Stores Country # of Stores
AUSTRALIA 1301 MEXICO 541
BRAZIL 740 NEW ZEALAND 239
CANADA 2704 RUSSIAN FEDERATION 298
CHINA 262 SAUDI ARABIA 46
FRANCE 303 SINGAPORE 94
GERMANY 613 UNITED KINGDOM 1426
INDIA 242 UNITED STATES 24728
JAPAN 293 TOTAL 35874
US as a percentage
of Total 69%
ERNST AND YOUNG’S PRE-2008
ORGANIZATIONAL STRUCTURE: MOTHER-
DAUGHTER (FRANCHISING)
Questions
• Why did Ernst and Young (and other
auditors) have this company structure?
• What are the disadvantages of such a
structure?
ERNST AND YOUNG’S 2008 ORGANIZATIONAL STRUCTURE:
Intended Consequences of New
Structure
• Facilitate greater consistency in service quality
• Meet the demands of multi-national customers
better
• Streamline processes and programmes within
Ernst and Young
• Promote learning between partnerships
• Bring ‘smaller country practices together with
larger ones’ to allow for ‘greater sharing of
resources and knowledge.
First Solar
Quick Facts and Figures
• Formed in 1999
• Largest manufacturer of thin film solar modules
• Fastest energy payback time of any PV technology
• Common stock is traded on the NASDAQ Stock Market
• Number of employees: 5,500+
• Headquarters: Arizona, US
• Manufacturing facilities: Germany, Malaysia, and the US
• Sales and Marketing: Australia, France, Germany, Spain,
and the US
• Project development: Canada, China, and the US
• Government affairs: Belgium, Germany, and the US
Questions
• How might first Solar be structured?
• What are your reasons for thinking this?
First Solar – Executive Management
• Executive Chairman
• Chief Executive Officer
• President
• Executive Vice President, Human Resources
• Executive Vice President, General Counsel
Corporate Secretary
• Executive Vice President, Marketing and Product
Management
• Executive Vice President, Public Affairs
• President, Utility Systems and Chief Financial Officer
• Chief Accounting Officer
• Vice President for Sales, Managing Director of First
Solar GmbH
FORMS OF INTERNATIONAL CO-ORDINATION IN
FOUR TYPES OF PROFESSIONAL SERVICES FIRMS
Reciprocity-Based Collegially Co- Financially Hierarchically
International ordinated Controlled Controlled
Networks of Firms International Firm International Firm International Firm
Type of N/A Committee Public limited Private company

International company
Governance
Strength and Weak (social) Weak, (bureaucratic) Relatively strong, Relatively strong,
Type of Control financial bureaucratic
Mechanisms
Focus of Very limited training, Consistency Limited training Firm-specific technical
Training if any and behavioural
standards
Degree of Very limited Very limited Limited Relatively high

Standardization
of Routines
Career systems Specific to individual Firm specific, ‘up or Industry specific, high Firm specific, ‘up or
firms in network out’ system mobility across firms out’ system
Aims of Become a partner Short-term financial Become a partner

Employees rewards
Conclusions
• There are similarities between the
advantages and disadvantages associated
with international organizational structures
and corresponding national organizational
structures that we examined earlier
• However, international structures are likely
to be more complex as the organization
faces a wider range of challenges
(different product markets, governments,
and regulations).

Designing Organizations Lecture 10 Designing International Organization Structures II

Uploaded by

Document Information

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Designing Organizations Lecture 10 Designing International Organization Structures II

Uploaded by

Copyright:

Available Formats

ODCM

Lecture : Designing International

• Similar advantages and disadvantages to

• Typically found in low technology

• Professor Geneviève Berger - Chief Research &

• Douglas Anderson Baillie - President of Western Europe

• Often found in large MNCs that have a

• Co-President of the Cement Business * 3

AUSTRALIA 1301 MEXICO 541

BRAZIL 740 NEW ZEALAND 239

CANADA 2704 RUSSIAN FEDERATION 298

CHINA 262 SAUDI ARABIA 46

FRANCE 303 SINGAPORE 94

GERMANY 613 UNITED KINGDOM 1426

INDIA 242 UNITED STATES 24728

JAPAN 293 TOTAL 35874

Type of N/A Committee Public limited Private company

Degree of Very limited Very limited Limited Relatively high

Aims of Become a partner Short-term financial Become a partner

You might also like