Organization. Acer’s Organizational Evolution Stage 1: Centralization Stage 2: Decentralization...
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Transcript of Organization. Acer’s Organizational Evolution Stage 1: Centralization Stage 2: Decentralization...
![Page 1: Organization. Acer’s Organizational Evolution Stage 1: Centralization Stage 2: Decentralization Stage 3: Global Matrix Stage 4: Global Business Units.](https://reader035.fdocuments.us/reader035/viewer/2022062321/56649e6a5503460f94b686bf/html5/thumbnails/1.jpg)
Organization
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Acer’s Organizational Evolution
Stage 1: CentralizationStage 2: DecentralizationStage 3: Global MatrixStage 4: Global Business UnitsStage 5: Separation of DMS from
ABO
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Stage 2: Decentralization
• Separation SBUs and RBUs
• Client-Server model
• Fast food model
• “21 in 21”
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Pros and Cons of Stage 2
Pros: • More local initiative • Better adaptation to local marketsCons:• Lack of vertical coordination• Lack of horizontal coordination• Duplication• Competition
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Stage 3: Global Matrix
Effort at solving coordination problems of stage 2
But slow decision making
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Lines of Business
PCs PeripheralsSBU/RBU
AA
AE
ACLA
ACI
Semiconductors
IPG
AP
Other Business
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Stage 4: Six GBUs
• AIPG (IP + Europe and US RBUs)• Acer Peripherals• Acer International Service Group (ACI
+ ACLA RBUs)• Acer Sertek• Acer Digital Services• XBUs
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Pros and Cons of GBUs
• Better vertical and horizontal coordination
• Interference between OEM and branded operations
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Stage 5
• Acer Brand Operations
• Acer Design, Manufacturing and Service
• Holding and Investment Business
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Adaptation/Standardization dilemma
Adaptation = duplication = high cost but high price
Standardization = poor fit = low cost but low price
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Decentralization
• Good when locals know more than HQ
• Encourages initiative
But
• Suboptimization– Duplication
– Competition
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Centralization
• Good when HQ knows better than the locals
But
• Low incentives
• Poor local adaptation
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Choice between centralization and decentralization depends onProduct
Target Market
Experience
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Four interdependent levers
• Organizational structure
• Management processes
• HRM policies
• Corporate culture
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Fundamentals of Organization Design
• Decomposition principle
• Match between strategy and structure
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Decomposition principles
The way the firm is organized determines what employees see and do
Group together strongly interacting units and separate them from weakly interacting units
Link weakly interacting units with soft structures (committees, task forces)
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Three dimensions of organizational structure
• Functions
• Areas
• Products
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Four structural templates
• Functional
• Area
• Global
• Matrix
• (Mixed)
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Organizational Dimensions
Function
Bu
siness/ p
rod
ucts
Management/se
rvices
R&D
Marketing
Manufacturing
A
B
C
D
EuropeAmerica
Others
Asia Geography
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Fragmented Structure
A CB D
Products
Countries
France
Netherlands
Belgium
Germany
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Fragmented Structure
• Result from frequent acquisitions
• Little coordination at area level
• Little coordination at product level
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Functional Structure
A CB D
Functions
Countries
France
Netherlands
Belgium
Germany
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Functional Structures
• Single product manufactured and sold the same way in all countries
• High economies of scale
• Low volume
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Area Structure
A CB D
Products
Countries
France
Netherlands
Belgium
Germany
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Area Structure• Advised if..
– products have similar technologies and similar end users in a given area
– need to adapt all products to each area– potential product scale economies are low
• Pros and cons– good adaptation to local conditions– good interface with local stakeholders– lack of inter-country coordination– give up product scale economies
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Product Structure
A CB D
Products
Countries
France
Netherlands
Belgium
Germany
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Product Structure
• Advised if..– Products require different
technologies and have different end users
– No need to adapt products to a given area
– Potential scale economies are large
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Product Structure
• Pros and cons...– Captures scale economies– Worldwide product consistency– Ethnocentric bias– Not responsive to local-only opportunities– Lack of coordination and potential duplication
within a country– Poor interface with local stakeholders
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Mixed Structure
A CB D
Products
Countries
France
Netherlands
Belgium
Germany
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Mixed Structure
• Advised if...–Some products require adaptation
to areas while others do not
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Matrix Structure
A CB D
Products
Countries
France
Netherlands
Belgium
Germany
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Lines of Business
PCs PeripheralsSBU/RBU
AA
AE
ACLA
ACI
Semiconductors
IPG
AP
Other Business
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Matrix Structure
• Advised if..– Products benefit at the same time from
adaptation to areas and rationalization across areas
• Pros and cons– Makes it possible to choose for each
product the precise mix of adaptation and rationalization
– Confusion, conflict and paralysis as some managers have two bosses
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Strategy and Structure
Strategy
Standardization
Adaptation
Standardization for some products, adaptation for others
A bit of both for all
Structure
Product divisions
Area divisions
Mixed
Matrix
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Management Processes
• Information systems–E.g. Citibank
• Strategic Plan
• Budgeting
• Compensation
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HRM policies
• Local vs. Expatriate Managers
• National or Multicountry careers
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Culture
• Language
• Values
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Organizational Evolution of MNEs
• Ethnocentric
• Polycentric
• Geocentric
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Conclusion
• Everything is a tradeoff
• Organization must change –as conditions change
–as strategies change