CH 14 PPTaccessible

International Business: A Managerial
Perspective
Ninth Edition
Chapter 14
International Organization Design
and Control
Copyright © 2020, 2015, 2013 Pearson Education, Inc. All Rights Reserved
Learning Objectives
14.1 Define and discuss the nature of international organization
design, and identify and describe the initial influence of
international business activity on organization design.
14.2 Identify and describe five advanced forms of international
organization design and discuss hybrid global designs.
14.3 Identify and describe key related issues in global organization
design.
14.4 Explain the general purpose of control and the levels of
control in international business.
14.5 Describe how international firms manage the control function.
The Nature of International
Organization Design (1 of 2)
• Organization Design
– Allocate Organizational Resources
– Assign Tasks
– Provide Information
– Collects and Transmits Information
The Nature of International
Organization Design (2 of 2)
• Corollary Approach
• Export Department
• International Division
Global Organization Designs (1 of 2)
• Global Design
– Area Knowledge
– Product Knowledge
– Functional Knowledge
Global Organization Designs (2 of 2)
• Common Forms
– Product Design
– Area Design
– Functional Design
– Customer Design
– Matrix Design
• Managerial Philosophy
– Ethnocentric
– Polycentric
– Geocentric
Global Product Design (1 of 3)
• Related Products
– M-Form (Multidivisional)
• Unrelated Products
– H-Form (Holding)
• Advantages
– Expertise
– Efficiencies
– Global Marketing
– Geocentric Corporate Philosophies
• Disadvantages
– Expensive Duplication
– Knowledge Development
– Coordination Levels
– Corporate Learning
Figure 14.1 Samsung Group’s Global Product Design
Global Area Design (1 of 2)
• 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
Global Area Design (2 of 2)
Figure 14.2 Adecco S.A.’s Global Area Design
Global Functional Design (1 of 2)
• Advantages
– Transfer Expertise
– Centralize Control
– Focus on Functions
• Disadvantages
– Limited Products or Customers
– Difficult to Coordinate
– Duplication of Resources
Global Functional Design (2 of 2)
Figure 14.3 British Airways’ Global Functional Design
Global Customer Design (1 of 2)
• Opportunities
– Serve Diverse Customers
– Focus Marketing
– Approach
• Challenges
– Duplication of Efforts
– Coordination Issues
Global Customer Design (2 of 2)
Figure 14.4 Eastman Kodak’s Global Customer Design
Global Matrix Design (1 of 2)
• Advantages
– Organizational Flexibility
– Coordination and Communication
• 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
Global Matrix Design (2 of 2)
Figure 14.5 A Global Matrix Design
Hybrid Global Designs (1 of 2)
• Size
• Strategy
• Technology
• Environment
• Culture
Hybrid Global Designs (2 of 2)
Figure 14.6 Nissan US A’s Hybrid Design
Related Issues in Global Organization
Design
• Centralization versus Decentralization
• Role of Subsidiary Boards of Directors
• Coordination in the Global Organization
Centralization Versus Decentralization
Decision Making Focus Local Market Response Overall Needs of the Firm
Corporate Headquarters Lower Higher
Local Subsidiary Higher Lower
Role of Subsidiary Boards of
Directors
• MN C
– Board of Directors
▪ Little Authority
▪ Substantial Decision-Making Authority
Coordination in the Global Organization
• Organizational Hierarchy
• Rules and Procedures
• Ad Hoc Coordination Techniques
• Informal Coordination Mechanisms
– Informal Management Network
The Control Function in International
Business
Figure 14.7 Levels of International Control
Strategic Control
• Strategic Control
– Formulate Strategy
– Implement Strategy
• Role of Strategic Control
– Financial Resources
– Inventory Management
– Exchange Rate Fluctuations
– Joint Ventures and Strategic Alliances
Organizational Control
• Responsibility Center Control
• Generic Organizational Control
• Planning Process Control
Operations Control
• Processes
• Performance
Managing the Control Function in
International Business
• Effectively Manage Control
– Establishing International Control Systems
– Essential Control Techniques
– Behavioral Aspects of International Control
Establishing International Control
Systems
Figure 14.8 Steps in International Control
Essential Control Techniques
• Accounting Systems
• Procedures
• Performance Ratios
Behavioral Aspects of International
Control
• Resistance to Control
– Reaction to Over-Control
– Inappropriate Focus
– Increased Accountability
• Overcoming Resistance to Control
– Participation
– Accountability
– Diagnostics
– Culture
Review Questions (1 of 2)
• What are some of the initial impacts of international activity
on organization design?
• What is the global product design? What are its strengths
and weaknesses?
• What is the global area design? What are its strengths and
weaknesses?
• What is the global functional design? What are its
strengths and weaknesses?
• What is the global customer design? What are its
strengths and weaknesses?
Review Questions (2 of 2)
• What is the global matrix design? What are its strengths
and weaknesses?
• What are the three levels of control in international
business?
• Why is financial control so important?
• What are the four basic steps in establishing an
international control system?
Copyright
This work is protected by United States copyright laws and is

provided solely for the use of instructors in teaching their courses
and assessing student learning. Dissemination or sale of any part
of this work (including on the World Wide Web) will destroy the
integrity of the work and is not permitted. The work and materials
from it should never be made available to students except by
instructors using the accompanying text in their classes. All
recipients of this work are expected to abide by these restrictions
and to honor the intended pedagogical purposes and the needs of
other instructors who rely on these materials.

CH 14 PPTaccessible

Uploaded by

Document Information

Original Description:

Original Title

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

CH 14 PPTaccessible

Uploaded by

Copyright:

Available Formats

International Business: A Managerial

This work is protected by United States copyright laws and is

You might also like