© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter Six Designing Organizations for the International Environment

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Entering The Global Arena More companies are doing business globally Companies need top leaders who have a global outlook Advancements in technology and world communications has changed the competitive landscape

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Motivations for Global Expansion Motivation to Expand: Economies of Scale Economies of Scope Low-Cost Production Factors Economic, technological, and competitive forces have combined to push companies from a domestic to a global focus.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Global Economy as Reflected in the Fortune Global 500

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Stages of International Evolution Domestic International Multinational Global

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Expansion Through International Strategic Alliance Licensing – allowing another firm to market your brands Joint Ventures - separate entity of two or more firms Consortia – groups of independent companies

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Model for Global vs. Local Opportunities Global standardization versus national responsiveness –Globalization or multidomestic strategy Globalization strategy - products are standardized throughout the world Multidomestic - competition is handled in each country independently

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Fitting Organization Structure to International Advantages

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Organization Structure International Division Global Product Division Global Geographic Division Global Matrix Structure

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Global Organizational Challenge

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Global Coordination Mechanisms Global Teams Global Teams Headquarters Planning Headquarters Planning Expanded Coordination Roles Expanded Coordination Roles

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Benefits of Collaboration →Cost Savings →Better Decision Making →Greater Revenue →Increased Innovation

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Cultural Differences In Coordination and Control National Value System Power Distance: people accept inequality Uncertainty Avoidance: members feel uncomfortable with uncertainty and ambiguity

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. National Approaches to Coordination an Control 1)Centralized Coordination: Japanese Companies 2)Decentralized Approach: European Firms 3)Coordination and Control Through Formalization: The United States

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Transnational Model of Organization Mix in organizational complexity with diverse units and coordination Combines global learning, knowledge sharing and technological innovation Structure required in highly complex organizations An integrated network linked together to achieve multidimensional goals Based on interdependence A managerial state of mind, a set of values and shared values toward a worldwide learning system

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Transnational Organizations Assets and resources are dispersed worldwide Structures are flexible and ever-changing Subsidiary managers initiate strategy and innovations that become strategy for the whole organization Corporate culture, shared vision and management style guide the organization

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Design Elements Managers must design organizations for complex international coordination Organizations international strategy and structure evolve There a diverse options for specific international strategies There are a variety of challenges for global organizations Diverse national and cultural values influence an organization’s approach Companies operating globally require broad coordination