ch13

Chapter 13
Organization,
Implementation, and
Control
1
Learning Objectives
Describe alternative organizational
structures for international
operations.
Highlight factors affecting decisions
about the structure of international
organizations.
Indicate roles for country organizations
in the development of strategy and
implementation of programs.
Outline the need for and challenges of
controls in international operations.
2
Organizational Structure
Companies must change
strategies as their structures
evolve from domestic to
multinational. The basic
functions of an organization
are to provide:
A route and locus of decision making
and coordination.
A system for reporting and
communications.
3
Organizational Designs
Types of structures used by
companies to manage foreign
activities:
Little/No
Little/NoFormal
Formal
Organization
Organization
International
InternationalDivision
Division
Global
GlobalOrganizations
Organizations
4
Little or No Formal Organization
Domestic operations assume
responsibility for international
activities in the early stages.
The organizational structure
reflects the increased
demands from the
international marketplace.
The export department
structure becomes obsolete as
the firm becomes more
involved in foreign markets.
5
The International Division
Centralizes in one entity
all of the responsibility
for international
activities.
Best serve firms with
few products that do not
vary significantly.
Coordination is
important.
6
Global Organizational Structures
Types: Most often used by
multinational
corporations.
Improved cost
Product Structure efficiency is a major
benefit.
Second most used

approach. Follows
the marketing
concept most
closely.
Area Structure
7
(continued)
Types: The simplest from

the administrative
viewpoint. A
variation is one that
Functional uses processes as a
Structure basis for structure.
Especially used if
customer groups
are dramatically
Customer different.
Structure
8
(continued)
Types: Combines two or
more organizational
dimensions
simultaneously.
Integrates the
Mixed Structure
various approaches.
Most companies find
this arrangement
problematic.
Complexity of this
structure may
Matrix Structure increase the reaction
time of a company.
9
Implementation
Locus of Decision Making
Decentralized systems have loose and
simple controls. Subsidiary operates
as a profit center.
Centralized systems have tight
controls.
Strategic decision making is at
headquarters.
Coordinated decentralization calls for
overall strategy to come from
headquarters.
Subsidiaries are free to implement
within agreed upon range.
10
Decision Making
Factors that impact structure
and decision making.
Degree of involvement in international
operations.
Products that the firm markets.
Size and importance of the firm’s
markets.
Human resource capability of the firm.
11
The Networked Global Organization
The network avoids
problems of effort
duplication, inefficiency,
and resistance to ideas.
Subsidiaries are able to
make local business
development decisions
within the global
framework.
12
Internal Cooperation
Success for a global firm involves
the ability to move intellectual
capital.
Boundarylessness describes a
situation in which people can act
without regard to status while
feeling the freedom to search
elsewhere for innovative ideas.
International teams promote
cooperation.
13
Internal Cooperation
(contd.)
Greatly assisted
by Internet-
based
technology.
Access to
virtual teams.
14
Country Organizations
Roles:
Contributor
Stra
tegic
Lead
er
k Hole
Implementor Blac
15
Strategic Leader
A competent national subsidiary
that may be serving as a partner in
developing and implementing
strategy.
Contributor
Country organization with a
distinctive competence.
16
Implementor
Most entities hold this role. It provides
critical mass for the global effort.
Black Hole
The international company has a low
competence country organization, or
none at all.
17
Controls
Internal benchmarking is of
great importance in today’s
market.
General instruments of control:

Bureaucratic/Formalized Control
Cultural Control
18
The Bureaucratic/Formalized
Control System
Elements:
International budget and
planning system.
Functional reporting system.
Policy manuals to direct
functional performance.
19
Cultural Control
Requires personal
interaction.
Requires careful
selection and
training of
corporate
personnel.
20
Exercising Controls
Manufacturing subsidiaries
tend to be controlled more
intensively than sales
subsidiaries.
U.S.-based multinationals
place more emphasis on
quantitative data.
Control systems must consider
the impact of the environment.
21

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Chapter 13

Second most used

Types: The simplest from

General instruments of control:

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