Week three - organisation of the international firm Flashcards
what do companies need to balance global rationalisation with
local responsiveness
how do strategists and marketers approach problems?
- strategists: centralisation vs decentralisation
- marketers: standardisation vs adaptation
what are the four P’s
- product
- price
- place
- promotion
what is meant by local dimension
each country is different, there is a high sensibility to differences in local markets
what pressures are there in the global dimension
- multinational consumers
- intensity of technology/investment
- multinational competitors
- universal tastes and needs
what are the pressures on the local dimension
- differences in tastes and needs
- differences in market structures
- local government requirements
- high transport costs
what is global convergence driven by
- the low cost and frequency of international communication, transport and travel
what is standardisation
the process of establishing uniformity across manufacturing materials and processes
what are the benefits of standardisation
- lower production costs
- economies of scale
- higher efficiency
what is global strategic alignment
buyers can shop at one global market, suppliers and competitors create global industries resulting in companies coordinating their global strategies
what factors facilitate a global approach
- political (reduces trade barriers)
- social (favours standardisation and global branding)
- technology (increases economies of scale)
- competitive (induces integration and coordination)
what is localisation
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
what is an international diversity perspective
strategists suggest you must be willing to adapt to complex variety and fragmentation that characterises our world
why is the level of international variety quite consistent
- habits change slowly, cultural norms are rigid
- legal differences
what factors facilitate a multi domestic approach
- 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)
what are the three main international strategic approaches for the international strategy
- global strategy
- transnational strategy
- multidomestic strategy
what is meant by centralisation vs de-centralisation
distribution of decision making authority and responsibilities between headquarters and subsidiaries
what is meant by formalisation and standardisation
establishment of written, official rules, these determine allowed behaviour and criteria for decision making
what is socialisation
learning and internationalisation of values, norms and behavioural patterns accepted by the company
what are subsidiaries used for
channels to expand markets and reach a global scale
what is an ethnocentric mindset
maintenence of national identity as leadership positions are occupied by people of the country of origin
why are international operations conceived as a set of domestic operations
because they are linked by a common property
why do some subsidiaries have R&D units
to adapt products or to develop new market-specific products
what is the role of subsidiaries in global strategy
passive (dependence)
what is the role of subsidiaries in multi domestic strategy
autonomous subsidiary
what is a polycentric mindset
managerial post are occupied by people of the host country
what is the organisational structure of a global srategy
international division (centralisation) and global product division (global perspective)
what are the coordination mechanisms for global strategy
socialisation and control results
which strategic approach has the highest dispersion of the activities of the value chain outside the country of origin
multi-domestic approach
what are the subsidiaries conceived as in a transnational strategy
as part of a ‘whole’, not as ‘satellites’ of the matrix, flows of people, products and technologies
what is a geocentric mindset
the nationality of managers does not matter
what is the organisational structure of transnational strategy
multidimensionality
what are the coordination mechanisms of transnational strategy
importance of socialisation and informal relationships, selective centralisation and decentralisation
what are the coordination mechanisms of a global strategy
centralisation, formalisation and behaviour control
what are the characteristics of a functional structure
- first international step (predominance of domestic sales)
- functional units
- export activity is in charge of a manager or department
- few product lines
characteristics of an international division structure
- 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
characteristics of a product division structure
- 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
characteristics of a geographic division structure
- 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
characteristics of a matrix structure
- 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
characteristics of a hybrid structure
- 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
