Chapter 13
Chapter 13
Chapter 13
The Organization of
International Business
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Hello!
Faryah Saeed
👉 Control Systems and Incentives
👉 Processes
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👉 Personal Controls
👉 Bureaucratic Controls
👉 Output Controls
👉 Cultural Controls
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Personal Controls
Personal contact with subordinates
most widely used in small firms
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Example
Jack Welch, the longtime CEO of General Electric
who retired in 2001, had regular one-on-one meetings
with the heads of all GE's major businesses
Probe the managers about the strategy,
structure, and financial performance
of their operations.
Exercised personal control over
these managers
Undoubtedly, over the strategies
that they favored.
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Bureaucratic Controls
A system of rules and procedures that directs the
actions of subunits
budgets and capital spending rules
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Example
The R&D budget normally specifies how much cash
the R&D unit may spend on product development.
R&D managers know that if they spend too
much on one project, they will have less to
spend on other projects.
They modify their behavior to stay
within the budget.
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Output Controls
Setting goals for subunits to achieve and expressing
those goals in terms of objective performance metrics
compare actual performance against targets and
intervene selectively to take corrective action
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Example
If goals are met or exceeded, subunit managers will
be rewarded.
If goals are not met, top management will normally
intervene to find out why and take appropriate
corrective action.
Control is achieved by comparing actual
performance against targets and intervening
selectively to take corrective action.
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Cultural Controls
Exist when employees “buy into” the norms and value
systems of the firm
strong culture implies less need for other forms of
control
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Example
McDonald's actively promotes organizational
norms and values, referring to its franchisees and
suppliers as partners and emphasizing its long-term
commitment to them.
It is backed by actions, including a willingness to
help suppliers and franchisees improve their
operations.
McDonald's franchisees and suppliers are
integrated into the firm's culture.
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Incentive Systems
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Incentive Systems
CONTROL SYSTEMS,
INCENTIVES, AND
STRATEGY IN
THE INTERNATIONAL
BUSINESS
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Strategy,
Performance Interdepende
Ambiguity nc, and
Ambiguity
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Performance
Ambiguity
exists when the
causes of a
subunit's poor
performance are
not clear.
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Performance Ambiguity
Strategy,
Interdepend
ence, and
In firms pursuing a
Ambiguity
localization strategy,
each national
operation is a stand-
alone
entity and can be
judged on its own
merits
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Processes
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