Week three - organisation of the international firm

Question 1

what do companies need to balance global rationalisation with

Answer 1

local responsiveness

Question 2

how do strategists and marketers approach problems?

Answer 2

• strategists: centralisation vs decentralisation
• marketers: standardisation vs adaptation

Question 3

what are the four P’s

Answer 3

• product
• price
• place
• promotion

Question 4

what is meant by local dimension

Answer 4

each country is different, there is a high sensibility to differences in local markets

Question 5

what pressures are there in the global dimension

Answer 5

• multinational consumers
• intensity of technology/investment
• multinational competitors
• universal tastes and needs

Question 6

what are the pressures on the local dimension

Answer 6

• differences in tastes and needs
• differences in market structures
• local government requirements
• high transport costs

Question 7

what is global convergence driven by

Answer 7

• the low cost and frequency of international communication, transport and travel

Question 8

what is standardisation

Answer 8

the process of establishing uniformity across manufacturing materials and processes

Question 9

what are the benefits of standardisation

Answer 9

• lower production costs
• economies of scale
• higher efficiency

Question 10

what is global strategic alignment

Answer 10

buyers can shop at one global market, suppliers and competitors create global industries resulting in companies coordinating their global strategies

Question 11

what factors facilitate a global approach

Answer 11

• political (reduces trade barriers)
• social (favours standardisation and global branding)
• technology (increases economies of scale)
• competitive (induces integration and coordination)

Question 12

what is localisation

Answer 12

adapting a product or content to fit a specific market or country and adjusting its functional properties to accommodate the linguistic, cultural, political and legal differences

Question 13

what is an international diversity perspective

Answer 13

strategists suggest you must be willing to adapt to complex variety and fragmentation that characterises our world

Question 14

why is the level of international variety quite consistent

Answer 14

• habits change slowly, cultural norms are rigid
• legal differences

Question 15

what factors facilitate a multi domestic approach

Answer 15

• cultural factors (reduces the benefits of standardisation)
• commercial factors (requires differentiated approaches to sales and marketing)
• legal factors (limits free flow of people, goods and data/imposes localisation constraints)
• technical factors (reduces the benefits of economies of scale)

Question 16

what are the three main international strategic approaches for the international strategy

Answer 16

• global strategy
• transnational strategy
• multidomestic strategy

Question 17

what is meant by centralisation vs de-centralisation

Answer 17

distribution of decision making authority and responsibilities between headquarters and subsidiaries

Question 18

what is meant by formalisation and standardisation

Answer 18

establishment of written, official rules, these determine allowed behaviour and criteria for decision making

Question 19

what is socialisation

Answer 19

learning and internationalisation of values, norms and behavioural patterns accepted by the company

Question 20

what are subsidiaries used for

Answer 20

channels to expand markets and reach a global scale

Question 21

what is an ethnocentric mindset

Answer 21

maintenence of national identity as leadership positions are occupied by people of the country of origin

Question 22

why are international operations conceived as a set of domestic operations

Answer 22

because they are linked by a common property

Question 23

why do some subsidiaries have R&D units

Answer 23

to adapt products or to develop new market-specific products

Question 24

what is the role of subsidiaries in global strategy

Answer 24

passive (dependence)

Question 25

what is the role of subsidiaries in multi domestic strategy

Answer 25

autonomous subsidiary

Question 26

what is a polycentric mindset

Answer 26

managerial post are occupied by people of the host country

Question 27

what is the organisational structure of a global srategy

Answer 27

international division (centralisation) and global product division (global perspective)

Question 28

what are the coordination mechanisms for global strategy

Answer 28

socialisation and control results

Question 29

which strategic approach has the highest dispersion of the activities of the value chain outside the country of origin

Answer 29

multi-domestic approach

Question 30

what are the subsidiaries conceived as in a transnational strategy

Answer 30

as part of a ‘whole’, not as ‘satellites’ of the matrix, flows of people, products and technologies

Question 31

what is a geocentric mindset

Answer 31

the nationality of managers does not matter

Question 32

what is the organisational structure of transnational strategy

Answer 32

multidimensionality

Question 33

what are the coordination mechanisms of transnational strategy

Answer 33

importance of socialisation and informal relationships, selective centralisation and decentralisation

Question 34

what are the coordination mechanisms of a global strategy

Answer 34

centralisation, formalisation and behaviour control

Question 35

what are the characteristics of a functional structure

Answer 35

• first international step (predominance of domestic sales)
• functional units
• export activity is in charge of a manager or department
• few product lines

Question 36

characteristics of an international division structure

Answer 36

• a unit is centralising all international activity
• improves coordination of all forms of implementation
• facilitates communication between parent and subsidiaries but limits communication between the international division and domestic operations
• if it grows its importance, may lead to conflict with domestic units

Question 37

characteristics of a product division structure

Answer 37

• operations related to the same products are spread internationally
• centralises decision making regarding the product and decentralises decisions non-related to products to the subsidiaries
• rationalisation of production plants and centralisation of management capacity, improving relations and adaptation to customers
• duplication of personnel and functions in each division, coordination problems between divisions

Question 38

characteristics of a geographic division structure

Answer 38

• result of the increase in the number of countries, unit responsible for all business in a given area
• operations in an area must be sufficiently complex, many different (opportunity for specialisation and economies of scale)
• facilitates information between divisions and subsidiaries, sensitivity to local conditions
• duplication and coordination problems

Question 39

characteristics of a matrix structure

Answer 39

• consequence of complexity growth in the international area
• combines dual authority flows in order to balance global integration and local responsiveness
• flexible organisation of resources
• dual information flows should improve conflict resolution among functions, markets and products
• problems: complexity and dual authority
• information collapses
• confusion/responsibility avoidance/conflict

Question 40

characteristics of a hybrid structure

Answer 40

• consequence of assymetries: some parts of the organisation are adapted to markets, yet other are not large enough to be efficient
• combines functional units with outputs (product or market units)
• problems: tendancy to isolation among operations carried out by matrix and other units