Bahçeşehir University Social Science Institutions Ph D. Business Program Management & Organization Organizational Theory Prof. Dr. Atilla DİCLE Designing Organizations for the International Environment Prep. by: İlhan ÇİFTÇİ

Industrial Revolution & Globalization Bahçeşehir University - Organizational Theory

Bahçeşehir University - Organizational Theory Orientation Stages Global Orientation Multinational Orientation International Orientation Domestic Orientation Bahçeşehir University - Organizational Theory

Four Stages of Int’l Evolution I - Domestic II - International III - Multinational IV - Global Strategic Orientation Domestically oriented Export – oriented multi domestic Multinational Global Stage of Development Initial foreign involment Competitive positioning Explosion Structure Domestic structure, plus export department Domestic structure, plus international division Worldwide geographical product Matrix, transnational Market Potential Moderate, mostly domestşc Large, multidomestic Very large, multinational Whole world Bahçeşehir University - Organizational Theory

Fortune 500 Investigation - 2006 The number of US companies was 189 in the 500 biggset company. # Country Revenue (billion $) # of Firm in Global Market 1 US 5.841 189 2 Japan 2.181 82 3 France 1.246 37 4 Britain 1.079 35 5 Germany 1.363 34 6 China 358 15 7 Canada 185 13 8 Netherlands 388 12 9 Switzerland 382 10 South Korea 266 11 Bahçeşehir University - Organizational Theory

Maps - The World US & Turkey Bahçeşehir University - Organizational Theory

Bahçeşehir University - Organizational Theory In accordance to revenue basis,Tüpraş is the biggest company in Turkey and the number of Tüpraş is 108 in an US market Fortune 500 Investigation - 2008 Bahçeşehir University - Organizational Theory

To Expand Int’l Market Motivators Economies of Scale Indutrial Revolution Innovations Technology ... Economies of Scope Diversification of Products Increase in product quantity Expand regions, country and market Low Cost Production Factors Invest raw materials with a lowest possible cost Get opportunity to obtain scare Obtain source of cheap labor Bahçeşehir University - Organizational Theory

Bahçeşehir University - Organizational Theory Strategic Alliances Strategic Alliance is one of the way of getting involved in international trade Licensing Joint Ventures Consortia Source: .... Bahçeşehir University - Organizational Theory

Strategic Alliances Benefits Achieve production cost savings through economies of scale Share complementary technological strengths Distrubute new products Service through anaother country’s distrubution channels Bahçeşehir University - Organizational Theory

Strategic Alliances Samples JV Pharmaceutical Merck, Eli Lilly, Pfizer, Warner Lambert JV, Gold Exploration Robex Resources (Canada)Inc. & Geo Services International (Mali) Jonit Ventures, Consortias JV Banking Sector ICiCI (India) & Prudential (UK) (Asset Management) CONSROTIA Airbus  French, British,German vs Boeing (US) Source: .... Bahçeşehir University - Organizational Theory

Bahçeşehir University - Organizational Theory Model for Global vs Local Opportunities Decision between the Globalization vesrsus a multidomestic global strategy Whether the manager want each global affiliate to act autonomously or whether activities should be standardized across countries Globalization strategy means that product design, manufacturing and marketing strategy are standardized throught the world (Coca – Cola  only the advertising and marketing need to be tailored for different regions) A multidomestic strategy menas that competition in each counrty is handled independently of competition in other countries (Dominos - - > The compnay has 2.500 int’l restaurants and offers 100 different pizza pies) Bahçeşehir University - Organizational Theory

Model to Fit Org. Structure to Int’l Advantages High Globalization Staretegy: Global Product Structure Both Globalization and Multi Domestic Strategy: Matrix Export Strategy: International Division Multi Dpmestic Strategy: Geographic Forces for Global Integration Low Low Forces for National Responsiveness High Bahçeşehir University - Organizational Theory

Bahçeşehir University - Organizational Theory Int’l Divison & Domestic Division Domestic Division: Typicially Orginized along functional or product lines International Divison: Orginized according to geographical interest Has its own hierarchy to handle business (licensing, joint ventures) in various countries Selling the products and services and prodcuts created by the domestic division Openning subsidiary plants Moving the organization into more sophisticated international operations Bahçeşehir University - Organizational Theory

Domestic Hybrid Structure with Int’l Division CEO Human Resources Research & Development Corporate Finance Europe Sales Mideast (Sales) Electircial Product Div. Scientific Product Div. Medical Product Div. Internatinal Division Brazil (Subsidiary) Staff (Legak, Licensing) Bahçeşehir University - Organizational Theory

Global Product Divison Structure The Product based structure works best when a division handles products that are tecnology similar and can be standarized for marketing worldwide All Divison Manager is responsible Controlling Organizing Distrubition of product Planning Issues Successful global Division Structure Bahçeşehir University - Organizational Theory

Global Geographical Divison Structure Divides the world into geographical regions Each geographical divison reporting to CEO Each Division has full control of functional activities wtihin a geog. area Difficult to transfer new domestic tech. and products, (each div. thinks what it need) Source: .... Bahçeşehir University - Organizational Theory

Global Matrix Structure It provides a way to achieve vertical and horizontal coordination simultaneously along two dimensions The matrix works best when pressure for decision making balances the interests of both product standarzation and geographical localization and when coordination to share resources is important Bahçeşehir University - Organizational Theory

Global Matrix Structure Bahçeşehir University - Organizational Theory

Building Global Capabilities The Global Organizational Challenge Increased Complexity and Differenciation Need for Integration Transfer of Knowledge and Innovation Global Coordination Mechanisms Global Teams Headquarters Planning Expand Coordination Roles Bahçeşehir University - Organizational Theory

Cultural Differences in Coordination and Control National Value Systems Three National Approaches to Coordination and Control Centralized Coordination in Japannese Companies European Firms’ Decentralized Approach The U.S. Bahçeşehir University - Organizational Theory

Questions and Explanations Bahçeşehir University - Organizational Theory