1. Network & International Designs

2. Network Structure
A network structure is a cluster of different organizations
whose actions are coordinated by contracts and
agreements rather through a formal hierarchy of
authority. Most major organizational functions are
subcontracted to suppliers, who move into or out of the
organization as needed to meet changing
needs.
This type of structure has become increasingly popular in
fast-changing environments. It has been made possible
largely by the advent of sophisticated information systems
that allow real-time access to company data.

3. The Network Design Distribution Manufacturing Health Products, Inc.
(Central Hub)
Accounts
Receivable
Marketing
Public
Relations

4. Advantages of Network Structure
Costs are reduced by finding reliable, low-cost partners for functional activities
Avoid high-cost bureaucratic structures to provide value-creation activities
Can act in an “organic” way, for fast response to changes in the environment
Allows access to low-cost, foreign sources of inputs and functional specialties

5. Disadvantages of Network Structure
Close interaction is required between partners, and is not always easy to achieve
Coordination between distant partners doing parts of an overall task can be very difficult
Difficult to build “core competencies” in a dispersed organization
Little loyalty among partners, who are often replaced frequently as needs change

6. The Horizontal Organization
The horizontal organization is the most recent approach to
organizing. It organizes employees around core processes,
making it similar to a matrix based upon functions and
processes.
Structure is created around cross-functional core processes
rather than tasks, functions or geography. Self-directed
teams, not individuals, are the primary organizational
elements. Process owners have responsibility for each core
process in its entirety. Cross-trained team members are
given necessary skills, knowledge & authority to do the job.
Highly customer-driven, flexible & seeks continuous
improvement

7. An Example of a Horizontal Structure
CEO
Team 1
Process
Owner
Team 2
Team 3
Team 1
Team 2
Team 3
Process
Owner

8. Strengths of Horizontal Structure
Promotes flexibility & rapid response to changes in customer needs
Directs the attention of everyone toward the production & delivery of value to the customer
Each employee has a broader view of organizational goals
Promotes a focus on teamwork & collaboration
Improves quality of life for employees by offering them the opportunity to share responsibility, make decisions, and be accountable for outcomes

9. Weaknesses of Horizontal Structure
Determining core processes is difficult & time consuming
Requires changes in culture, job design, management philosophy, and information & reward systems
Traditional managers may balk when they have to give up power and authority
Requires significant training of employees to work effectively in a horizontal team environment
Can limit in-depth skill development

10. Structural Forms Used for International Operations
Structural forms used for international operations vary
depending largely upon the degree of involvement in
international business.
Increasing types of involvement:
1. Importing/exporting
2. Licensing
3. Joint Ventures
4. Direct Investment
Most approaches involve modification of either the
Product Departmentalization form or the Conglomerate
form.

11. Simple, International Division
Example: Levi Strauss, Inc.

12. Extension of Geographical Departmentalization
Example: Ford Motor Company, Coca Cola

13. Extension of Product Departmentalization
Example: Unilever, NV, FedEx, H.J. Heinz

14. Extension of Multi-Divisional (SBU) Departmentalization
Examples: General Electric, BOC, Ltd.

15. Global Matrix Design
Example: N.V. Phillips