Multinational Companies Organization Structure & Control Systems
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Multinational Companies Organization Structure &Control
Systems
Multinational Companies Organization Structure &Control
Systems
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Lecture Learning GoalsLecture Learning Goals
1. Understand the importance of appropriate organizational structures to effective strategy implementation.
2. Become familiar with the types of organizational designs suitable for the level and scope of internationalization of the firm.
3. Be able to recognize why and when organizational restructuring is needed.
1. Understand the importance of appropriate organizational structures to effective strategy implementation.
2. Become familiar with the types of organizational designs suitable for the level and scope of internationalization of the firm.
3. Be able to recognize why and when organizational restructuring is needed.
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Lecture Learning GoalsLecture Learning Goals
Realize how organizational design affects manager’s job, for example, on the level and location of decision making.
Emphasize the role of control and monitoring systems suitable for specific situations in the firm’s international operations.
Realize how organizational design affects manager’s job, for example, on the level and location of decision making.
Emphasize the role of control and monitoring systems suitable for specific situations in the firm’s international operations.
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Opening Profile: Samsung Electronics Recognizes to Fight
Downturn
Opening Profile: Samsung Electronics Recognizes to Fight
Downturn Badly hit by the global economic
downturn Implemented a radical
reorganization in 2009 Consolidating business
operations into two operating divisions
Replaced the heads of five of its eight overseas operations
Badly hit by the global economic downturn
Implemented a radical reorganization in 2009
Consolidating business operations into two operating divisions
Replaced the heads of five of its eight overseas operations
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Organizational StructureOrganizational Structure
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Organizational StructureOrganizational Structure
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Evolution and Change in MNC Organizational Structures
Evolution and Change in MNC Organizational Structures
Structural evolution/stage modelAlcoa
Created smaller unitsLinked geographically dispersed, but
similar businesses (e.g., Brazil and Australia)
Structural evolution/stage modelAlcoa
Created smaller unitsLinked geographically dispersed, but
similar businesses (e.g., Brazil and Australia)
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Evolution and Change in MNC Organizational Structures
Evolution and Change in MNC Organizational Structures
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Domestic Structure Plus Foreign Subsidiary
Domestic Structure Plus Foreign Subsidiary
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Integrated Global StructuresIntegrated Global Structures
International Division Global Functional Structure
Organized along functional, product, or geographic lines
IBM World Trade
Pepsi Cola International
Organized along functional, product, or geographic lines
IBM World Trade
Pepsi Cola International
Designed on the basis of the company’s functions
Allows for functional specialization and economies of scale
Designed on the basis of the company’s functions
Allows for functional specialization and economies of scale
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Integrated Global Structures:Global Product (Divisional)
Structure
Integrated Global Structures:Global Product (Divisional)
Structure
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Integrated Global Structures:Global Geographic (Area)
Structure
Integrated Global Structures:Global Geographic (Area)
Structure
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Organizational StructureOrganizational Structure
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Organizing for GlobalizationOrganizing for Globalization
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Organizing for GlobalizationOrganizing for Globalization
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Organizing for GlobalizationOrganizing for Globalization
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Management Focus: Proctor & Gamble’s “Think Globally—Act
Locally” Structure
Management Focus: Proctor & Gamble’s “Think Globally—Act
Locally” StructureP&G’s Global/Local
StructureP&G’s Global/Local
StructurePhilosophy
Global business units
Market Development Organizations (MDO)
Global Business Services (GBS)
Corporate functions
Global business units
Market Development Organizations (MDO)
Global Business Services (GBS)
Corporate functions
Think globally
Act locally
Enabling P&G to win with customers and consumers
Be the smartest/best
Think globally
Act locally
Enabling P&G to win with customers and consumers
Be the smartest/best
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Bartlett-GhoshallBartlett-Ghoshall
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InternationalInternational
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MultinationalMultinational
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MultinationalMultinational
Nestlé
Peter Brabeck (Chief Executive of Nestlé): „Link with local consumers is very important to us. Therefore, our business remains fragmented and therefore we try to stay as close to the customer as possible. (Financial Times, 13 March 2000)
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GlobalGlobal
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Transnational Network Structure
Transnational Network Structure
EXHIBIT 8-7 Dell’s Value Web Model
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Matrix Structure and Transnational Company:
Matrix Structure and Transnational Company:
Attempts to combine: The capabilities and resources of a
multinational corporation The economies of scale of a global
corporation The local responsiveness of a
domestic company The ability to transfer technology
efficiently typically of the international structure
Attempts to combine: The capabilities and resources of a
multinational corporation The economies of scale of a global
corporation The local responsiveness of a
domestic company The ability to transfer technology
efficiently typically of the international structure
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Choice of Organizational FormChoice of Organizational Form
EXHIBIT 8-8 Organizational Alternatives and Development for Global Companies
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Organizational Change and Design
Needed When:
Organizational Change and Design
Needed When:
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Locus of Decision Making in an International Organization
Locus of Decision Making in an International Organization
EXHIBIT 8-11 Locus of Decision Making in an International Organization
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Control Systems for Global Operations
Control Systems for Global Operations
Direct Coordinating Mechanism
Indirect Coordinating Mechanism
McDonald’s in MoscowProblem: quality
controlSolution: built
processing plant in Moscow and provided managerial training
Other options: visits by head-office personnel and regular meetings
McDonald’s in MoscowProblem: quality
controlSolution: built
processing plant in Moscow and provided managerial training
Other options: visits by head-office personnel and regular meetings
Examples: sales quotas, budgets, and financial tools and reports
Three financial statementsOne for accounting
standards in host country
One for the standards in the home country
One for consolidation
Examples: sales quotas, budgets, and financial tools and reports
Three financial statementsOne for accounting
standards in host country
One for the standards in the home country
One for consolidation
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http://www.dinesh.com/history_of_logos/car_logos_-_design_and_history/skoda_logo_-_design_and_history.html
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Seminar (11.4.2011)1. Read the case Acer (is.muni.cz)In your groups, discuss and answer these questions:
In your opinion, can Acer’s growth in the global arena be attributed to the restructuring of its operations? Give reasons to support your answer.
Write a note on the growth path adopted by Acer in India. What should Acer do now to take advantage of the opportunities presented by the Indian market?
Do some research on Acer and give an update on the company’s situation in India and also globally as of the time of your reading this case.
Prepare a SHORT presentation of your results
2. Since 2008, the global economy has been greatly affected by the economic downturn. How has this affected the strategies of those companies who went “global” in the early 2000s? Select two companies in different fields and evaluate their changing strategies as a result of the economic downturn
Prepare a SHORT presentation of your results
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http://www.umanitoba.ca/libraries/units/management/DoingBusiness/eastern_europe02.pdf
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Thank you for attention!