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Chapter 11 ( The organisation of international business), Ch 14 - Coggle…
Chapter 11 ( The organisation of international business)
Centralised or decentralised structure
Centralized Structure:
Decision-making authority and control are concentrated at the top of the hierarchy, typically with top-level management or a central executive team
Arguments for:
• To facilitate coordination across countries and activities. For
• To ensure decisions are consistent with overall organisational objectives avoid "goal displacment"
• To give top management the capability to introduce necessary major organisational changes on an international basis.
• To avoid duplication of similar activities, thus gaining scale and resources for that activity (e.g. centralising R&D or production in one
Tighter control over activities
Decentralized Structure:
Decision-making authority and control are distributed throughout the organization, allowing for greater autonomy and empowerment at lower levels.
Arguments for:
Top management can become overburdened when decision-making is centralised and this can lead to poor decisions.
• Motivational research suggests that people are more committed and work harder in their jobs where they have a greater degree of discretion, control and freedom in their work.
• Decentralisation can increase control. If you establish autonomous, self-contained units within an organisation, you can then hold the sub-unit managers accountable for sub-unit performance.
• Decentralisation can produce better decisions. Here decisions are made closer to the issues by managers who typically have better quality (including informal) information than those higher up the hierarchy
• Decentralisation can offer greater flexibility and responsiveness. Cumbersome decision-making processes can be avoided and well-informed decisions made quickly.
Fitting with international business strategy
Geographic Area Structure
This structure groups operations based on geographic regions , where each area will be its own-self contained area
Problems:
Encourages fragmentation of the organisation into highly autonomous entities
Can be difficult to transfer core competencies and skills between
areas to realise location and experience curve economies
The power base built up in an area can be difficult to control and
may resist change
Domino's Pizza
Global product division structure
This structure groups operations based on product lines. Each product division has global responsibility for developing, marketing, and selling its products worldwide
Global standardisation strategy (aggregation)
Problems:
Power tends to reside with product division managers,
so a frequent problem is the lack of voice resulting in a lack of local responsiveness
Unilever
International division structure
Used at the early stages when expanding abroad
Encounter a number of problems:
• Foreign subsidiary managers in the international division are not given sufficient voice relative to the heads of domestic divisions.
• International division activities lack synergies because they are not coordinated with the rest of the company "silo effect"
• Is often followed just initially so it gains little commitment from even its own managers
home replication strategy
Sony
Global Matrix Structure
Transnational strategy
Problems:
confusion and power struggles due to having to bases and dual reporting lines
bureaucratic, clumsy and slow
They can result in conflicts and power struggles between areas and product divisions due to joint responsibility
They can result in finger-pointing between parties when something goes wrong, because it is often difficult to establish accountability in this structure
combines both geographic areas and product divisions. It creates a matrix with horizontal and vertical reporting lines
Samsung
Organisation architecture
Processes
Strategy by which decisions are made & work is performed
Culture
Norms and value systems that are shared among the
employees of an organisation
Control systems and incentives
Target
Control systems
Output
Bureaucratic
Cultural
Personal
People
employees and the strategy used to recruit, compensate and retain those individuals and the type of people they are in terms of their skills, values and orientation
Organisational structure
• The formal division of the organisation into sub-units.
• The location of decision-making responsibilities
•Mechanisms to coordinate sub-units
Ch 14