Organization of the
multinational firm
Hedl Maria
Eschbacher Claudia
Agenda

Organizational structures (Perlmutter)
Ethnocentrism
 Polycentrism
 Geocentrism


Stages of international development (Daft)


Matrix structure vs. Heterarchy (Hedlund)
The home based MNC (Porter, Sölvell, Zander)
Organizational structures (Perlmutter)

Ethnocentrism
Type of interdependence
Sequential
Control style
HQ-derived
Strategic role of subsidiary
Implement local strategy
Recruitment and rotation
Home-country managers, much rotation
Organizational structures (Perlmutter)

Polycentrism
Type of interdependence
Pooled
Control style
Calculative
Strategic role of subsidiary
Formulate & implement local strategy
Recruitment and rotation
Local managers, little rotation
Organizational structures (Perlmutter)

Geocentrism
Type of interdependence
System of central and reciprocal
Control style
Normative, coercive
Strategic role of subsidiary
Implement & adapt to global strategy
Recruitment and rotation
Mixed, much rotation
Difficulties of geocentric MNCs
Differences between nations and regions
 Cultural differences
 Size
 Skilled managers
 Specialization of subsidiaries
 No adaption to local markets

Stages of international
development (Daft)

Domestic stage

International stage

Multinational stage

Global stage
Model for global vs. local
opportunities
Globalization strategy means that product
design and advertising strategy are
standardized throughout the world.
Multidomestic strategy means that
competition in each country is handled
independently of competition in other
countries.
Model for global vs. local opportunities
Global
Product
Structure
Heterarchy
Global
Matrix
Structure
Development
of
Globalization
Strategy
International
Division
Global
Geographic
Structure
Development of
Multidomestic
Strategy
International division
CEO
HR
Finance
R&D
Int. Division
Europe
Mideast
Brazil
Staff
Global Product Strucutre
Chairman
Law
Engineering
Global
Automobile
Components
President
Global
Industrial
Group
Finance
Global
Instruments
Production
International
Global
Truck
Components
Global Geographic Division
CEO
Pacific
Division
European
Division
Latin American
Division
Corporate
Staff
Long Term
Planning
Product
Coordination
Global Matrix Structure
International
Excecutive Committee
Country Managers
Germany Norway
Transportation
Business
Sectors
Industry
Power Transf.
Local Companies
Spain
Global Heterarchy (Hedlund)

large transnational firms

whole world as their playing field

no single country base

local and global advantages

complex multidimensional structure
Global Heterarchy (Hedlund)

Differences from Matrix Structure

Many centres

Stratic role for MNC of subsidiary managers

Different kinds of centres

Coordination through corporate culture
Global Heterarchy (Hedlund)

Differences from Matrix Structure

Degree of coupling between units

Holographic organization

„firm as a brain“ rather than „brain of the firm“

Coalitions

Managers have authority
The home based MNC
(Sölvell, Zander, Porter)

4 Diamonds

Factor endowments

Demand conditions

Relating and supporting industries

Firm strategy, structure and rivalry
 supplies to regions or nations rather than the
international environment
The home based MNC
(Sölvell, Zander, Porter)
The home base is best understood as a
limited geographical area, where a firm
has a cluster of core functions including
strategic decision making, research
development and often some form of core
manufacturing.
The home based MNC
(Sölvell, Zander, Porter)

Simple home-based MNC


Selective tapping
Multi-home-based MNC

Separate bases for individual lines of
business
Case Study
1819
Founding by Alois Miesbach on the Wienerberg in Vienna
1869
Trading starts on the Vienna Stock Exchange
1986
Start of internationalization and expansion (Germany)
1990
Start of expansion in Eastern Europe
1999
Advance to Global Player
Case Study



235 plants in 24 countries
Profit after tax € 155,5 million
Brands & Products:







POROTHERM - Bricks
TERCA - Facing bricks
KORAMIC - Roof tiles
SEMMELROCK - Pavers
BRAMAC & TONDACH GLEINSTÄTTEN - Roof
PIPELIFE - Pipes
Wienerberger Ofenkachel
Structure and Organization
Structure and Organization
Mature product lines in core business
 Not all products in all countries
 Stable technologies

Diveded into regions
 Regions report to managing board
 Each region full control over activities

 Geographic division structure
Thank you for your
attention!!