Chapter 13
Organization,
Implementation, and
Control
1
Learning Objectives
Describe alternative organizational
structures for international
operations.
Highlight factors affecting decisions
about the structure of international
organizations.
Indicate roles for country organizations in
the development of strategy and
implementation of programs.
Outline the need for and challenges of
controls in international operations.
2
Organizational Structure
Companies must change strategies
as their structures evolve from
domestic to multinational. The
basic functions of an organization
are to provide:
A route and locus of decision making and
coordination.
A system for reporting and communications.
3
Organizational Designs
Types of structures used by companies
to manage foreign activities:
Little/No Formal
Organization
International Division
Global Organizations
4
Little or No Formal Organization
Domestic operations assume
responsibility for international
activities in the early stages.
The organizational structure
reflects the increased demands
from the international
marketplace.
The export department structure
becomes obsolete as the firm
becomes more involved in foreign
markets.
5
The International Division
Centralizes in one entity all
of the responsibility for
international activities.
Best serve firms with few
products that do not vary
significantly.
Coordination is important.
6
Global Organizational Structures
Types:
Product Structure
Most often used by
multinational
corporations.
Improved cost
efficiency is a major
benefit.
Second most used
approach. Follows the
marketing concept
most closely.
Area Structure
7
Global Organizational Structures
(continued)
Types:
Functional
Structure
Customer
Structure
The simplest from the
administrative
viewpoint. A variation
is one that uses
processes as a basis
for structure.
Especially used if
customer groups are
dramatically different.
8
Global Organizational Structures
Types:
Mixed Structure
Matrix Structure
(continued)
Combines two or more
organizational
dimensions
simultaneously.
Integrates the various
approaches. Most
companies find this
arrangement
problematic.
Complexity of this
structure may increase
the reaction time of a
company.
9
Implementation
Locus of Decision Making
Decentralized systems have loose and
simple controls. Subsidiary operates
as a profit center.
Centralized systems have tight controls.
Strategic decision making is at
headquarters.
Coordinated decentralization calls for
overall strategy to come from headquarters.
Subsidiaries are free to implement within
agreed upon range.
10
Decision Making
Factors that impact structure and
decision making.
Degree of involvement in international
operations.
Products that the firm markets.
Size and importance of the firm’s markets.
Human resource capability of the firm.
11
The Networked Global Organization
The network avoids problems
of effort duplication,
inefficiency, and resistance to
ideas.
Subsidiaries are able to make
local business development
decisions within the global
framework.
12
Internal Cooperation
Success for a global firm involves the
ability to move intellectual capital.
Boundarylessness describes a situation
in which people can act without regard
to status while feeling the freedom to
search elsewhere for innovative ideas.
International teams promote
cooperation.
13
Internal Cooperation
(contd.)
Greatly assisted
by Internet-based
technology.
Access to virtual
teams.
14
Roles:
Country Organizations
Contributor
Implementor
15
Country Organizations
Strategic Leader
A competent national subsidiary that
may be serving as a partner in
developing and implementing strategy.
Contributor
Country organization with a distinctive
competence.
16
Country Organizations
Implementor
Most entities hold this role. It provides
critical mass for the global effort.
Black Hole
The international company has a low
competence country organization, or
none at all.
17
Controls
Internal benchmarking is of great
importance in today’s market.
General instruments of control:
Bureaucratic/Formalized Control
Cultural Control
18
The Bureaucratic/Formalized
Control System
Elements:
International budget and
planning system.
Functional reporting system.
Policy manuals to direct
functional performance.
19
Cultural Control
Requires personal
interaction.
Requires careful
selection and
training of
corporate
personnel.
20
Exercising Controls
Manufacturing subsidiaries tend to
be controlled more intensively than
sales subsidiaries.
U.S.-based multinationals place
more emphasis on quantitative
data.
Control systems must consider the
impact of the environment.
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