6 - Organization of MNC - MARCH 04-05-2016

8/19/2019 6 - Organization of MNC - MARCH 04-05-2016

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MNC’s

Organization

Khurram Zafar


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Architecture?

Organizational Architecture

March - 04-05 - 2016 MNC's Organization by Khurram Zafar 2


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Architecture?

Organizational architecture is thetotality of a rm’s organization including 1.Organizational structure2.Control systems & incentives

3.Processes, organizational culture, & eole

To be the most protable !he elements of the organizationalarchitecture must "e internally consistent !he organizational architecture must #t the

strategy !he strategy & architecture must "econsistent $ith each other & consistent $ithcometitive con%itions

March - 04-05 - 2016 MNC's Organization by Khurram Zafar !


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What are the imensions ofOrganizational !tructure?

Organizational structure has threedimensions

"#$ertical di%erentiation location of%ecision'ma(ing resonsi"ilities $ithin a

structure " Centralized decision&ma'ing

" ecentralized decision&ma'ing

(#)orizontal di%erentiation formal %ivisionof the organization into su"'units

*#+ntegrating mechanisms the mechanismsfor coor%inating su"'units



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Why is )orizontali%erentiation +mportant?

1. )nitially, most #rms have no formalstructure, "ut as they gro$, %evelo afunctional structure

2. *irms may s$itch to a productdi,isional structure $here each%ivision is resonsi"le for a %istinctro%uct line

3. +hen #rms ean% internationally, theyoften grou all of their internationalactivities into an international di,ision



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!tructure?

A Typical -unctional !tructure



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!tructure?

A Typical .roduct i,isional !tructure

March - 04-05 - 2016 MNC's Organization by Khurram Zafar #


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What is an +nternationali,isional !tructure?

One Company’s +nternational i,isional!tructure

March - 04-05 - 2016 MNC's Organization by Khurram Zafar $


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What )appens Ne/t?

*irms that continue to ean% $ill move toeither a

"#World0ide product di,isionalstructure a%ote% "y #rms that arereasona"ly %iversi#e%

(#World0ide area structure favore%"y #rms $ith lo$ %egree of %iversi#cationan% a %omestic structure "ase% on function

*#The global matri/ structure tries to

minimize the limitations of the $orl%$i%earea structure an% the $orl%$i%e ro%uct%ivisional structure

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What is a World0ide .roducti,ision !tructure?

A World0ide .roduct i,isional !tructure



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!tructure?

A World0ide Area !tructure



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!tructure?

A 1lobal Matri/ !tructure



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)o0 does Organizational!tructure Change O,er Time?

The +nternational !tructural !tages Model

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&+ntegrated?

-egar%less of the tye of structure, #rmsnee% a mechanism to integrate su"units

any #rms use informal integratingmechanisms

" a 'no0ledge net0or'

*ormal integrating mechanisms inclu%e

a2.ersonal controls

b23ureaucratic controls

c2Output controls

d2Cultural controls



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What is the 4in' 3et0een Control5

+ncenti,es5 and !trategy? +nterdependence5 .erformance Ambiguity5 and the Costs of Control for the

-our MNC’s 3usiness !trategies



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Culture?

Organizational culture the values an%norms that emloyees are encourage% tofollo$

/volves from " foun%ers an% imortant lea%ers

" national social culture " the history of the enterrise " %ecisions that resulte% in high

erformance

anagers in comanies $ith a 6strong7culture share a relatively consistent set ofvalues an% norms that have a clear imacton the $ay $or( is erforme%


Wh t i th 4i ' 3 t


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What is the 4in' 3et0een!trategy and Architecture?

1. *irms ursuing a localization strategy focus on local resonsiveness2. *irms ursuing an international strategy

create value "y transferring core

cometencies from home to foreignsu"si%iaries

3. *irms ursuing a global standardizationstrategy focus on the realization of locationan% eerience curve economies

0. *irms ursuing a transnational strategy focus on simultaneously attaining locationan% eerience curve economies, localresonsiveness, an% glo"al learning

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Wh t i th 4i ' b t


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What is the 4in' bet0een!trategy 8 Architecture?

A !ynthesis of !trategy5 !tructure5 andControl !ystems

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) -i + l t


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)o0 can -irms +mplementOrganizational Change?

-or a rm to succeed1.!he #rms strategy must "e consistent $ith theenvironment in $hich the #rm oerates

2.!he #rms organization architecture must "e

consistent $ith its strategy

To implement organization change

1.nfreeze the organization through shoc( theray

2.ove the organization to a ne$ state throughroactive change in architecture

3.-efreeze the organization in its ne$ state

March - 04-05 - 2016 MNC's Organization by Khurram Zafar 1%

6 - Organization of MNC - MARCH 04-05-2016

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