organisational structure and chnge

8/11/2019 organisational structure and chnge

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Chapter 8

Organization Structure and

Control Systems

PowerPoint by

Kristopher Blanchard

North Central University


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Organizational Structure

There is no permanent organization chart for

the world. . . . It is of supreme importance to

be ready at all times to take advantage ofnew opportunities.

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


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Evolution and Change in MNC

Internationalization is the process by which a firmgradually changes in response to internationalcompetition, domestic market saturation, and thedesire for expansion, new markets, and

diversification.Structural Evolution (Stages Model) occurs whenmanagers redesign the organizational structure tooptimize the strategys changes to work, making

changes in the firms tasks and relationships anddesignating authority, responsibility, lines ofcommunication, geographic dispersal of units andso forth


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Typical ways that firms organize

international activities

Domestic structure plus export department

Domestic structure plus foreign subsidiary

International divisionGlobal functional structure

Global product structure

Global Geographic Structure


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Integrated Global Structures

The global functional structure is designed on thebasis of the companys functions production,marketing, finance, and so forth. Foreign

operations are integrated into the activities andresponsibilities of each department to gainfunctional specialization and economies of scale.

Matrix Structure is a hybrid organization of

overlapping responsibilitiesit is used by somefirms but has generally fallen into disfavorrecently


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Organizing for Globalization

If you misjudge the market [by globalizing],

you are wrong in 15 countries rather than

only in one.Ford European Executive


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Two opposing forces in structural decisions The need for differentiation (focusing on and

specializing in specific markets)

The need for integration (coordinating those same

markets)

Globalizationa specific strategy that treats the

world as one market by using a standardizedapproach to products and markets


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Organizing to facilitate a globalization strategytypically involves rationalization and thedevelopment of strategic alliances

Organizing for global product standardizationnecessitates close coordination among the variouscountries involved

The problem facing companies in the future is thatthe structurally sophisticated global networks

leave the organization exposed to the risk ofenvironmental volatility from all corners of theworld


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Comparative Management Focus:

Chinese Global Network

The Chinese commonwealth is a form ofglobal network that has become the envy ofWestern multinationals

Network of entrepreneurial relationships inAsia primarily

Includes mainland China, 1.3 billion citizens,and more than 55 million Chinese in Taiwan,Indonesia, Hong Kong, and Thailand

Estimated to control $2 Trillion in liquid assets


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Comparative Management Focus:

Chinese Global Network

Most observers believe that this China-basedinformal economy is the world leader in economicgrowth, industrial expansion, and exports

Comprises most mid-sized, family-run firmslinked by transnational network channels

Channels move information, finance, goods, andcapital

Network alliances bind together and draw fromthe substantial pool of financial capital andresources available in the region


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Emergent Structural Forms

Inter-organizational networks

The global e-corporation network structure

The transnational corporation (TNC)network structure


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Organizational Change and Design

When does a company need to make achange in organizational structure?

Makes a change in goals or strategy

Makes a change in scope of operations

Indications of organizational inefficiency

Conflicts among divisions and subsidiaries

Overlapping responsibilitiesComplaints regarding customer service


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Organizational Change and Design


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Control Systems for Global

Operations

The establishment of a single currency makes

it possible, for the first time, to establish

shared, centralized accounting andadministrative systems.Francesco Caio, CEO, Merloni Elettrodomestici


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Monitoring Systems


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Direct Coordinating Mechanisms

Design of appropriate structures

Use of effective staffing practices

Visits by head-office personnel Regular meetings


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In-Direct Coordinating Mechanisms

Sales quotas

Budgets

Other financial tools Feedback reports


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Appropriateness of Monitoring and

Reporting Systems

Factors likely to affect the appropriateness

of monitoring systems include:

Management practicesLocal constraints

Expectations regarding: Authority, Time, and

Communication


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Managing Effective Monitoring

Systems

In deciding on appropriate monitoring and

reporting systems, additional factors to be

considered include:

The role of information systems (adequacy of managementinformation systems in foreign affiliates, non-

comparability of performance data across countries)

Evaluation variables across countries


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