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Organising and Controlling International Operations (International…
Organising and Controlling International Operations
Strategy-Structure
Must evolve to accommodate internationalisation
Contingency based
Choosing strategy or structure first depends on situation
Tata's acquisition of Jaguar Land Rover
very different companies, had different culture
Tata used hands-off strategy to manage JLR
Helped JLR to become profitable
Built trust
No layoffs
Clear communication with staff
Opposing Forces in Structural Choices
Organisational structure
Differentiation
Focus on specific markets
Integration
Co-ordination with the same markets
Localisation-globalisation
Local-responsiveness vs global integration
Strategy
Different amounts of pressures for each industry
Textile industry has low pressure for globalisation but high pressure for local responsiveness
Pre-International Organisational Structures
Initial entry into international markets
Export locally produced g/s
Manufacturing, especially of technology
If successful, set up manufacturing in host countr
Establish subsidiary onsite if necessary
Set up international division
International Division Structure
Structural arrangement specifically for international operations
Used by companies with:
Small international sales
Limited geographic diversity
Few executives with international expertise
Advantages
Work directly under CEO
More attention given
Helps company develop international management experience
Allows response to new opportunities
Disadvantages
Separate managers can cause miscommunication
Conflicts over allocation of resources
Integrated Global Structures
Arise when MNC begins acquiring and allocating resources based on international opportunities and threats
Major change in strategy
replaces divisions with change in structure
4 types of focus
Functional
Product structure/strategic business units
Diversification
Matrix (mix of more than one)
Geographic
Global Functional Structure
First focus on
function
, then product
Not widely used
Extractive industries
Small firms with highly centralised systems
Product lines with similar technology
Narrow customer base serving single/similar market
Advantages
emphasis on functional expertise
Tight centralised control
Disadvantages
Co-ordination of manufacturing and marketing very difficult
Managing multiple product lines can be difficult because of separation between production and marketing
Only the CEO is accountable for profits
Global Product Structure
Single product line is represented by separate division
Each division headed by its own general manager
Each division responsible for its own production and sales function
Each product division is a strategic business unit
Self contained business
Own functional department and accounting
Global Area Structure
Each division is a separate area
Can cater to each geographic area
Matrix Organisational Structure
Combination of Global Product, Area or Functional arrangement
Hybrid structure
Supplements primary structure with secondary/tertiary structures
Managers can have more than one superior
Dual authority
Can be confusing and causes miscommunication
Emergent Structural Forms
Interorganisational network
3 components
Dispersed subunits
Specialised operations
interdependent relationshipn
Bureaucratic control is not very important
Decisions centralised at key network notes
Organisational culture is the most important control mechanism
Dispersed organisation units connected by a system/network
E-Corporation
Network of virtual e-exchange
Some services are in-house, others outsources
Dell Computers
Transnational corporation
Horizontal organisation
Big companies
Decentralised horizontal organisation
Flexible!