Post on 05-Dec-2014
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PRESENTED BY:AVANI JUVEKAR (14)
BHUSHAN SADAPHULE (26)
Organizational Structure in Global Corporations
Organizational Structure
Organizational Structure is defined by the formal structure, coordination and control systems, and the organization culture.
It’s the formal arrangement of roles, responsibilities and relationships within an organization.
It’s a powerful tool with which to implement strategy.
Vertical Differentiation: Centralization V/S Decentralization.
Vertical Integration: The issue of determining where in the hierarchy, the authority to make decisions stand.
Centralization is the degree to which high level managers, usually above the country level, make strategic decisions and pass them over to lower levels for implementation.
Decisions made at foreign subsidiary level are considered decentralized, and those made at HQ are considered to be centralized.
Centralization
Advantages • Engender common culture and values
• Reduces the risk of making wrong decisions at low level• Realize cost savings from economies of scale
Disadvantages• People fail to coordinate with other departments• Discourages initiative among lower – level employees
Centralized Organization Structure
Managing
Director
HR Manager
Marketing
Manager
Staff Staff Staff
FinanceManager
Decentralization
Advantages • Stable environments do not require frequent intervention by the CEO to reap coordination benefits• Offer close proximity between business lines and markets• Motivates employees to exercise initiativeDisadvantages• Looser controls yield riskier decision-making• Duplication of functions
Decentralized Organizational Structure
CEO
BU 1
Marketing HR
BU 2
Marketing HR
Horizontal Differentiation: The Design of the Formal Structure
Horizontal Differentiation: The way a co. designs its formal structure to perform the following functions;
1. Specify the set of organizational tasks.2. Divide these tasks into jobs, departments,
subsidiaries and divisions to get the work done.
3. Assign authority relationships to get the work done in a way that supports co. strategy.
Types of Organizational Structures
1. Functional Structure2. International Division Structure3. Product Division Structure4. Geographic (Area) Division Structure5. Matrix Division Structure
1. Functional Structure
Specialized jobs are grouped according to traditional business functions.
Ideal for Co. having a narrow product line, sharing similar technology.
Helps maximize economies of scale
Highly efficient.
CEO
Production
India USA
Marketing
India USA
International Division Structure
International division structures A structural arrangement that handles all
international operations out of a division created for this purpose Assures that international focus receives top
management attention Unified approach to international operations Often adopted by firms still in the
developmental states of international business operations
Separates domestic from international managers (not good)
May find it difficult to think and act strategically, or to allocate resources on a global basis
International Division Structure
Chief Executive Officer
Human Resource
sFinance
Marketing
Production
Domestic Division:Plant
Domestic Division:Tools
Domestic Division:Hardware
Domestic Division:Furniture
International Division:
Government
RelationsMarketing
Office Operations
Home-office departments
Operating divisions
(Partial Organization Chart)
Japan ItalyAustrali
a
Global Product Division Structure
Global product division A structural arrangement in which domestic divisions
are given worldwide responsibility for product groups Global product divisions operate as profit centers Helps manage product, technology, customer diversity Ability to cater to local needs Marketing, production and finance can be coordinated
on a product-by-product global basis Division manager may pursue currently attractive
geographic prospects and neglect others with long-term potential
Division managers my spend too much time tapping local rather than international markets
See example next slide
Global Product Division
Human Resource
sFinance
Marketing
Production
Home-office departments
Operating divisions
(Partial Organization Chart)
Product Division A
Product Division B
Product Division C
Product Division D
Product Division E
Africa EuropeS.
AmericaAustralia Far East
Great BritainFranceGermanyItalyNetherlands
FinanceMarketingProduction Human Resources
Chief Executive Officer
Global Area Division
Global area division A structure under which global operations are
organized on a geographic rather than a product basis International operations are put on the same level as
domestic operations Global division managers are responsible for all business
operations in their designated geographic area Often used by firms in mature businesses with narrow
product lines By manufacturing in a region, the firm is able to reduce
cost per unit and price competitively Difficult to reconcile a product emphasis with a
geographic orientation New R&D efforts often ignored because divisions are
selling in mature marketSee example next slide
Global Area Division
Human Resource
sFinance
Marketing
Production
Home-office departments
Operating divisions
(Partial Organization Chart)
North America
South America
Europe Asia Africa
Great BritainFranceGermanyItalyNetherlands
Chief Executive Officer
Global Functional Division
Global functional division A structure that organizes worldwide operations
primarily based on function and secondarily on product Approach not used except by extractive companies such
as oil and mining firms Favored only by firms that need tight, centralized
coordination and control of integrated production processes and firms involved in transporting products and raw materials between geographic areas
Emphasizes functional expertise, centralized control, and relatively lean managerial staff
Coordination of manufacturing and marketing often is difficult
Managing multiple product lines can be very challenging because of the separation of production and marketing into different departmentsSee example next slide
Global Functional Division
(Partial Organization Chart)
Marketing
FinanceProductio
n
Chief Executive Officer
Domestic Production
Product AProduct BProduct CProduct D
Foreign Production
Product AProduct BProduct CProduct D
Domestic Production
Product AProduct BProduct CProduct D
Foreign Production
Product AProduct BProduct CProduct D
Matrix Organizational Structures
Matrix organizational structures A structure that is a combination of a global product,
area, or functional arrangement Allows the organization to create the specific type of
design that best meets its needs As the matrix design’s complexity increases,
coordinating the personnel and getting everyone to work toward common goals often become difficult
Too many groups go their own way
See example next slide
Matrix Organizational Structures
Home-office departments
Operating divisions
(Partial Organization Chart)
North America
Industrial Goods
Europe
Human Resource
sFinance
Marketing
Production
Chief Executive Officer
Manager, Industrial
GoodsNorth
America
Manager, Industrial
GoodsEurope
Transnational Network Structures
Transnational network structures A multinational structural arrangement that combines
elements of function, product, and geographic designs, while relying on a network arrangement to link worldwide subsidiaries At the center of the transnational network structure are
nodes, which are units charged with coordinating product, functional, and geographic information
Different product line units and geographical area units have different structures depending on what is best for their particular operations
See example next slide
Transnational Network Structures
Organizational Structure of HTC
“The organizational structure is really that a centipede walks on hundred legs and one or two don't count. So if I lose one or two legs, the process will go on, the organization will go on, the growth
will go on.” -Mukesh Ambani
THANK YOU !!