1. Organizational Designs for Multinational Companies
跨国公司组织设计
朱吉庆 博士 讲师

2. Learning Objectives Understand the components of organizational design
Know the basic building blocks of organization structure
Understand the structural options for multinational companies
Know the choices multinationals have in the use of subsidiaries
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3. Learning Objectives
See the links between multinational strategies and structures
Understand the basic mechanisms of organizational coordination and control
Know how coordination and control mechanisms are used by multinational companies
Understand the need for knowledge management systems within organizations
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4. Organizational Design
How organizations structure subunits and coordination and control mechanisms to achieve strategic goals
Basic questions:
- How to divide work among the organization’s subunits?
- How to coordinate and control the efforts of the units created?
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5. Nature of Organization Design
In small organizations, there is little reason to divide work
- Everyone does the same thing and everything
As organizations grow, there is a need to divide work and the organization
There is no one best organizational design
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6. The Basic Functional Structure
Departments perform separate business functions such as marketing or manufacturing
Simplest of organizations
Most smaller organizations have functional structures
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7. Exhibit 8.1: A Basic Functional Structure
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8. The Basic Functional Structure
Works best when organization has:
- Few products
- Few locations
- Few types of customers
- A stable environment
- Routine technology
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9. The Basic Product and Geographic Structures
Product structure: departments or subunits based on different product groups
Geographic structure: departments or subunits based on geographic regions
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10. The Basic Product and Geographic Structures (cont.)
Usually less efficient than the functional organization
Allows a company to serve customer needs that vary by region or product
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11. Exhibit 8.2: Product Structure
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12. Exhibit 8.3: A Basic Geographic Structure
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13. The Basic Product and Geographic Structures
Managers choose product structures when:
Product or an area sufficiently unique to require focused functional efforts on one type of product or service
Hybrid structure: mixes functional, geographic, and product units
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14. Organizational Structures to Implement Multinational Strategies
When company first goes international, it seldom changes structure.
- Passive exporter
Licensing has little impact on domestic structures.
However, when international sales become more central, structures need to be changed.
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15. Export Department
Coordinates and controls a company’s export operations
Export department
- Is created when exports become significant
- Deals with international sales of all products
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16. Exhibit 8.4: A Functional Structure with an Export Department
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17. Foreign Subsidiaries
Subunit of the multinational company that is located in another country
Types of foreign subsidiaries
- Minireplica subsidiary: smaller version of the parent company
Uses the same technology and producing the same products as the parent company
- Transnational subsidiary: has no companywide form or function
Each subsidiary contributes what it does best
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18. Foreign Subsidiaries
Many subsidiaries are neither minireplicas nor transnationals
May take different forms or functions
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19. Foreign Subsidiaries
Multinationals choose the mix of functions based on:
- The firm’s multinational strategy or strategies
- The subsidiaries’ capabilities and resources
- The economic and political risk of building and managing a subunit in another country
- How the subsidiaries fit into the overall multinational organizational structure
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20. International Division
Larger and has greater responsibilities compared to the export department
Responsible for managing exports, international sales, and foreign subsidiaries
Usual step after export department
Deals with all products
Manages overseas sales force and manufacturing sites
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21. Exhibit 8.5: An International Division
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22. Organizational Structures to Implement Multinational Strategies
Reasons to abandon the international division
- Diverse products overwhelm capacities of multinational
- Not close enough to local markets
- Cannot take advantage of global economies of scale or global sources of knowledge
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23. Organizational Structures to Implement Multinational Strategies
Several options available to deal with these shortcomings
- Worldwide product structure
- Worldwide geographic structure
- Matrix structure
- Transnational-network structure
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24. Worldwide Geographic Structure
Has geographical units representing regions of the world
- Prime reason is to implement a multidomestic or regional strategy
- Organizational design with maximum geographic flexibility
- Separate divisions for large market countries
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25. Exhibit 8.6: Royal Vopak Geographic Structure
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26. Worldwide Product Structure
- Gives product divisions responsibility to produce and sell their products or services throughout the world
- Implements strategies that emphasize global products
- Provides an efficient way to organize and centralize the production and sales of similar products
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27. Exhibit 8.7: Worldwide Product Structure
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28. Hybrids
Both worldwide product structure and worldwide geographic structure have advantages and disadvantages
- Product structure: supports global products
- Geographic structure: emphasizes local adaptation
Multinationals often want both abilities
Use hybrids
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29. Front-back Hybrid Structure
The front side has units based on geography to provide a multidomestic or regional focus
The backside has units based on product groups to capture global economies of scale in R&D and production
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30. Exhibit 8.8: Tetra Pak’s Front-Back Hybrid Structure
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31. Worldwide Matrix Structures
Symmetrical organization with equal emphasis on
- Worldwide product groups and
- Regional geographical divisions
Geographic divisions focus on national responsiveness and product divisions focus on finding global efficiencies
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32. Worldwide Matrix Structures
Balances the benefits produced by area and product structures
Creates equal lines of authority for products and areas
- Works best with near equal demands from both sides
Requires extensive resources for communication and coordination
Requires middle and upper level managers with good human relations skills
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33. Exhibit 8.9: Worldwide Matrix Organization
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34. Matrix Structures Problems emerging with worldwide matrix structures
- Slow decision making process
- Too bureaucratic
- Too many meetings and too much conflict
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35. Matrix Structures (cont.)
Result
- Some companies have abandoned their matrixes and returned to product structures
Other companies have redesigned their matrix structures to be more flexible with speedier decision making
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36. The Transnational-Network Structure
Newest solution to the complex demand of being locally responsive and taking advantage of global economies of scale
Combines functional, product, and geographic subunits
- Dispersed subunits
- Specialized operations
- Interdependent relationships
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37. The Transnational-Network Structures
Has no symmetry or balance in its structural form
Resources, people, and ideas flow in all directions
Nodes or centers in the network coordinate product, functional, and geographic information
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38. The Transnational-Network Structures
Philips divides the world into three groups
Key countries: such as the Netherlands and the United States produce for local and world markets and control local sales
Large countries: such as Mexico and Belgium have some local and worldwide production facilities and local sales
Local business countries: smaller countries that are primarily sales units and that import products from the product divisions’ worldwide production centers in other countries
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39. Exhibit 8.10: Geographic Links in the Philips Transnational Structure
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40. Exhibit 8.11: Product Links in the Same Organization
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41. Components of the Transnational-Network Structure
Dispersed subunits: subsidiaries located anywhere where they can most benefit the company
Specialized operations: subunits specializing in particular product, research areas, or marketing areas
Interdependent relationships: continuous sharing of information and resources by dispersed and specialized subunits
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42. Metanational Structure
Large entrepreneurial multinational
Can tap into pockets of innovation, technology, and markets located around the world
Develops extensive systems to encourage organizational learning and entrepreneurial activities
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43. Metanational Characteristics
Nonstandard business formulas for any local activity
Looking to emerging markets as sources of knowledge and ideas
Creating a culture supporting global learning
Extensive use of strategic alliances to gain knowledge for varied sources
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44. Characteristics of Metanationals
High levels of trust between partners to encourage knowledge sharing
Centerless organization that moves strategic functions away from headquarters to major markets
Decentralization of decision making to managers who serve key customers and strategic partners
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45. Micro-Multinational Company
Micro-multinational companies: smaller organizations that take advantage of the Web to operate globally from Day One
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46. Micro-Multinational Company
Characteristics
- They operate as born-global firms from the day they are founded, and they operate everywhere around the world
- They are willing to start operations and hire workers from around the world and from where it makes the most sense to do so
- They are more likely to use various state-of-the-art technology for communication purposes
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47. Multinational Strategy and Structure: An Overview
Most companies support early internationalization efforts with export department
Depending on globalization strategy, they evolve into product or geographic structure
Pressure for local adaptation and global efficiencies result into matrix or transnational-network
No company reaches any pure form—use hybrids
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48. Exhibit 8.12: Multinational Strategy, Structure, and Evolution
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49. Control Systems
Control system: helps link the organization vertically, up and down the organizational hierarchy
Basic functions of control system
- Measure or monitor the performances of subunits
- Provide feedback to subunit managers regarding the effectiveness of their units
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50. Coordination Systems
Coordination system: horizontal organizational links
- Provide information flows among subsidiaries
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51. Design Options for Control Systems
Four types of control systems
- Output control system
- Bureaucratic control system
- Decision-making control
- Cultural control system
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52. Output Control Systems
Assesses the performance of a unit based on results, not on the processes used to achieve these results
- Profit center: unit controlled by its profit or loss performance
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53. Bureaucratic control system
Focuses on managing behaviors within the organization
- Budgets: financial targets for expenditures
- Statistical reports: information to top management about nonfinancial outcomes
- Standard operating procedures (SOPs): rules and regulations of appropriate behavior
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54. Control and Coordination Systems
Decision-making control: level in the organizational hierarchy where managers have the authority to make decisions
Cultural control system: uses organizational culture to control behaviors and attitudes of employees
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55. Exhibit 8.13: Use of Control Mechanisms in Multinational Organizational Structures
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56. Design Options for Coordination Systems
Textual communication: , memos, and reports
Direct contact: face-to-face interaction of employees
Liaison roles: part of a person’s job in one department to communicate with people in another department
Task forces: temporary teams created to solve a particular organizational problem
Full-time integrators: cross-unit coordination is the main job responsibility
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57. Teams Teams: permanent unit of the organization
Global virtual teams: groups of people from different parts of the world who work together by using information and communication technologies such as intranets, web meetings, WIKI’s, s and instant messaging
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58. Problems with Global teams
Team members’ native languages are different
Differences in cultural background
Global teams dominated by headquarters’ perspectives and experiences
Major challenges in building team collaboration
Challenges in meeting programmatic objectives
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59. Steps to ensure the global teams collaborate to function effectively
Build relationships and trust
Devote significant attention to project planning and hold project progress meetings regularly
Cultural, language, and active-listening training
Be aware of team-development stage
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60. Knowledge Management
Knowledge management: refers to the systems, mechanisms, and other design elements of any organization to ensure that the right form of knowledge is available to the right individual at the right time
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61. Knowledge Management Types of knowledge
Explicit form:found in records or other repositories of information
Tacit knowledge: represents the knowledge that usually resides within employees and is dependent on the organization’s culture and context
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62. Exhibit 8.14: Knowledge Management Barriers
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63. Knowledge Management: Steps to Develop Successful System
Identify/support knowledge activists
Make knowledge management part of the general strategy
Provide financial and human resources support
Emphasize importance of communication
Celebrate success
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64. Conclusion
Good strategies do not guarantee success – also need good implementation
Need the right organizational designs to carry out strategies
Chapter reviews basic organizational structures and discusses international organizational designs and structures
Chapter also discusses knowledge management systems
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