Subsidiary Organization and Coordination

Question 1

What is Coordination?

Answer 1

Mutual reconciliation of elements in order to optimize a system

Question 2

What are two type of Timing?

Answer 2

􏰀 Forward coordination (control)

􏰀 Feedback coordination (closed-loop control)

Question 3

What are 3 types of Direction?

Answer 3

􏰀 Vertical
Coordination of subsidiary entities towards the whole
􏰀 Horizontal
Coordination of coequal entities
􏰀 Lateral
Coordination of entities that are neither vertically nor horizontally arranged (network)

Question 4

Coordination vs. integration

Answer 4

Coordination vs. integration

Integration = embedding an entity in an existing set of entities

Question 5

Reducing the requirements for coordination

Answer 5

􏰀 Disconnecting value activities

􏰀 Surplus resources as buffers

􏰀 Flexible resources

Question 6

Disconnecting value activities through:

Answer 6

􏰀 Outsourcing (also to reduce cost and risk)
software development in India, catering for airlines (LSG)
􏰀 Licensing

Question 7

Surplus resources as buffers

Answer 7

􏰀 Creating additional capacity

􏰀 Using existing resources more efficiently 􏰀 Flexible resources

Question 8

Flexible resources:

Answer 8

• Qualified employees
• Multi-applicable machines
• Universal know-how

Question 9

INTERNATIONAL ORGANIZATION MODEL

Answer 9

International mentality: Management regards overseas operations as appendages to a central domestic corporation

Administrative control: Formal management planning and control systems allow tighter HQ-sub linkage

Coordinated federation: Many assets, resources, responsibilities, and decisions decentralized, but controlled from headquarters

Question 10

MULTINATIONAL ORGANIZATION MODEL

Answer 10

subsidiaries very independent of each other (ex. insurance companies that operate locally)

Multinational mentality: Management regards overseas operations as a portfolio of independent businesses

Personal control: Informal HQ-sub relationships overlaid with simple financial controls

Decentralized federation: Many key assets, responsibilities, and decisions decentralized

Question 11

GLOBAL ORGANIZATION MODEL

Answer 11

Global mentality: Management treats overseas operations as delivery pipelines to a unified global market

Operational control: Tight central control of decisions, resources, and information

Centralized hub: Most strategic assets, resources, responsibilities, and decisions centralized

Question 12

Integrated Network

Answer 12

Transnational mentality: Complex process of coordination and cooperation in an environment of shared decision making

No centralized control: Large flows of components, products, resources, people, and information among interdependent units

integrated network structure: Distributed, specialized resources and capabilities

Question 13

Typologies of coordination strategies

Answer 13

INTERNATIONAL ORGANIZATION MODEL
MULTINATIONAL ORGANIZATION MODEL
GLOBAL ORGANIZATION MODEL
INTEGRATED NETWORK

Question 14

Horizontal differentiation and organizational design

Answer 14

ORG CHART

Vertical differentiation refers to the formal division of the organization into subunit

whereas horizontal differentiation refers to the decision making responsibilities within the structure.

Question 15

Pre-International Organization

Answer 15

ORG CHART

􏰀 In the very early stages of international involvement, domestic operations assume responsibility for international activities
􏰀 Organizationally, the marketing & sales department is often responsible for the few international activities (export, licensing)

Question 16

International Division Structure

Answer 16

ORG CHART
􏰀 Is created when exports become significant
􏰀 All international activities are grouped into one separate division
Headquarters (CEO)
􏰀 Structure is most adequate for companies that are still at the development stages of international business involvement

Question 17

Global Functional Structure

Answer 17

ORG CHART
􏰀 Activities of the company are organized around specific functions
􏰀 Departments have worldwide responsibility for the specific function
Headquarters (CEO)
􏰀 Structure is most adequate if the company has rather homogenous product lines (i.e. low level of diversification) and if markets for its products are not strongly heterogeneous

Question 18

Global Product Divisional Structure

Answer 18

ORG CHART
􏰀 Activities of the company are organized around specific products or product groups
􏰀 Departments or divisions have worldwide responsibility for the specific function
􏰀 Structure is most adequate for companies with very heterogeneous product lines and technological requirements for those product lines

Question 19

Global Matrix Structure

Answer 19

􏰀 Matrix design is multi-dimensional
􏰀 Structure is the result of applying at (least) two structural dimensions simultaneously at
the highest level of hierarchy
􏰀 Managers in matrix cells (i.e. managing directors of specific foreign subsidiaries) are simultaneously responsible to 2 executives in the 2 given lines of authority

Question 20

What are the criticisms of the Stopford and Wells model?

Answer 20

• Sample included only U.S. companies
• Positioning of boundaries (point at which one organization form ends and another one begins)
• Authors only assume that global matrix structure would be applied (no empirical evidence)
• Empirical studies (i.e. Engelhoff) disprove the study

Question 21

What are the three key drivers of organizational structure in the public sector?

Answer 21

• Legislation-driven
• Service-driven
• Citizen-driven

Question 22

What are 5 barriers to changing existing organizational structures?

Answer 22

• knowledge barriers
• system barriers
• capability barriers
• intention barriers
• norm barriers