8-*Implementing Global Marketing StrategiesInternational Marketing 2015GS

8-*Organizational StructureThere is no permanent organization chart for the world. . . . It is of supreme importance to be ready at all times to take advantage of new opportunities.

Robert C. Goizueta, (Former) Chairman and Ceo, Coca-Cola Company

8-*Basic Organizational StructuresA number of basic structures exist that permit an MNC to compete internationallyStructure must meet the need of both the local market and the home-office strategy of globalizationContingency approachBalances the need to respond quickly to local conditions with the pressures for providing products globallyMost MNCs evolve through certain basic structural arrangements in international operations

8-*Basic Organizational Structures (cont.)Global Structural Arrangements Global Product DivisionStructural arrangement in which domestic divisions are given worldwide responsibility for product groupsGlobal Area DivisionStructure under which global operations are organized on a geographic rather than a product basisGlobal Functional DivisionStructure which organizes worldwide operations primarily based on function and secondarily on product Matrix Organization StructureStructure that is a combination of a global product, area, or functional arrangement

8-*Domestic Plus Foreign Subsidiary

8-*Global Product Division

8-*Global Geographic StructureReturn

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International Division Structure

2006 Prentice Hall8-* Structure of the international division International divisionOrganized on geographyInitially export goods to foreign subsidiary but later outsource productionProblemsHeads of foreign subsidiaries relegated to second-tier positionLack of coordination between domestic and foreign operationsTherefore firms begin adopting worldwide structures

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Multinational Matrix Structure

2006 Prentice Hall8-*Matrix Structure is a hybrid organization of overlapping responsibilities it is used by some firms but has generally fallen into disfavor recently.Attempts to meet needs of transnational strategy. Doesnt work as well as theory predicts.Conflict and power struggles.Flexible matrix structures.

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8-*Integrated Global StructuresThe global functional structure is designed on the basis of the companys functions production, marketing, finance, and so forth. Foreign operations are integrated into the activities and responsibilities of each department to gain functional specialization and economies of scale.

8-*Organizing for GlobalizationIf you misjudge the market [by globalizing], you are wrong in 15 countries rather than only in one.Ford European Executive

8-*Organizing for GlobalizationTwo opposing forces in structural decisionsThe need for differentiation (focusing on and specializing in specific markets) The need for integration (coordinating those same markets)Globalization a specific strategy that treats the world as one market by using a standardized approach to products and markets

8-*Organizing for GlobalizationOrganizing to facilitate a globalization strategy typically involves rationalization and the development of strategic alliancesOrganizing for global product standardization necessitates close coordination among the various countries involvedThe problem facing companies in the future is that the structurally sophisticated global networks leave the organization exposed to the risk of environmental volatility from all corners of the world

8-*Comparative Management Focus: Chinese Global NetworkThe Chinese commonwealth is a form of global network that has become the envy of Western multinationalsNetwork of entrepreneurial relationships in Asia primarilyIncludes mainland China, 1.3 billion citizens, and more than 55 million Chinese in Taiwan, Indonesia, Hong Kong, and ThailandEstimated to control $2 Trillion in liquid assets

8-*Comparative Management Focus: Chinese Global NetworkMost observers believe that this China-based informal economy is the world leader in economic growth, industrial expansion, and exportsComprises most mid-sized, family-run firms linked by transnational network channelsChannels move information, finance, goods, and capital Network alliances bind together and draw from the substantial pool of financial capital and resources available in the region

8-*Emergent Structural FormsInter-organizational networksThe global e-corporation network structureThe transnational corporation (TNC) network structure

8-*Choice of Organizational Form

8-*Organizational Change and DesignWhen does a company need to make a change in organizational structure?Makes a change in goals or strategyMakes a change in scope of operationsIndications of organizational inefficiencyConflicts among divisions and subsidiariesOverlapping responsibilitiesComplaints regarding customer service

8-*Organizational Change and Design

8-*Control Systems for Global OperationsThe establishment of a single currency makes it possible, for the first time, to establish shared, centralized accounting and administrative systems.Francesco Caio, CEO, Merloni Elettrodomestici

8-*Direct Coordinating MechanismsDesign of appropriate structuresUse of effective staffing practicesVisits by head-office personnelRegular meetings

8-*In-Direct Coordinating MechanismsSales quotasBudgetsOther financial toolsFeedback reports

8-*Appropriateness of Monitoring and Reporting SystemsFactors likely to affect the appropriateness of monitoring systems include:Management practicesLocal constraintsExpectations regarding: Authority, Time, and Communication

8-*Inter-organizational networksViews the various companies, subsidiaries, suppliers, or individuals as a relational networksAllows the different network partners to adopt unique structures that are adapted to the local context

8-*Global E-Corporation NetworkReturn

8-*Global Structural Arrangements (cont.)Transnational Network StructuresMultinational structural arrangement that combines elements of function, product, and geographic designs, while relying on a network arrangement to link worldwide subsidiariesDispersed subunitsSubsidiaries that are located anywhere in the world where they can benefit the organizationSpecialized operationsActivities carried out by subunits that focus on a particular product line, research area, or market areaDesigned to tap specialized expertise or other resources in the companys worldwide subsidiariesInterdependent relationshipsShare information and resources throughout the dispersed and specialized subunits

8-*Transnational CorporationInvolves linking foreign operations to each other and to headquarters in a flexible wayLeverages local and central capabilitiesNot a matter of boxes on an organizational chart; it is a network of company units and a system of horizontal communicationRequires the dispersal of responsibility and decision making to local subsidiariesEffectiveness is dependant on the ability and willingness to share current and new learning and technology across the network

*In other words, the structure must fit the strategy, or it will not work. Managers are faced with how best to attain that fit in organizing the companys systems and tasks.

*To facilitate access to and development of specific foreign markets, the firm can take a further step toward worldwide operations by reorganizing into a domestic structure plus foreign subsidiary in one or more countries (see Exhibit 8-1). To be effective, subsidiary managers should have a great deal of autonomy and should be able to adapt and respond quickly to serve local markets. This structure works well for companies with one or a few subsidiaries located relatively close to headquarters.

*a global product (divisional) structure may be more strategically advantageous than a functional structure. In this structure, a single product (or product line) is represented by a separate division. Each division is headed by its own general manager, and each is responsible for its own production and sales functions.

*In the global geographic (area) structurethe most common form of organizing foreign operationsdivisions are created to cover geographic regions. Each regional manager is then responsible for the operations and performance of the countries within a given region. In this way, country and regional needs and relative market knowledge take precedence over product expertise. Local managers are familiar with the cultural environment, government regulations, and business transactions. In addition, their language skills and local contacts facilitate daily transactions and responsiveness to the market and the customer. While this is a good structure for consolidating regional expertise, problems of coordination across regions may arise. With the geographic structure, the focus is on marketing, since products can be adapted to local requirements.

**The way the firm is organized along the differentiationintegration continuum determines how well strategiesalong a localizationglobalization continuumare implemented. This is why the structural imperatives of various strategies such as globalization must be understood to organize appropriate worldwide systems and connections.

*To achieve rationalization, managers choose the manufacturing location for each product based on where the best combination of cost, quality, and technology can be attained. It often involves producing different products or component parts in different countries. Typically, it also means that the product design and marketing programs are essentially the same for all end markets around the world to achieve optimal economies of scale. The downside of this strategy is a lack of differentiation and specialization for local markets.

Global product standardization also requires centralized global product responsibility (one manager at headquarters responsible for a specific product around the world), an especially difficult task for multi-product companies. Henzler and Rall suggest that structural solutions to this problem can be found if companies rethink the roles of their headquarters and their national subsidiaries. Managers should center the overall control of the business at headquarters, while treating national subsidiaries as partners in managing the businessperhaps as holding companies responsible for the administration and coordination of cross-divisional activities.

*The Overseas Chinese, now models for entrepreneurship, financing, and modernization for the world, and in particular for Beijing, are refugees from Chinas poverty, disorder, and communism. Business became the key to survival for those Chinese emigrants faced with uncertainties, hardships, and lack of acceptance in their new lands. The uncertainties, a survivor mentality, and the cultural basis in the Confucian tradition of patriarchical authority have led to a way of doing business that is largely confined to family and trusted friends. This business mentality and approach to life has led to many self-made billionaires among the Overseas Chinese. Among

*Companies are increasingly abandoning rigid structures in an attempt to be more flexible and responsive to the dynamic global environment. Some of the ways they are adapting are by transitioning to formats known as interorganizational networks, global e-corporation network structures, and transnational corporation network structures, as described below.

*Two major variables in choosing the structure and design of an organization are the opportunities and need for (1) globalization and (2) localization. This slide depicts alternative structural forms appropriate to each of these variables and to the strategic choices regarding the level and type of international involvement desired by the firm. This figure thereby updates the evolutionary stages model to reflect alternative organizational

*Determining how many and what types of decisions can be made and by whom can have drastic consequences; both the locus and the scope of authority must be carefully considered. This centralizationdecentralization variable actually represents a continuum. In the real world, companies are neither totally centralized nor totally decentralized: The level of centralization imposed is a matter of degree. continuum and the different ways that decision making can be shared between headquarters and local units or subsidiaries. In general, centralized decision making is common for some functions (finance; research and development) that are organized for the entire corporation, whereas other functions (production; marketing; sales) are more appropriately decentralized. Two key issues are the speed with which the decisions have to be made and whether they primarily affect only a certain subsidiary or other parts of the company as well.

*To complement the organizational structure, the international manager must design efficient coordinating and reporting systems to ensure that actual performance conforms to expected organizational standards and goals. The challenge is to coordinate far-flung operations in vastly different environments with various work processes, rules, and economic, political, legal, and cultural norms. The feedback from the control process and the information systems should signal any necessary change in strategy, structure, or operations in a timely manner. Often, the strategy, the coordinating processes, or both, need to be changed to reflect conditions in other countries.

*Whether the ever-expanding transnational linkages of an MNC consist of different companies, subsidiaries, suppliers, or individuals, they result in relational networks. These networks may adopt very different structures of their own because they operate in different local contexts within their own national environments. By regarding the MNCs overall structure as a network of interconnected relations, we can more realistically consider its organizational design imperatives at both global and local levels. The network framework makes clear that the companys operating units link vastly different environmental and operational contexts based on varied economic, social, and cultural milieus. This complex linkage highlights the intricate task of a giant MNC to rationalize and coordinate its activities globally to achieve an advantageous cost position while simultaneously tailoring itself to local market conditions (to achieve benefits from differentiation).

*The organizational structure for global e-businesses, in particular for physical products, typically involves a network of virtual e-exchanges and bricks and mortar services, whether those services are in-house or outsourced. This structure of functions and alliances makes up a combination of electronic and physical stages of the supply chain network, as depicted in this slide. As such, the network comprises some global and some local functions. Centralized e-exchanges for logistics, supplies, and customers could be housed anywhere; suppliers, manufacturers, and distributors may be in various countries, separately or together, wherever efficiencies of scale and cost may be realized. The final distribution system and the customer interaction must be tailored to the customer-location physical infrastructure and payment infrastructure, as well as local regulations and languages.

*To address the globalizationlocalization dilemma, firms that have evolved through themultinational form and the global company are now seeking the advantages of horizontalorganization in the pursuit of transnational capabilitythat is, the ability to manageacross national boundaries, retaining local flexibility while achieving global integration.