Chapter 13: The Organization of International Business: Park, Du-Jun G Liu, Jia Naran, Zorigt Ganaa
Chapter 13: The Organization of International Business: Park, Du-Jun G Liu, Jia Naran, Zorigt Ganaa
Chapter 13: The Organization of International Business: Park, Du-Jun G Liu, Jia Naran, Zorigt Ganaa
Organization of
International Business
International Business
October 15, 2007
Incentives
Processes People And
Controls
Culture
Organizational
Architecture(2)
Maximizing its profitability
=>Internal consistency
Horizontal differentiation
Integrating mechanisms
Vertical differentiation
Arguments for Centralization
Arguments for
Decentralization
Strategy and Centralization in an
International Business
Horizontal differentiation
International Structural Stages Model
Worldwide
Product
Division Global Matrix
(“Grid”)
Foreign
Product
Diversity
Alternate Paths
of Development
Area
Division
International
Division
Law High
Need of coordination
Integrating
Mechanisms(2)
Impediments to Coordination
- Different orientations
- Different goals
Formal Integrating Mechanisms
- Direct - Liaison roles
contact
- Teams - Matrix
structure
Informal Integrating Mechanism
=> Knowledge Networks : network for transmitting information
Types of control system.
Personal control is control by personal contact with
subordinates
Bureaucratic Controls is control through a system of
rules and procedures that directs the actions of
subunits
Output controls involves setting for subunits to
achieve and expressing those goals in term of
relatively objective performance metrics such as
profitability, productivity, growth, market share, and
quality.
Cultural Controls exist when employee “buy into” the
norms and value system of the firm. When this occurs,
the employee tend to control their own behavior,
which reduces the need of other controlling systems.
Incentive refers to the devices used to reward
appropriate employee behavior.
Important points to consider when using
incentive system.
The type of incentive used often varies depending
on the employees and their tasks.
Most firms use a formula for incentives that links a
portion of incentive pay to the performance of
subunit in which a manager or employee works and
portion to the performance of the entire firm, or
some level other higher level organization unit.
The incentive system used within a multinational
enterprise often have to be adjusted to account for
national differences in institutions and culture.
Unintended consequences
Performance ambiguity is a function of the
interdependence of subunits in an
organization.
Cost control can be defines as the amount of time
top management must devote to monitoring and
evaluating subunits’ performance.
Strategy Interdependenc Performance Costs of
e Ambiguity control
localization Low Low Low
International Moderate Moderate Moderate
Global High High High
Transnational Very high Very high Very high
Process is defined as manners in which
decisions are made and work is performed
within the organization.
Organizational Culture:
-Creating and Maintaining Organizational
Culture
-Organizational Culture and Performance
in the international Business
Synthesis: Strategy and Architecture
-Localization Strategy
-International Strategy
- Global Standardization Strategy
- Transnational Strategy
- Environment, strategy, Architecture and
Performance
Organizational Change:
- Organizational Inertia
- Implementing Organizational Change
Organizational Culture
Creating and Maintaining Organizational
Culture
Influences on Organizational Culture
2. reward strategies
3. Socialization Process
4. Communication Strategy
Organizational Culture & Performance in the
International Business
Unfreezing the organization Moving to the new State Refreezing the Organizati
Movement requires a
Whose power is threatened substantial change in the Refreezing requires that
by change can too easily form of a multinational’s employees be
resist incremental change organization architecture socialized into the new
so that it matches the way of doing things
desired new strategic
postures