Chapter 16* Flashcards
The Organization of International Business
Organizational structure
the formal arrangement of roles, responsibilities, and relationships in the MNE
Vertical differentiation
- the balance between the centralization and decentralization of authority
- chain of command that runs from “top to bottom”
Horizontal differentiation
- involves specifying which people do which jobs in which units
- separate tasks or skills that run “sideways” in the organization
Centralization
degree to which high-level managers make strategic decisions and delegate them to lower levels for implementation
Decentralization
degree to which lower-level managers make and implement strategic decisions
Functional structure
- groups people based on common expertise and resources
- is popular among companies with narrow product lines
- work well in stable environments that support continuous operations
Divisional structure
- divides employees based on the product, customer segment, or geographical location
- duplicates functions and resources across divisions
Matrix structure (organization)
- institutes overlaps among functional and divisional forms
- gives functional, product, and geographic groups a common focus
- violates the unity of command principle (had dual reporting rather than single line of command)
Unity of command principle
A single line of command reporting relationships
Mixed structure
- combines elements of the functional, area, and product structure
- allows the firm to better adapt to market conditions worldwide
Neoclassical structures
emphasize coordination and cultivation (collaborate) not command and control
Network structure
arranges differentiated elements in patterned flows of activity that allocate people and resources to problems and projects in a decentralized manner
Virtual organization
a dynamic arrangement among partners that efficiently adapts to market change
Virtual organization
a virtual organization is a temporary arrangement among independent companies, suppliers, customers, and rivals that “works across space, time, and organizational boundaries with links strengthened by webs of communication technology”
Control systems
define how managers compare performance to plans, identify differences, and where found, assess the basis for the gap and impose corrections
- Bureaucratic control
- Market control
- Clan control
Control tools include:
- reports
- visits to subsidiaries
- evaluative metrics
- information systems
Coordination by Standardization
relies on objectives and schedules to set rules and regulations, and enforces consistency
Coordination by Plan
requires interdependent units to meet common deadlines and objectives
Coordination by Mutual adjustment
depends on managers interacting extensively with their counterparts
Organization culture
the coherent set of assumptions about an MNE and its goals and practices shared by its members
- management values and principles
- work climate and atmosphere
- ‘how we do things around here’ patterns
- traditions
- ethical standards
An MNE’s organization reflects its
- market circumstances
- strategic choice
- value chain configuration
- administrative legacy
- executive preferences
Organization structure
formal arrangement of roles, responsibilities, and relationships
Differentiation
means that the company is composed of different units that work on different tasks with different degrees of authority
Classical structure
- applies explicit vertical and horizontal differentiation to organize the workplace
- emphasize command and control
International division
- creates a critical mass of international expertise
- competes with powerful domestic divisions for resources
- fits the demands of the MNE that generates most sales in a single nation
Geographic divisions
fit the demands of MNEs who have extensive international operations that are distributed across many countries
Persistent problems coordinating responsibilities and resources
have led MNEs to question the matrix structure’s practical usefulness
Boundarylessness follows from
eliminating vertical, horizontal, and external boundaries that constrain information, relationships, and initiative
Network structure
is a flatter, less-hierarchical format that decentralizes decision making to promote connections, communications, and collaboration among agents, both internal and external to the firm
Bureaucratic control
emphasizes organizational authority and relies on rules and regulations
Market control
uses external market mechanisms to set standards that regulate performance
Clan control
uses shared values and ideals to regulate employee behaviour
Organizational culture
refers to the ideologies, symbols, and core values that employees, no matter their location in the MNE’s worldwide operations, regard as legitimate
An organization’s culture
shapes the behaviour patterns of current workers as well as new hires, by endorsing workplace values
Key features of a company’s organization culture include
- values and principles of management
- work climate and atmosphere
- logics of “how we do things around here”
- traditions and legacies
- ethical outlooks
