1. Chapter 8 Organization Structure and Control Systems
PowerPoint by
Kristopher Blanchard
North Central University

2. 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 of new opportunities.
—Robert C. Goizueta, (Former) Chairman and Ceo, Coca-Cola Company

3. Evolution and Change in MNC
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

4. Typical ways that firms organize international activities
Domestic structure plus export department
Domestic structure plus foreign subsidiary
International division
Global functional structure
Global product structure
Global Geographic Structure

5. Integrated Global Structures
The global functional structure is designed on the basis of the company’s 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.
Matrix Structure is a hybrid organization of overlapping responsibilities – it is used by some firms but has generally fallen into disfavor recently

6. Organizing for Globalization
If you misjudge the market [by globalizing], you are wrong in 15 countries rather than only in one.
—Ford European Executive

7. Organizing for Globalization
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)
Globalization – a specific strategy that treats the world as one market by using a standardized approach to products and markets

8. Organizing for Globalization
Organizing to facilitate a globalization strategy typically involves rationalization and the development of strategic alliances
Organizing for global product standardization necessitates close coordination among the various countries involved
The 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

9. Comparative Management Focus: Chinese Global Network
The Chinese commonwealth is a form of global network that has become the envy of Western multinationals
Network of entrepreneurial relationships in Asia 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

10. Comparative Management Focus: Chinese Global Network
Most observers believe that this China-based informal economy is the world leader in economic growth, industrial expansion, and exports
Comprises most mid-sized, family-run firms linked by transnational network channels
Channels 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

11. Emergent Structural Forms
Inter-organizational networks
The global e-corporation network structure
The transnational corporation (TNC) network structure

12. Organizational Change and Design
When does a company need to make a change 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 responsibilities
Complaints regarding customer service

13. Organizational Change and Design.

14. Control Systems for Global Operations
The 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

15. Monitoring Systems

16. Direct Coordinating Mechanisms
Design of appropriate structures
Use of effective staffing practices
Visits by head-office personnel
Regular meetings

17. In-Direct Coordinating Mechanisms
Sales quotas
Budgets
Other financial tools
Feedback reports

18. Appropriateness of Monitoring and Reporting Systems
Factors likely to affect the appropriateness of monitoring systems include:
Management practices
Local constraints
Expectations regarding: Authority, Time, and Communication

19. 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 management information systems in foreign affiliates, non-comparability of performance data across countries)
Evaluation variables across countries

20. Looking Ahead
Chapter 9 – Staffing, Training, and Compensation for Global Operations
Staffing philosophies for global operations
Global selection
Training and development
Compensating expatriates
Compensating HCNs