Reminders

1. Acme & Omega revisions due Monday.

2. Rhodes Industries Case due Monday.3. Please leave your mid-term course

evaluations with me at your convenience.

Designing Organizationsfor

The International Environment

BA 152

INPUT THROUGHPUT OUTPUT

Organization

Technology

Industry/Competition

Customers

HumanResources

MaterialResources

FinancialResources

Government/Political Sector

EconomicSector

Cultural/Demographic

Sector

PRIMARY SECTORS

SECONDARY SECTORS

International

Context

The International Environment

Why Enter the Global Environment

Growth opportunities Economies of scale Economies of scope Move expensive operations to

lower cost locations – outsourcing Others?

Stages of International Development

Domestic – with modest global efforts• Aware of an export market (might have an

Export Department) International

• Multi-domestic thinking - views issues as independent across countries (might have an International Division)

Stages of International Development

Multinational• Marketing and manufacturing facilities are

located around the world. Global

• Goods and services are produced to meet the needs of the global market. (“stateless” company)

Globalization Strategy• Product design, manufacturing, and/or

advertising strategies are standardized for world markets.

Fitting Design & International Strategy

Multi-domestic Strategy• Competition in each country is assumed to

be independent of competition in other countries.

• Product design, manufacturing, and/or advertising strategies are tailored to each country.

Fitting Design & International Strategy

Design Choices will be a function of these two competing demands.• Forces for global integration• Forces for national responsiveness

Fitting Design & International Strategy

Low Forces for National Responsiveness High

Low

High

GlobalMatrix

Structure

GlobalProduct

Structure

GlobalGeographicStructure

InternationalDivision

TransnationalModel

Fitting Design & International Strategy

Forc

es

for

Glo

bal In

teg

rati

on

A Hybrid Organizationwith an International Division

President

Finance &AccountingPersonnel

Europe

Asia

Vice-PresidentElectrical Products

Vice-PresidentScientific Products

Vice-PresidentMedical Products

Vice-PresidentInternational Ops.

L e g a l R e la tio ns E n g in e e ring

G lo b a l Ins tru m e n tsP ro d u ct G ro up

G lo b a l In d u s tria lG ro u p

G lo b a l M a te ria lsH a n d lin g G ro up

P re s id e n t F & A

R e g io n a lC o o rd in a to rs

In te rn a tio n a l

C E O

Partial Global Structure use by Eaton Corp.

Colgate-Palmolive’s Global Geographic Structure

CEO

NorthAmerica

Europe Latin America

Corporate Staff

Far East South Pacific

InternationalBusiness

Development

ChiefOperating

Officer

WorldwideSales &

Marketing

CorporateDevelopment

GM’s Global Geographic Structure

CEO

USDivision

AustraliaDivision

SwedenDivision

South KoreaDivision

GermanDivision

GM’s Global Geographic Structure: The Problems

Reversing 80 Years of History GM Is Reining In Global FiefsDetroit Makes Key Decisions on Design, Manufacturing To Cut Costly Duplication

Chinese Build a Chevy Engine

General Motors Corp. is the biggest car company in the world. But in many parts of the globe it has long operated like a smaller regional player, with executives in places like Australia and Sweden given wide autonomy over the design of new models. Now GM has put an end to that policy, which dates back to the 1920s and legendary president Alfred P. Sloan. It's insisting that its world-wide units share basic parts and work together to design vehicles that can be sold, with modest variations, anywhere in the globe. One example: GM wants to reduce the types of radios it uses in its cars to 50 from 270 currently, saving 40% in radio costs.

GM's struggle to find the balance between local autonomy and central control is a familiar one for global corporations. Mr. Wagoner says he wants GM to be the winner in what he calls "a race to the middle" in the centralization vs. decentralization debate.

ABB’s Global Matrix Structure

P o w e rT ra n s fo rm e rs

T ra n sp o rta tionP ro d u c ts

H ig h V o lta geT o w e rs

O th e rB u s in e ss A re as

B u s in e ssA re a s

G e rm a ny L a tin A m e rican C a n a d ian F a r E a st

In te rn a tio n a lE xe cu tive

C o m m ittee Country Managers

The Transnational Model:Philips NV

The Transnational Model

Highly specialized operations dispersed worldwide and linked through interdependent relationships.

Structure is flexible and changeable as needed.

The Transnational Model

Local managers can initiate strategic changes that may infiltrate the rest of the organization.

Coordination is largely a function of strong culture, shared vision and values, and management style.

The Downside Risks of the Global Environment

Western business plans may not “translate” well. (Wal-Mart/Disney)

Backlash in the home market. Exposure to foreign laws and

regulations Political instability Others?

Next Time

Rhodes Industries