Organization of the multinational firm Hedl Maria Eschbacher Claudia

Agenda Organizational structures (Perlmutter) Organizational structures (Perlmutter) Ethnocentrism Ethnocentrism Polycentrism Polycentrism Geocentrism Geocentrism Stages of international development (Daft) Stages of international development (Daft) Matrix structure vs. Heterarchy (Hedlund) Matrix structure vs. Heterarchy (Hedlund) The home based MNC (Porter, Sölvell, Zander) The home based MNC (Porter, Sölvell, Zander)

Organizational structures (Perlmutter) Ethnocentrism Ethnocentrism Type of interdependence Sequential Control style HQ-derived Strategic role of subsidiary Implement local strategy Recruitment and rotation Home-country managers, much rotation

Organizational structures (Perlmutter) Polycentrism Polycentrism Type of interdependence Pooled Control style Calculative Strategic role of subsidiary Formulate & implement local strategy Recruitment and rotation Local managers, little rotation

Organizational structures (Perlmutter) Geocentrism Geocentrism Type of interdependence System of central and reciprocal Control style Normative, coercive Strategic role of subsidiary Implement & adapt to global strategy Recruitment and rotation Mixed, much rotation

Difficulties of geocentric MNCs Differences between nations and regions Differences between nations and regions Cultural differences Cultural differences Size Size Skilled managers Skilled managers Specialization of subsidiaries Specialization of subsidiaries No adaption to local markets No adaption to local markets

Stages of international development (Daft) Domestic stage Domestic stage International stage International stage Multinational stage Multinational stage Global stage Global stage

Model for global vs. local opportunities Globalization strategy means that product design and advertising strategy are standardized throughout the world. Multidomestic strategy means that competition in each country is handled independently of competition in other countries.

Global Product Structure Global Geographic Structure International Division Heterarchy Global Matrix Structure Development of Globalization Strategy Development of Multidomestic Strategy Model for global vs. local opportunities

International division CEO HRFinanceR & DInt. Division Europe Mideast Brazil Staff

Global Product Strucutre Chairman LawEngineeringPresident Global Automobile Components Global Industrial Group Global Instruments Production Global Truck Components FinanceInternational

Global Geographic Division CEO Pacific Division European Division Latin American Division Corporate Staff Long Term Planning Product Coordination

Global Matrix Structure GermanyNorwaySpain Transportation Industry Power Transf. International Excecutive Committee Business Sectors Country Managers Local Companies

Global Heterarchy (Hedlund) large transnational firms large transnational firms whole world as their playing field whole world as their playing field no single country base no single country base local and global advantages local and global advantages complex multidimensional structure complex multidimensional structure

Global Heterarchy (Hedlund) Differences from Matrix Structure Differences from Matrix Structure Many centres Many centres Stratic role for MNC of subsidiary managers Stratic role for MNC of subsidiary managers Different kinds of centres Different kinds of centres Coordination through corporate culture Coordination through corporate culture

Global Heterarchy (Hedlund) Differences from Matrix Structure Differences from Matrix Structure Degree of coupling between units Degree of coupling between units Holographic organization Holographic organization „firm as a brain“ rather than „brain of the firm“ „firm as a brain“ rather than „brain of the firm“ Coalitions Coalitions Managers have authority Managers have authority

The home based MNC (Sölvell, Zander, Porter) 4 Diamonds 4 Diamonds Factor endowments Factor endowments Demand conditions Demand conditions Relating and supporting industries Relating and supporting industries Firm strategy, structure and rivalry Firm strategy, structure and rivalry  supplies to regions or nations rather than the international environment

The home based MNC (Sölvell, Zander, Porter) The home base is best understood as a limited geographical area, where a firm has a cluster of core functions including strategic decision making, research development and often some form of core manufacturing.

The home based MNC (Sölvell, Zander, Porter) Simple home-based MNC Simple home-based MNC Selective tapping Selective tapping Multi-home-based MNC Multi-home-based MNC Separate bases for individual lines of business Separate bases for individual lines of business

Case Study 1819 Founding by Alois Miesbach on the Wienerberg in Vienna 1869 Trading starts on the Vienna Stock Exchange 1986 Start of internationalization and expansion (Germany) 1990 Start of expansion in Eastern Europe 1999 Advance to Global Player

Case Study 235 plants in 24 countries 235 plants in 24 countries Profit after tax € 155,5 million Profit after tax € 155,5 million Brands & Products: Brands & Products: POROTHERM - Bricks POROTHERM - Bricks TERCA - Facing bricks TERCA - Facing bricks KORAMIC - Roof tiles KORAMIC - Roof tiles SEMMELROCK - Pavers SEMMELROCK - Pavers BRAMAC & TONDACH GLEINSTÄTTEN - Roof BRAMAC & TONDACH GLEINSTÄTTEN - Roof PIPELIFE - Pipes PIPELIFE - Pipes Wienerberger Ofenkachel Wienerberger Ofenkachel

Structure and Organization

Mature product lines in core business Mature product lines in core business Not all products in all countries Not all products in all countries Stable technologies Stable technologies Diveded into regions Diveded into regions Regions report to managing board Regions report to managing board Each region full control over activities Each region full control over activities  Geographic division structure

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