5. Organisational Design And International Business

Question 1

What are the needs of OD in context of MNC?

Answer 1

• need for responsiveness
• need for integration
• balance between external effectiveness and internal efficiency

Question 2

Differences at early and late stages of internationalisation

Answer 2

EARLY: domestic and international activities are separated in different organisational subunits.
-domestic structures and international division

LATE: domestic and reign operations are combined in same organisational units

• global functional structure
• global area structure
• global product structure
• global matrix structure

Question 3

Characteristics (+disadvantage) of domestic structure and international division

Answer 3

• resources for international management are concentrated in one organisational unit
• it is flexible, so can have fast reactions to opportunities and threats of international business.
• the disadvantage is that conflicts could occur (different interests than HQ or use of resources…)

Question 4

Characteristics of a global functional structure

Answer 4

• designed on basis of company’s functions
• foreign operations are fully integrated into activities of functional departments
• can gain economies of scale
• it usually leads to centralisation
• requirements for certain areas or products are neglected

Question 5

Characteristics of global product structure

Answer 5

• single product is represented by a separate division
• each division has its own general manager and each is responsible for own production and sales functions
• departments have international responsibility for all functions and regions
• helps with implementation of global strategies

Question 6

Characteristics of global area structure

Answer 6

• organisational subunits are created to cover different regions
• often used for organising foreign operations
• regional managers are responsible for functions, products and performance indicators within the region
• it is flexible and allows to coordinate responses to regional issues

Question 7

Characteristics of a matrix structure

Answer 7

• applies at least 2 organisational dimensions simultaneously
• intended for combination of specific advantages
• integration of domestic and foreign operations in same organisational subunits

Question 8

What is a strategic alliance?

Answer 8

The coalition of 2 or more organisations to achieve a strategically significant goal that is mutually beneficial.

Question 9

Characteristics of transnational structure

Answer 9

• simultaneous responses to the need for global integration and local responsiveness
• resources and activities are geographically dispersed leading to economies of scale and flexibility
• no HQ, no subsidiaries
• very complex and costly organisational design

Question 10

When should a company apply a centralised decision making organisation (when subsidiary…)

Answer 10

• belongs to a large multinational company which is active in many countries)
• belongs to an international network
• is responsible for more than the local host market

Question 11

When should a company apply a decentralised decision making organisation (when subsidiary…)

Answer 11

• belongs to a multinational company applying a growth strategy
• is strongly oriented towards the local market
• has local investors with significant shares
• is located in a host country with a high geographic distance to home country