Mgt 485
CHAPTER 11
ORGANIZING INTERNATIONAL
OPERATIONS
Case Study Question(s)
Due Monday, March 29th

Dan Simson: Project Mgr.
 Discuss the cultural dimension(s) of time (e.g.
temporal forces, past vs. future orientation,
sequential vs. synchronous, orientation and
value) and how they apply to this case
 Discuss the organizational and strategic
impacts, focusing on Dan Simson’s
responsibilities to maximize his organization’s
effectiveness (Profitabity, developing Human
Resources, increasing market exposure)
 Make and justify a recommendation as to how
Dan Simson can be effective in this
environment
Mgt 485-11-2
Determinants of an Organization’s Structure
Work specialization
Specialization
Subdividing “tasks” into separate jobs (division of labor)
Centralization
Centralization
Hierarchical level with authority to make a decision
Authority / responsibility structure
Hierarchy of authority
Ability to provide direction: Who reports to whom
Span of control
Related to Hierarchy: number of employees reporting to supervisor
Chain of command
Number of supervisors overseeing individual employees
Departmentalization
Complexity
Number of activities or subsystems within the organization
Formalization
Written documentation (rules, policies, procedures)
Standardization
Similar work activities being done in a uniform manner
Personnel ratios
Deployment of people to functions and departments
Professionalization
Level of formal education & training of employees
Mgt 485-11-3
Pressure for Globalization
Organizational Consequence of
Internationalization
High
Aircraft
Cameras
Electronics
Computers
Telecommunications
Aerospace
Autos
Synthetic fibers
Steel
Clothing
Low
Cement
Low
Packaged goods
High
Pressure for Local Responsiveness
Mgt 485-11-4
Goals and Strategy
Environment
Culture
Size
Structure
1. Formalization
2. Specialization
3. Standardization
4. Hierarchy of Authority
5. Complexity
6. Centralization
7. Professionalism
8. Personnel Ratios
Technology
Mgt 485-11-5
Initial Division Structure
Used for Initial Entry into International Markets
 Exporting
 Common
first choice for manufacturers of
technologically advanced products
 Firm can charge premium price due to little
competition
 Subsidiary
A
common for handling finance-related
businesses or other operations that require an
on-site presence from the start
Mgt 485-11-6
Subsidiaries During the Early Stage
of Internationalization
CEO
Home Office
Departments
Production
Marketing
Personnel
V.P. International
Operations
Overseas
Subsidiaries
France
Finance
Japan
Egypt
Australia
Argentina
Mgt 485-11-7
International Division Structure

Advantages





Takes burden off the CEO
Receives top management attention
Promotes overall unified approach
Develops internationally experienced managers
Disadvantages
 Separating domestic and international managers may
cause differing objectives
 Home office may not be able to allocate resources
globally, thereby penalizing growth
Mgt 485-11-8
An International Division Structure
CEO
Production
Domestic
Division
Marketing
Domestic
Division
Domestic
Division
Operating
Divisions
Home Office
Departments
Finance
Domestic
Division
Australia
Office
Operations
Marketing
Personnel
International
Division
Japan
Italy
Government
Relations
Mgt 485-11-9
Global Product Division
Domestic divisions are given worldwide
responsibility for product groups

Advantages
 Helps to manage diversity
 Able to cater to local needs
 Marketing, production, and finance can be coordinated on a product-by-product global basis

Disadvantages
 Duplication of facilities and staff personnel
 Managers may pursue attractive short-term sites
instead of long-term sites
 Managers spend to much time trying to tap local
instead of international markets
Mgt 485-11-10
A Global Product Division Structure
CEO
Production
Marketin
g
Finance
Product
Division A
Product
Division B
Product
Division C
South
Americ
a
Africa
Europ
e
Product
Division D
Australia
Personnel
Product
Division E
Far East
Great Britain
France
Germany
Italy
Netherlands
Productio
n
Marketing
Finance
Personnel
Mgt 485-11-11
Global Area Division
Based on geographic rather than product
orientation

Advantages
 Reduces cost per unit
 Caters to local markets
 Makes rapid decisions to accommodate environmental
changes

Disadvantages
 Difficulty reconciling a product emphasis with
geographic orientation
 Ignores new research and development by division
groups
Mgt 485-11-12
A Global Area Division Structure
CEO
Home Office
Departments
Production
Marketing
Finance
Personnel
Operating
Divisions
North
America
South
America
Europe
Asia
Great Britain
France
Germany
Italy
Netherlands
Africa
Mgt 485-11-13
Global Functional Division
Worldwide operations based primarily on function
and secondarily on product

Advantages
 Emphasizes functional expertise
 Tight centralized control
 Relatively lean managerial staff

Disadvantages
 Difficulty co-ordinating manufacturing and
marketing
 Difficulty managing multiple product lines
 Only CEO can be held accountable for profits
Mgt 485-11-14
A Global Functional Structure
CEO
Production
Marketing
Finance
Domestic
Production
Foreign
Production
Domestic
Production
Foreign
Production
Product
Product
Product
Product
Product
Product
Product
Product
Product
Product
Product
Product
Product
Product
Product
Product
A
B
C
D
A
B
C
D
A
B
C
D
A
B
C
D
Mgt 485-11-15
Mixed Organization Structures
Combines global product, area, and functional divisions
to supplement its primary structure with a secondary
one, and perhaps a tertiary (third) one

Advantages
 Allows organization to create the specific type
of design to meet its needs

Disadvantages
 Complexity increases
 Difficulty arises in co-ordinating personnel
Mgt 485-11-16
A Multinational Matrix Structure
CEO
Production
Marketing
North America
Finance
Industrial Goods
Manager,
Industrial Goods
North America
Personnel
Europe
Manager,
Industrial Goods
Europe
Mgt 485-11-17
Meeting the Challenges of
Globalization

Synergy - (2 + 2 = 5)
 whole is greater than the sum of its parts
 Organizational Synergy
 Pooling knowledge across regions
 Sharing resources to meet world-wide needs
 Pooling purchases for greater negotiating power
 Coordinating strategies to become more efficient
 Vertically integrating to be more cost effective
 Creating new businesses
Mgt 485-11-18
Organizing for Product Integration
Strategies:






Mutual adjustment
Use of direct, technically skilled supervisors
Use of integrative leadership
Technical training provided in-house
Use of standard milestones in work design
Flexible design standards
Mgt 485-11-19
Information Technology
Key Questions:
 Which information systems are needed?
 Are investments are worthwhile?
 How does technology fit into management’s
strategic thinking ?
 How should users and specialists connect within
the company?
 How do you design systems to improve
organizational performance?
Mgt 485-11-20
Organizational Characteristics
3 most critical for international operations
 Formalization
 The use of defined structures used in decision making,
communicating, and controlling


Objective - written descriptions
Subjective -informal controls
 Specialization
 The assigning of individuals to specific, well-defined
tasks


Horizontal specialization
Vertical specialization
 Centralization
 Management system in which important decisions are
made at the top
Mgt 485-11-21
Symptoms of Structural Deficiency
 Decisions
are delayed or lacking in quality
 Organization
does not respond
innovatively to a changing environment
 Too
much conflict from departments
being at cross purposes is evident
Mgt 485-11-22
Relate “Structure” to “Culture”
 How
do cultural dimensions affect
structural dimensions?
 Are some structures inherently more
effective in some cultures?
Option for additional 30 Points
Use Hofstede (p. 119-122) & Trompenaar’s (p. 126)
Mgt 485-11-23