Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. What We Are Striving To Accomplish 1.To describe several types of organizational structures for global operations. 2.To highlight factors affecting decisions about the structure of global organizations, including the roles of country organizations in the development of strategies and the implementation of programs. 3.To outline the need for and challenges of controls in global operations. 4.To examine the selection processes, compensation, and training of international managers. 5.To illustrate the different roles of labor in international markets, especially that of labor participation in management.

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Organizational Structure The greater the degree of internationalization the more complex the organizational structure can become. Types of structures used to manage foreign activity:

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Stages 1, 2 and 3 The Export Department Structure The International Division Structure Stage 1: Domestic operation assumes responsibility for international activities. Stage 2: Development of an export department as international demand increases. Stage 3: Centralization of responsibility for all global activity. International division concentrates on international expertise, foreign market information flows, and international activity authority.

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Stage 4 - Global Structures Six basic types of global structures: Global product structure - product divisions are responsible for manufacturing and marketing worldwide. Global area structure - geographic divisions are responsible for all manufacturing and marketing in their respective areas. Global functional structure - functional areas (production, marketing, finance, and personnel) are responsible for the worldwide operations of their own functional area. Global customer structure - operations are structured based on distinct worldwide customer groups. Mixed or hybrid structure - may combine the other alternatives. Matrix structure - operations have reporting responsibility to more than one group (typically, product, function, or area).

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Organizational Structure and Decision Making Many multinational corporations have adopted a coordinated decentralized corporate strategy for decision making. Subsidiaries have the freedom to implement their own corporate strategies within established ranges of the corporate headquarters’ overall strategy. Factors determining organizational structure and locus of decision making: degree of involvement in international operations products the firm markets size and importance of the firm’s markets human resource capability of the firm

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Networking Networking gives subsidiaries the latitude, encouragement, and tools to pursue local business development within the corporate strategy - avoiding “not-invented-here syndrome”. Effort duplication, inefficiency, and resistance to ideas developed elsewhere are avoided.

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Country Organizations Relationship with headquarters will vary depending on the contribution of the subsidiary to the corporate strategy. Must have enough operating independence to cater to local needs and provide motivation to country managers. Principal means by which new opportunities in markets around the world can be tapped.

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Controls (Balance sheets, sales data, production data, product line growth, performance reviews) (influencing how activities are conducted) Bureaucratic/formalized control elements are: an international budget and planning system the functional reporting system policy manuals used to direct functional performance Cultural control emphasizes values and corporate culture with evaluations based on how individuals or entities fit within the norms. Informal, personal interaction is central.

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Selection of Global Managers Many firms use adaptability screening as an integral part of the selection process for overseas managers. A candidates competence, adaptability, and personal characteristics are considered. Competence Technical knowledge Leadership ability Experience, past performance Area expertise Language Adaptability Interest in overseas work Relational abilities Cultural empathy Appreciation of new management styles Appreciation of environmental constraints Adaptability of family Personal Characteristics Age Education Sex Health Marital status Social acceptability

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Compensation of Global Managers Effective compensation packages for global managers: provide an incentive to take a foreign assignment maintain a standard of living consider career and family needs facilitate reentry into the home country

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Types of Compensation Compensation is divided into: Base salary - dependent on qualifications and responsibilities cost of living allowances foreign service premiums hardship allowances housing allowances tax-equalization plans Nonsalary-related allowances relocation allowance mobility allowance housing allowance automobile protection travel expenses temporary living expenses education allowance for families medical expenses and services

Developed by Cool Pictures and MultiMedia Presentations Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Labor Participation Workers’ roles in a firm’s decision making process have been enhanced through incorporation of the following programs: self-management codetermination minority board work councils Degree of participation varies depending on the level of involvement: shop-floor management board SOURCE: Digital Murals by Mike Mosher 1998