Organisational Design In Mncs - International Business Lecture 9

Front 1

What are the componenets of organisational architecture?

Back 1

Front 2

How is organisation architecture linked to strategy?

Back 2

To be effective, all the components of an organisation’s architecture should be consistent with one another

A firm’s organisation architecture should be aligned to its strategy

A firm’s organisation strategy and architecture should be aligned to the firm’s competitive environment

Front 3

What is the international division structure?

Back 3

Front 4

Who facours international division structure, and what are the problems with it?

Back 4

Favoured by firms in the early stages of their internationalisation
-Enables a greater management focus on international operations

Problems:
-Lack of co-ordination between domestic and foreign operations
-Lack of sensitivity of the international division to host country’s national differences

Front 5

What is the Worldwide area structure?

Back 5

Front 6

Who favours the Worldwide area structure and what is its problems?

Back 6

Favoured by firms with low degree of product diversification

Facilitates national responsiveness
-Structure appropriate to a ‘multinational’ (also called ‘localisation’) strategy

Problems:
-Fragmentation of the organisation between areas, limiting the realisation of economies of scale, economies of location and knowledge transfer

Front 7

What is the Worldwide production division structure?

Back 7

Front 8

Who facours the Worldwide product division structure and what is its problems?

Back 8

Adopted by firms which have a reasonable degree of product diversification

Facilitates the development and implementation of integrated strategies worldwide within each product division
-Structure appropriate to the ‘global’ and ‘international’ strategies

Problems:
-National subsidiaries may have limited power, leading to lack of national responsiveness

Front 9

What is the Worldwide matrix structure?

Back 9

Front 10

Who favours the Worldwide matrix structure, what is its problems and how has it evolved in the later years?

Back 10

Helps to cope with the conflicting demands of global integration and national responsiveness
-Structure appropriate to a ‘transnational’ strategy

Problems:
-Slow decision-making due to dual decision-making process
-Conflicts between the product divisions and the areas
-When things go wrong, product division and areas tend to reject responsibility onto each other

Evolution of matrix structures in recent years
-Greater emphasis on informal means of coordination
-Some firms return to world product division structures whilst maintaining greater national responsiveness

Front 11

What are Control Systems?

Back 11

Mechanisms to monitor the strategic consistency and financial performance of sub-units (e.g. headquarters controlling subsidiaries) within a firm

Types of control systems:
-Personal controls
-Bureaucratic controls
-Output controls
-Cultural controls
-Organisational culture

Control systems are backed by incentive systems

Front 12

How is organisational culture created?

Back 12

Sources:
Role of leaders, societal culture, history of the firm etc.

Means of creating an organisational culture
-Hiring and promotional practices of firms
-Reward strategies
-Socialisation processes (training programs, professional networks)
-Communication strategy

Front 13

How does corporate culture relate to MNCs' strategies?

Back 13

Multinational strategy => multiple corporate cultures in the various subsidiaries

International and global strategies => corporate cultures may be strong, and will essentially be duplicating the headquarters’ ways of doing things

Transnational strategies => the creation of a common corporate culture throughout the firm is given significant emphasis – creation of a cosmopolitan, opened culture

-Can facilitate cooperation between the headquarters and subsidiaries, and among subsidiaries
-Can support knowledge transfer within the MNC
-Can help achieve goal congruence in the different parts of the firm
=> Difficult to create and takes a long time

Front 14

What are the links between strategy, structure, control and integrations systems in an ideal situation?

Back 14

Front 15

What is the Role of subsidiaries in a transnational strategy?

Back 15