Organization structure and control
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Transcript of Organization structure and control
Organizational Structure, Control –Early Experiences, Evolution of New Structure and Performance.
International Business
IIM StudentsOld and New Organization Structure and Control of AIRTEL
Agenda
Organizational Structure
Control Systems
Organizational Change
Types of Organizational Structures
Evolution and Change in MNC
Bharti Airtel
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Organizational Structure
Control Systems
Organizational Change
Types of Organizational Structures
Evolution and Change in MNC
Bharti Airtel
International Business
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International Business
There 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
Organizational Structure
International Business
Organization is defined by the formal structure, coordination and control systems, and the organization culture.
It’s the formal arrangement of roles, responsibilities and relationships within an organization.
It’s a powerful tool to implement strategy.
Organizational Structure
International Business
Centralization V/S Decentralization
Vertical Integration: The issue of determining where in the hierarchy, the authority to make decisions stand.
Centralization is the degree to which high level managers, usually above the country level, make strategic decisions and pass them over to lower levels for implementation.
Decisions made at foreign subsidiary level are considered decentralized, and those made at HQ are considered to be centralized.
Vertical Differentiation
International Business
The Design of the Formal Structure
Horizontal Differentiation: The way a co. designs its formal structure to perform the following functions
Specify the set of organizational tasks.
Divide these tasks into jobs, departments, subsidiaries and divisions to get the work done.
Assign authority relationships to get the work done in a way that supports co. strategy.
Horizontal Differentiation
Organizational Structure
Control Systems
Organizational Change
Types of Organizational Structures
Evolution and Change in MNC
Bharti Airtel
International Business
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International Business
Functional Structure
International Division Structure
Product Division Structure
Geographic (Area) Division Structure
Matrix Division Structure
Types of Organizational Structures
International Business
Specialized jobs are grouped according to traditional business functions.
Ideal for Co. having a narrow product line, sharing similar technology.
Helps maximize economies of scale
Highly efficient.
Functional Structure
CEO
Production
India USA
Marketing
India USA
International Business
Grouping each international business activity into its own division.
Creates a critical mass of international expertise.
Creates quick response to environmental changes enabling them to deal with different markets.
Prevents duplication of activities. Often struggles to get resources from
domestic divisions. This structure is suited for multi-domestic
strategies that demand little integration and standardization between domestic and foreign operations.
Frustrates its ability to exploit economies of scale.
International division structure.
CEO
Industrial Division
Automotive Division
Aerospace Electronics
Division
International Division
Diesel Company (France)
Electronics Company (France)
Brake Company (Mexico)
International Business
These are popular among international companies with diverse products.
Similar products are grouped under one product head e.g. Perfumes and Cosmetics, each focusing on a single product segment for its global market.
Suited for a global strategy
There may be duplicate functions and activities among divisions.
No formal means by which one product division can learn from another international expertise.
Product Division Structure
CEO
Power Systems Group
Electric Company (Belgium)
Meter Company (Argentina)
Industry And Defense Group
Elevator Company (Belgium)
Construction Products
Company (Italy)
International Business
These are used when foreign operations are large and not dominated by a single country or region.
Useful when managers can gain economies of scale on a regional rather than on global basis.
Drawback is the potential of duplication of work among areas as the company locates similar value activities in several places rather than consolidating them in the most efficient place.
Geographic (Area) Division Structure
CEO
Europe and Latin
America Division
U.K. Venezuela Italy
North America and
Pacific Division
U.S. Japan Canada
International Business
This tries simultaneously to deal with competing pressures for global integration and local responsiveness.
Institutes overlaps among functional and divisional forms.
Gives functional, product, and geographic groups a common focus.
It makes each group share responsibility for foreign operations and enables each group exchange information and resources more willingly.
Drawbacks- Stop championing their group’s unique needs, and thereby eliminate the multiple knowledge-generating and decision making relationship that it is supposed to engage.
Matrix Division Structure
Textile Groups
Agricultural Products Group
Europe-Africa Group Latin
America Group
U.K. Mexico
CEO
Organizational Structure
Control Systems
Organizational Change
Types of Organizational Structures
Evolution and Change in MNC
Bharti Airtel
International Business
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International Business
Control Organizational Strategy and Employees
Formal, target-setting, monitoring, evaluation and feedback systems that provide managers with information about whether the organization’s strategy and structure are working efficiently and effectively.
Control Systems
International Business
Managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals
Organizational Control
International Business
Market Control Use external market mechanisms to establish internal performance
benchmarks & standards
Bureaucratic Control Here company uses centralized authority to install rules and
procedures to power broad range of activities
Clan Control Shared values among employees to idealize the preferred
behavior
Control Methods
Organizational Structure
Control Systems
Organizational Change
Types of Organizational Structures
Evolution and Change in MNC
Bharti Airtel
International Business
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International Business
Internationalization is the process by which a firm gradually changes in response to international competition, domestic market saturation, and the desire for expansion, new markets, and diversification.
Structural Evolution (Stages Model) occurs when managers redesign the organizational structure to optimize the strategy’s changes to work, making changes in the firm’s tasks and relationships and designating authority, responsibility, lines of communication, geographic dispersal of units and so forth
Evolution and Change in MNC
International Business
A number of basic structures exist that permit an MNC to compete internationally
Structure must meet the need of both the local market and the home-office strategy of globalization
Contingency approach Balances the need to respond quickly to local
conditions with the pressures for providing products globally
Most MNCs evolve through certain basic structural arrangements in international operations
Basic Organizational Structures
Organizational Structures
Pressure for local responsiveness
Pre
ssu
re f
or
glo
bal
izat
ion
Low
High
Low High
Adapted from Figure 9–2: Organizational Consequences of Internationalization
Global StructuralArrangements
Global StructuralArrangements
Mixed and Transnational
Structures
Mixed and Transnational
Structures
Initial DivisionStructures
Initial DivisionStructures International
Division Structures
InternationalDivision Structures
Organizational Structure
Control Systems
Organizational Change
Types of Organizational Structures
Evolution and Change in MNC
Bharti Airtel
International Business
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International Business
Evolutionary change gradual, incremental, and narrowly focused
constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate changes in the environment
Evolutionary and Revolutionary Change
International Business
Revolutionary change Rapid, dramatic, and broadly focused
Involves a bold attempt to quickly find ways to be effective
Likely to result in a radical shift in ways of doing things, new goals, and a new structure for the organization
Evolutionary and Revolutionary Change
International Business
Steps in the Organizational Change Process
International Business
Top Down Change
A fast, revolutionary approach to change in which top managers identify what needs to be changed and then move quickly to implement the changes throughout the organization.
Implementing the Change
International Business
Bottom-up change
A gradual or evolutionary approach to change in which managers at all levels work together to develop a detailed plan for change.
Implementing the Change
Organizational Structure
Control Systems
Organizational Change
Types of Organizational Structures
Evolution and Change in MNC
Bharti Airtel
International Business
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International Business
Bharti Airtel Limited is a leading integrated telecommunications company with operations in 20 countries across Asia and Africa.
Headquartered in New Delhi, India, the company ranks
amongst the top 5 mobile service providers globally in terms of subscribers.
In India, the company's product offerings include 2G, 3G and 4G services, fixed line, high speed broadband through DSL, IPTV, DTH, enterprise services including national & international long distance services to carriers.
In the rest of the geographies, it offers 2G, 3G mobile services. Bharti Airtel had over 246 million customers across its operations at the end of February 2012.
Bharti Airtel
International Business
Background
International Business
Business Divisions
International Business
Bharti Airtel - Country Map
Source: Wikipedia
International Business
Bharti Airtel – Overseas Operations
Source: Wikipedia
International Business
Earlier Organization Structure
Functional Structure
International Business
Organization Structure After (August 1 2011)
Through this new structure, the company aims to decentralize decision making and increase accountability across all levels of management.
The new structure, separates the business to business (B2B) and the business to consumer (B2C) segments.
The B2C business unit (Headed by K Srinivas) will service the retail consumers, homes and small offices, by combining the erstwhile business units — mobile, telemedia, digital TV, and other emerging businesses.
DECENTRALIZED Structure:
International Division Structure
Geographic (Area) Division Structure
International Business
Organization Structure After Aug 1, 2011
International Division Structure
Geographic (Area) Division Structure
International Business
Organization Structure (South Asia) After August 1 2011
Market operations in India and South Asia is divided into three
regions, each headed by an operations director.
The north, east and Bangladesh operations is
headed by Ajai Puri
The south and Sri Lanka operations by Vineet
Taneja
Operations in the west is headed by Raghunath Mandava (along
with national distribution portfolio).
International Business
The Group Chairman and M.D is responsible for providing strategic direction, leadership and governance, leading transformational initiatives, international strategic alliances besides effective management of the Company with a focus on enhancing Bharti’s global image.
The CEO(International) and joint M.D. is based in Nairobi, Kenya and responsible for the overall business performance, management and expansion of the international operations.
He is also responsible for employee engagement, customer satisfaction, outsourcing initiatives and the internal control metrics for the international operations.
The CEO ( India and south east Asia) heads south asia operations and is responsible for overall business performance in this region. He is also responsible for employee engagement, customer satisfaction, ensuring success of outsourcing initiatives and improvements in the internal control metrics for India and south asia operations.
Governance Structure :
International Business
The Board of Directors of the Company has an optimum mix of Executive and Non-Executive Directors, which consists of three Executive and fifteen Non-Executive Directors.
The Chairman and Managing Director, Mr. Sunil Bharti Mittal, is an Executive Director and the number of Independent Directors on the Board is 50% of the total Board strength.
The independence of a Director is determined on the basis that such director does not have any material pecuniary relationship with the Company, its promoters or its management, which may affect the independence of the judgment of a Director.
The Board members possess requisite skills, experience and expertise required to take decisions, which are in the best interest of the Company
Board Members:
B.O.D Organization Structure (South Asia) After August 1 2011 B
BOARD OF DIRECTORS :
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