ORGANIZATIONAL
ENVIRONMENTS
CHAPTER 3
1. Organizations and environments
TOPIC FOR TODAY:
ORGANIZATIONAL
ENVIRONMENTS
2. Stakeholders and global
strategies
3. Organizing for global business
4. Regional organizing models
5. Control, participation and
decision – making
2
The organizational environment of
global management
Who do we
benefit and
how?
What is our
personality as
an
organization?
How do we
organize
our
business?
Stakeholders
and global
strategies
Organization
design
Corporate
culture
Decision making
processes
How do we
make
decision?
3
Stakeholders and global strategies
Economic and
financial
conditions
Market
opportunities
and constraints
Cultural milieu
Stakeholders’
objectives
Geographic
challenges
Management
education,
experience, and
philosophy
Corporate
mission and
core values
Corporate
strategies and
goals
Management
practices
Organization
structure and
processes
Legal-political
constraints
Resource
availability (e.g.,
HR, technology)
4
Culture and stakeholder power:
Centralized vs. distributed stakeholder models
Centralized
stakeholder model
(Narrow group of key
stakeholders)
Distributed
stakeholder model
(Broad group of key
stakeholders)
• Principal mission and goals: (example)
•Profit or ROI
•Customer satisfaction
•Avoid legal or ethical challenges
• Principal mission and goals: (example)
•Profit or ROI
•Customer satisfaction
•Ethical and legal behavior
•Social responsibility
•Sustainable growth and development
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GLOBAL ORGANIZATIONAL DESIGN
Global organizational design
Basic of organization
Global product
Worldwide responsibility for specific product
groups assigned to different global operating
units
Global area design
Geographic regions of the world
Global function
Functional areas (finance, marketing,…)
Global customer
Unique needs of customers
Global matrix
Combination of two global designs
Web-based global networks
Loosely coupled web-based organizations.
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Uber Technologies
One of the clearest examples of a Web-based global network design is Uber
Technologies, the highly successful ride-sharing service that uses private drivers and
private cars around the world to compete head on in the heavily regulated taxi
industry. Uber drivers typically are not licensed as public drivers, their cars are not taxed
or regulated, and fees are established online – away from the snooping eyes of
government regulations. As a result, costs – and consequently prices – are typically
much lower than traditional taxis.
Needless to say, some governments and most unionized taxi drivers oppose this
budding industry. Recently, France went so far as to arrest the executives of the local
Uber service there, charging them with running an illegal taxi service. Similar charges
have been brought in Korea, the Netherlands, and Indonesia. After the arrests in
France, the company announced “We are keen to continue talking with the French
government about the regulatory framework for services like Uber. There is a way
forward – with regulation that is focused on the needs and safety of the public, while
also allowing more people to take advantage of these new economic possibilities.”
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Regional organizing models
Characteristics
Investor
model
Family model
Network
model
Multual
benefit model
Country examples
American,
Australian, British,
Canadian
companies
Chinese gong-si,
South Korean
chaebol, Mexican
grupo
Japanese kaisha
and keiretsu
German konzern,
Danish selskabet,
Dutch bedrijf,
Swedish foretag
Primary
beneficiaries
Principle
emphasize on
stockholders and
investors as
principle
beneficiaries
Principle
emphasize on
extended family
members as both
investors and
principle
beneficiaries
Sequential
emphasis on
corporate
network,
individual
company
shareholders and
permanent
employees
Relative balance
between
stockholders and
investors, most
employees, local
community and
public – at - large
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Regional organizing models
Characteristics
Investor model
Family model
Network model
Multual benefit
model
Center of power and
influence
Centralized
power largely
held by investors
and stockholders
and delegated
to top executives
Centralized
power held by
family with
government
backing and
tightly controlled
through family
management
Moderately
distributed power
held by investors,
sister companies,
key banks, unions
and government
Widely distributed
power held by
investors,
partners,
managers, works
councils, unions
and government
Trend in management Professional
education
selection
Family
membership
Seniority
Technical
mastery
Variability in basic
model
Few variations in
basic model
Moderate
Few variations in
variations in basic basic model
model
Wide variations
within basic
model
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Regional organizing models
Characteristics
Investor model
Family model
Network model
Multual benefit
model
Trends in decision making
Top-down
centralized
management
common, but not
universal
Top-down
centralized
management,
often with
government
involvement and
support
Consultation with
employees up,
down and across
hierarchy, but final
decision typically
made at top
Collaboration
between
managers, works
councils and union
on key decision
Employee rights and
job security
Weak legal
protection of
employee rights
and job security for
all employees
Weak legal
protection of
employee rights
and job security for
all employees
Weak legal but
strong social
protection of
employee rights
and job security for
all “permanent”
employees
Strong legal
protection of
employee rights
and job security for
almost all
employees
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INVESTOR MODEL OF
ORGANIZATION
•
Mastery – oriented
•
Powerful CEOs
•
Professional management
•
Fluid organizational design
•
Low employee job security
Investors, Board of Directors, CEO
(powerfull executive, return on
investment principle goal,
performance-based tenure)
Tall organization structure with
professional managers
(centralized to-down
management, rule-based,
mastery-oriented, individual
incentives)
Supervisors
Employees
(low two-way commitment,
wages, and job security)
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Family model of
organization (eg. China)
üFlat and informal
structure
üRelationship - based
üFamily management
üBusiness as private
property
üFamily revenue
12
Network model of
organization (e.g., Japan)
üInternal financing
Mitsubishi
construction
Mitsubishi
Trading
Company
üTrading companies
üWeak executives
Mitsubishi
Motor
Mitsubishi
Aluminum
Kirin
Holding
(Mitsubishi
keiretsu)
Mitsubishi
Plastics
üLong - term employees
üEnterprise unions
Mitsubishi
Paper
Asahi Glass
Bank of
TokyoMitsubishi
13
Example of
German multual
benefit
organization
ü Supervisory and
management
boards
ü Co-determination
and works councils
ü Meister
ü Technik
Supervisory board
(Half appointed by outside
investors and half elected
by works council; five years
terms
Works council
Management board
(member elected by
employees through codetermination system)
(top management team,
appointed by supervisory
board)
Employees
Management and supervisors
(mostly permanent; many
from apprenticeship
programs)
(collaborative decisionmaking, managers frequently
promoted through the ranks
Cultural influences on participation in decision making
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PARTICIPATION AND DECISION STRATEGIES
Centralized
decisionmaking
Consultative
decisionmaking
Autocratic and exclusive
Collaborative
decisionmaking
Participative and inclusive
Employee participation in organizational decision-making
Centralized (low participation)
Top managers may or may not seek
employee involvement and then make
decisions largely unilaterally
Consultative (moderate participation)
Top managers actively seek employee
involvement and input, discuss issues
with others, and then make decisions.
Collaborative (high participation)
Top managers work closely with
employees at all levers to seek a
consensus on decision, if possible
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Decision analysis and implementation speed
Centralized
decision-making
• Rapid problem analysis
• Rapid decision-making
• Slow acceptance and implementation (USA)
• Rapid acceptance and implementation (China)
Consultative
decision-making
• Slow problem analysis
• Slow decision-making
• Rapid acceptance and implementation (Japan)
Collaborative
decision-making
• Moderate problem analysis
• Slow decision-making (co-determination)
• Moderate acceptance and implementation
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Centralized decision-making
(common in Australia, Canada, UK, USA)
Problem
identification (slow)
• Often slow
problem
identification by
supervisors or
management,
largely through
production
control system;
notification up
the line.
Problem analysis
and decision
(rapid)
• Rapid analysis
and discussion
of problem by
management.
• Announcement
of decision to
rank-and-file
employees.
Decision
implementation
(slow)
• Slow
acceptance
and
implementation
by rank-and-file
employees due
to lack of
involvement in
decision
process.
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Centralized decision-making
(common in China and overseas Chinese)
Problem
identification
(rapid)
• Rapid
identification of
problem by
supervisors or
ownermanagers,
largely through
production
control systems;
immediate
knowledge up
the line.
Problem analysis
and decision
(rapid)
• Rapid analysis
and discussion of
problem by
owner-managers
in consultation
with extended
family or guanxi
partners.
• Rapid final
decision.
Decision
implementation
(rapid)
• Rapid
acceptance
and
implementation
of decision by
rank-and-file
employees due
to combination
of loyalty and
pressures for
compliance.
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Consultative decision-making
(common in Japan)
Nemawashi
(slow)
• Problem
identified by
supervisors or
workers.
• Lower-level
workers work
together to solve
problems and
reach informal
consensus.
• Supervisors meet
informally to
discuss and
modify proposal.
• Departmental
consensus
reached on plan
of action.
Ringi-sho (slow)
• Slow and
formal
written
proposal
drafted and
passed up
the chain
for
approval or
rejection.
Formal decision
(rapid)
• When
document
makes it to
top
manageme
nt it is likely
to be
approved
rapidly.
Decision
implementation
(rapid)
• Relatively
rapid
implementa
tion given
widespread
buy-in.
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Collaborative decision-making (common in Germany,
Netherlands, Sweden)
Problem identification
(moderate)
•Problem identified by
supervisors and workers
through on-the-job experience
or production control
processes.
•Lower-level employees in a
section or department work
with supervisors to help identify
problem cause and possible
solutions.
•Department heads, section
chiefs, and supervisors meet to
discuss and develop proposals.
Technical experts consulted
where needed to improve
proposal.
•Problem and possible solutions
passed up management
hierarchy.
Problem analysis,
negotiations, and formal
decision (moderate)
•Management discusses
problem and possible
solutions widely and
then makes a formal
decision, often in
consultation and
negotiation with works
council and union (codetermination).
Decision implementation
(moderate)
•Moderate pace of
decision
implementation due to
widespread employee
buy-in.
•Union resistance may
still occur and slow
decision process due
to structural or
contractual issues.
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MANAGER’S NOTEBOOK:
WORKING WITH GLOBAL ORGANIZATION
Understanding the relationship
between stakeholders,
strategies and structures
Understanding the
characteristics of global work
environments
Learn about other
organizations by better
understanding your own
•Understanding stakeholder
power and influence in the
strategy-making process.
•Understanding how your
organization differs from others
in terms of their strategic
objectives and organizing
frameworks.
•Look for interactions between
strategic decisions and
structures.
•Remember that strategies and
structures can evolve over
time.
•Consider the role of cultural
differences in strategystructure relationships.
•Understanding how decisions
are made across
organizations, including the
role of employee involvement
•Understanding constraints on
organization decision-making.
•Understand your own
organizational culture.
•Understand differences in
organizational cultures across
companies, including artifact
and behaviors, power
distributions and problemsolving mechanisms.
•Learn how you as an outsider
can work with people from a
different organizational
culture.
•Learn more about the
relationship between your own
culture and local organizing
frameworks.
•Based on this, learn more
about other cultures as they
play out in organizational
settings.
•Continue to develop your
multicultural skills to be
prepared for differing
environments.
•Finally, learn the rules of the
game regardless of where you
are working.
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MANAGER’S NOTEBOOK:
WORKING WITH GLOBAL ORGANIZATION
Local understanding
Understanding your
own culture,
organization, and
prevailing
management style,
plus corporate
mission and
objectives
Global understanding
Global management
Understand the
cultures,
organizations, and
management
patterns of our global
customers, partners
and employees
Develop suitable
organizational and
management skills to
bridge culture division
and achieve
corporate mission
and objectives
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