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Mgt 485 CHAPTER 11 ORGANIZING INTERNATIONAL OPERATIONS.

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Mgt 485 CHAPTER 11 ORGANIZING INTERNATIONAL OPERATIONS
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Mgt 485CHAPTER 11

ORGANIZING INTERNATIONAL OPERATIONS

Mgt 485-11-2

Case Study Question(s)Due Monday, March 29thDue Monday, March 29th

Dan Simson: Project Mgr. Discuss the cultural dimension(s) of time (e.g.

temporal forces, past vs. future orientation, sequential vs. synchronous, orientation and value) and how they apply to this case

Discuss the organizational and strategic impacts, focusing on Dan Simson’s responsibilities to maximize his organization’s effectiveness (Profitabity, developing Human Resources, increasing market exposure)

Make and justify a recommendation as to how Dan Simson can be effective in this environment

Mgt 485-11-3

Determ inants of an Organization’s StructureW ork s pecializ ation S pecialization

S ubdivid ing “ tas ks ” in to s eparate jo bs (d iv is io n o f lab o r)C entralization C entralization

H ie rarch ic a l le ve l w ith autho rity to m ake a d ecis io nA uthority / r esponsib ility s tructur e H ierarchy o f a uthority

A b ility to p rovide d irectio n: W ho re ports to w ho mS pan o f c ontro l

R elated to H ie rarc hy: num be r o f e m ployees re porting to s upervis o r

C hain o f c om m andN um be r o f s upervis ors o verseeing ind iv id ual e m ployees

D epartm entalization C om plexityN um be r o f ac tiv itie s o r s ubsystem s w ith in the o rganizatio n

F orm alizationW ritte n d ocum e ntatio n (ru le s , p o lic ies , p rocedures )

S tandardizationS im ilar w o rk ac tiv itie s b eing d one in a uniform m anne r

P ersonnel r atiosD eploym e nt o f p eople to functions and d epartm ents

P rofessionalizationL eve l o f form al e ducatio n & tra in ing o f e m ployees

Mgt 485-11-4

Organizational Consequence of Internationalization

Aircraft Cameras Electronics Computers

Telecommunications

Aerospace

Autos

Synthetic fibers

Cement

Steel

Clothing

Packaged goods

High

Low

Low High

Pressure for Local Responsiveness

Pre

ssu

re f

or

Glo

balizati

on

Mgt 485-11-5

Goals and Strategy

Environment Size

Culture

Technology

Structure1. Formalization2. Specialization3. Standardization4. Hierarchy of Authority5. Complexity6. Centralization7. Professionalism8. Personnel Ratios

Mgt 485-11-6

Initial Division Structure

Used for Initial Entry into International Markets

Exporting Common first choice for manufacturers of

technologically advanced products Firm can charge premium price due to little

competition

Subsidiary A common for handling finance-related

businesses or other operations that require an on-site presence from the start

Mgt 485-11-7

Subsidiaries During the Early Stage of Internationalization

Home OfficeDepartments

OverseasSubsidiaries

CEO

Production Marketing Finance Personnel

V.P. InternationalOperations

France Japan Egypt Australia Argentina

Mgt 485-11-8

International Division Structure

Advantages Takes burden off the CEO Receives top management attention Promotes overall unified approach Develops internationally experienced managers

Disadvantages Separating domestic and international

managers may cause differing objectives Home office may not be able to allocate

resources globally, thereby penalizing growth

Mgt 485-11-9

An International Division Structure

Home OfficeDepartments

OperatingDivisions

CEO

Production Marketing Finance Personnel

DomesticDivision

DomesticDivision

DomesticDivision

DomesticDivision

InternationalDivision

Australia Japan Italy

OfficeOperations

Marketing Government Relations

Mgt 485-11-10

Global Product Division

Advantages Helps to manage diversity Able to cater to local needs Marketing, production, and finance can be co-

ordinated on a product-by-product global basis Disadvantages

Duplication of facilities and staff personnel Managers may pursue attractive short-term

sites instead of long-term sites Managers spend to much time trying to tap

local instead of international markets

Domestic divisions are given worldwide responsibility for product groups

Mgt 485-11-11

A Global Product Division Structure

CEO

Production Marketing

Finance Personnel

SouthAmerica

Africa Europe

Australia Far East

ProductDivision A

ProductDivision B

ProductDivision C

ProductDivision D

ProductDivision E

Production

Marketing Finance Personnel

Great BritainFranceGermanyItalyNetherlands

Mgt 485-11-12

Global Area Division

Advantages Reduces cost per unit Caters to local markets Makes rapid decisions to accommodate

environmental changes

Disadvantages Difficulty reconciling a product emphasis with

geographic orientation Ignores new research and development by

division groups

Based on geographic rather than product orientation

Mgt 485-11-13

A Global Area Division Structure

Home OfficeDepartments

OperatingDivisions

CEO

Production Marketing Finance Personnel

NorthAmerica

SouthAmerica Europe Asia Africa

Great BritainFranceGermanyItalyNetherlands

Mgt 485-11-14

Global Functional Division

Advantages Emphasizes functional expertise Tight centralized control Relatively lean managerial staff

Disadvantages Difficulty co-ordinating manufacturing and

marketing Difficulty managing multiple product lines Only CEO can be held accountable for

profits

Worldwide operations based primarily on function and secondarily on product

Mgt 485-11-15

A Global Functional Structure

CEO

Production Marketing Finance

DomesticProduction

Product AProduct BProduct CProduct D

ForeignProduction

Product AProduct BProduct CProduct D

DomesticProduction

Product AProduct BProduct CProduct D

ForeignProduction

Product AProduct BProduct CProduct D

Mgt 485-11-16

Mixed Organization Structures

Advantages Allows organization to create the specific

type of design to meet its needs Disadvantages

Complexity increases Difficulty arises in co-ordinating personnel

Combines global product, area, and functional divisions to supplement its primary structure with a secondary

one, and perhaps a tertiary (third) one

Mgt 485-11-17

A Multinational Matrix Structure

CEO

Production Marketing Finance Personnel

Manager,Industrial GoodsNorth America

Manager,Industrial GoodsEurope

North America Industrial Goods Europe

Mgt 485-11-18

Meeting the Challenges of Globalization

Synergy - (2 + 2 = 5) whole is greater than the sum of its parts

Organizational Synergy Pooling knowledge across regions Sharing resources to meet world-wide needs Pooling purchases for greater negotiating

power Coordinating strategies to become more

efficient Vertically integrating to be more cost effective Creating new businesses

Mgt 485-11-19

Strategies: Mutual adjustment Use of direct, technically skilled supervisors Use of integrative leadership Technical training provided in-house Use of standard milestones in work design Flexible design standards

Organizing for Product Integration

Mgt 485-11-20

Information Technology

Key Questions: Which information systems are needed? Are investments are worthwhile? How does technology fit into management’s

strategic thinking ? How should users and specialists connect

within the company? How do you design systems to improve

organizational performance?

Mgt 485-11-21

Organizational Characteristics3 most critical for international

operations Formalization

The use of defined structures used in decision making, communicating, and controlling

Objective - written descriptions Subjective -informal controls

Specialization The assigning of individuals to specific, well-

defined tasks Horizontal specialization Vertical specialization

Centralization Management system in which important decisions

are made at the top

Mgt 485-11-22

Symptoms of Structural Deficiency

Decisions are delayed or lacking in quality

Organization does not respond innovatively to a changing environment

Too much conflict from departments being at cross purposes is evident

Mgt 485-11-23

Relate “Structure” to “Culture”

How do cultural dimensions affect structural dimensions?

Are some structures inherently more effective in some cultures?

Use Hofstede (p. 119-122) & Trompenaar’s (p. 126)

Option for additional 30 Points


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