Developing Coordination and Control - International Management - Lecture Slides, Slides of International Management

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Coordination and Control

The focus is to find the appropriate structure to manage the MNC

• Organization Structure is the overall pattern of structural components and configurations used to manage the organization.
• Structure allows the firm to allocate resources, assigns tasks, transmit information, and instructs on rules and procedures (Coordination and Control)

Stopford’s Study three stages

• Using 2 variables - Product diversity and importance of international sales
• International division
• Area division or Product division
• Global matrix

Evolving structure in MNCs International Division Area Division Worldwide Product Division FOREIGN PRODUCT DIVERSITY FOREIGN SALES AS PERCENTAGE OF TOTAL SALES Global Matrix

Reasons why the Global Matrix as structure

“failed”

• It emphasized differences among subsidiaries
• duplication of communication
• not enough flexibility in practice
• too much focus on structure and not on environment and strategy.
• It may hinder transfer of knowledge

Factors that should determine the

appropriate structure

• Size, Strategy, Technology
• Environment
• Cultures of the different countries.

Approaches to Organizational Design: The

corollary approach

• delegating responsibility for processing international requests to individuals within existing company.
• Used by firms with very small international activity

Approaches to Organizational Design: The export

department approach

• creating a separate internal export department for overseeing international operations
• Used by small to medium size firms

Decentralized Federations

HQ

• MULTINATIONAL STRATEGY MODEL - COMPETE BY BEING NATIONALLY RESPONSIVE Mainly financial flows (capital in, dividend out) Loose, simple controls (strategic decisions centralized)

Approaches to Organizational Design:

Coordinated Federation

• Used by firms with an international strategy approach
• It allows for leveraging the capabilities of parent company overseas
• formal system of controls by headquarters, subsidiaries viewed as “inferior”
• Used primarily by US.. based MNCs

Approaches to Organizational Design:

Centralized Hub

• export based global strategy, focus on scale economies and quality control
• tight control at home, and mainly flow of goods out
• typical of Japanese MNC, and favored the cultural reality of Japan.

• GLOBAL STRATEGY MODEL - COMPETE THROUGH GLOBAL EFFICIENCY

HQ

Mainly flows of goods Tight, simple controls (key strategic decisions made centrally) Centralized Hub

Organizational implications: The integrated network THE

Organizational implications: The integrated

network

• Don’t manage like the United Nations Differentiate roles and responsibilities Don’t let a single perspective dominate Legitimize business, area and functional management Don’t search for a standard coordination process: Develop and apply different tools to different tasks.