Forelæsning 8 Flashcards
Domestic Structure + export or foreign subsidiary
- Product line – broad – Export manager will head separate department, directly responding to the president.
- Product line – narrow – Export managers lined up under the head of the marketing or international operations
- As pressures from government/competition in the local market increases, setting up subsidiary in the new market is necessary.
Advantages: Low need for investment into personnel and operations, flexibility, high responsiveness to foreign market needs.
Disadvantage: Harder to motivate global thinking even after setting up SDs.
International Division Structure
- Is set up to handle all the growing international operations, the head of the division oversees and coordinates all the foreign SDs that are largely self-sufficient.
Advantage: unification of international operations, executive attention (almost directly from CEO), availability of international resources.
Disadvantage: Separation of the domestic/international team, R&D focusing on the domestic market, difficulties creating united strategy.
Global Functional Division
- This is possible if the product portfolio is very narrow (e.g. oil, mining etc)
Advantage: Coordination and integration of activities.
Disadvantage: Coordination of manufacturing and marketing is difficult because they are In separate divisions, therefore it is hard to handle multiple product lines. Only CEO can be held accountable for the profits- very centralized control.
Global Product Division:
- The division operates as profit centers, the manager of the division has global authority for the product line and internal support (marketing, finance) necessary to market the product.
- This is used when the portfolio of products is getting larger and there is a big gap in maturity between home/foreign market.
Advantages: Broad and diverse portfolio of products. – it Is possible to add more products without disturbance.
Foster innovation – R&D investment intro each product.
Suitable to protect patents and technology.
Disadvantage: Duplication of personnel, focus on attractive geographic prospects right now, not seeing opportunities arising for long run.
Global Area Division
- Global divisions managers are responsible for all business operations in the designated geographical area – the international markets are now equal to domestic markets.
- The demands on regional managers are high – language, culture know-how.
- Marketing is incredibly important.
Advantages: Differentiation of product in a geographical area, seeking economies by pooling production, marketing and resource – purchase function.
Disadvantage: Many geographical areas are responsible for the sales of the same product line – duplicating efforts and costs, R&D overlooked, since the divisional manager are concentrating on selling a mature product within certain region.
Mixed/Matrix Structure
- A structure that is a combination of a global product, area or functional arrangement.
Advantage: Sharing resources – specialists/equipment, project integration – creating functional lines across the company.
Disadvantage: It has built-in tension between country and product managers who are in competition for the same set of resources, shared decision-making is time consuming “when everybody is responsible, nobody is really taking the blame”
Transnational Network
- Reasons for network creation:
o The global market network is of such size that it cannot be handled through resources of a single company.
o If a company needs to move quickly, they cannot be burdened by the rigidity of traditional organizational forms.
Advantage: Allows tighter connections to customers. Flexibility, speed of response, low costs, local connections.
Disadvantage: Risk of loss of control, demanding management.
E-corporation Network
Because of freelance employees that work from distant locations in virtual teams a new type of organizational structure emerged; “Electronic Network Organization”.
International MNC
Just exporting, not adapting and not taking advantage of cost cutting – maybe international division.
Multidomestic MNC
- Adaption to the local market takes precedence over centralization.
- Decentralized structure of independent SDs, low flow of company resources between the SDs.
- Global Area Division
Global MNC
- Centralization of power in HQs, economies of scale and low costs are more important than adaption in local markets.
- SDs are just for resources (products and cash) and/or for sales.
- Global Product Division
Transnational MNC
- Both local adaption and global coordination are important for the company.
- Network structure (matrix) with SDs being interdependent on each other rather than HQs- centers of excellence.
Control tools
Financial performance:
- Usually based on profit and return on investment (ROI)
Quality performance:
- Quality control cycle – team that meets regularly to discuss ways of improving quality of work
- Quality data handled by operational personnel/top management
- Timing and quality reviews
Personnel performance:
- Periodic appraisal of work performance
- Assessment centers – comprehensive testing on managerial abilities through simulation exercises.
Harzing - Bears, Bumble-bees ad Spisers
Bears
- Implementation f HQs decisions, direct control and surveillance.
Bumble bees
- Communication and cross-pollination of ideas between SD and HQ
Spiders
- Waving a web of social connections between the SDs horizontally and HQ-SDs.
Market approaches (3)
Market approach
- Competition, supply/demand, contractual agreements govern the relationship between the different units of MNC, that are free to deal with external or internal suppliers.
- Works well when the performance requirements are clearly spelled out.
- Formal (Financial performance of SD)/horizontal/decentralized
Rules approach
- Relying on spelled out rules and procedures for input and output.
- Works well when there is ambiguity about performance goals and at least moderate stability of the external environment.
- Formal (overall adherence to code of conduct)/vertical/centralized
Cultural approach
- External rules and procedures are internalized, individuals exercise self-control and abide by the cultural norms and expectations.
- Works well in highly unstable environment, where quick response is necessary, facilitates lower costs of control.
