Reminders
1. Acme & Omega revisions due
Monday.
2. Rhodes Industries Case due Monday.
3. Please leave your mid-term course
evaluations with me at your
convenience.
Designing Organizations
for
The International Environment
BA 152
The International Environment
Government/Political Sector
PRIMARY SECTORS
Human
Resources
Organization
Financial
Resources INPUT
THROUGHPUT
OUTPUT
Customers
Material
Resources
Economic
Sector
Industry/
Competition
Technology
SECONDARY SECTORS
Cultural/
Demographic
Sector
Why Enter the Global
Environment





Growth opportunities
Economies of scale
Economies of scope
Move expensive operations to
lower cost locations – outsourcing
Others?
Stages of International
Development

Domestic – with modest global efforts
• Aware of an export market (might have an
Export Department)

International
• Multi-domestic thinking - views issues as
independent across countries (might have
an International Division)
Stages of International
Development

Multinational
• Marketing and manufacturing facilities are
located around the world.

Global
• Goods and services are produced to meet
the needs of the global market.
(“stateless” company)
Fitting Design &
International Strategy

Globalization Strategy
• Product design, manufacturing, and/or
advertising strategies are standardized for
world markets.
Fitting Design &
International Strategy

Multi-domestic Strategy
• Competition in each country is assumed to
be independent of competition in other
countries.
• Product design, manufacturing, and/or
advertising strategies are tailored to each
country.
Fitting Design &
International Strategy

Design Choices will be a function
of these two competing demands.
• Forces for global integration
• Forces for national responsiveness
Fitting Design &
International Strategy
Forces for
Global Integration
High
Low
Global
Product
Structure
Transnational
Model
Global
Matrix
Structure
International
Division
Global
Geographic
Structure
Low Forces for National Responsiveness High
A Hybrid Organization
with an International Division
President
Personnel
Vice-President
Electrical Products
Vice-President
Scientific Products
Finance &
Accounting
Vice-President
Medical Products
Vice-President
International Ops.
Europe
Asia
Partial Global Structure
use by Eaton Corp.
CEO
Legal Relations
Engineering
President
Global Instruments Global Industrial
Product Group
Group
F&A
International
Global Materials
Handling Group
Regional
Coordinators
Colgate-Palmolive’s Global
Geographic Structure
CEO
International
Business
Development
Corporate Staff
Worldwide
Sales &
Marketing
Corporate
Development
Chief
Operating
Officer
North
America
Europe
Latin America
Far East
South Pacific
GM’s Global Geographic
Structure
CEO
US
Division
Australia
Division
Sweden
Division
South Korea
Division
German
Division
GM’s Global Geographic
Structure: The Problems
Reversing 80 Years of History GM Is Reining In Global Fiefs
Detroit Makes Key Decisions on Design, Manufacturing To Cut Costly Duplication
Chinese Build a Chevy Engine
General Motors Corp. is the biggest car company in the world. But in many parts of the
globe it has long operated like a smaller regional player, with executives in places like
Australia and Sweden given wide autonomy over the design of new models. Now GM has put
an end to that policy, which dates back to the 1920s and legendary president Alfred P. Sloan.
It's insisting that its world-wide units share basic parts and work together to design vehicles
that can be sold, with modest variations, anywhere in the globe. One example: GM wants to
reduce the types of radios it uses in its cars to 50 from 270 currently, saving 40% in radio
costs.
GM's struggle to find the balance between local autonomy and central control is a familiar
one for global corporations. Mr. Wagoner says he wants GM to be the winner in what he calls
"a race to the middle" in the centralization vs. decentralization debate.
ABB’s Global Matrix
Structure
International
Executive
Committee
Business
Areas
Power
Transformers
Transportation
Products
High Voltage
Towers
Other
Business Areas
Germany
Latin American
Country Managers
Canadian
Far East
The Transnational Model:
Philips NV
The Transnational Model


Highly specialized operations dispersed
worldwide and linked through interdependent
relationships.
Structure is flexible and changeable as
needed.
The Transnational Model


Local managers can initiate strategic
changes that may infiltrate the rest of the
organization.
Coordination is largely a function of strong
culture, shared vision and values, and
management style.
The Downside Risks of the
Global Environment





Western business plans may not
“translate” well. (Wal-Mart/Disney)
Backlash in the home market.
Exposure to foreign laws and
regulations
Political instability
Others?
Next Time
Rhodes Industries