International Organizational Design and Control Griffin & Pustay 14-1 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall International Business, 6th Edition chapter 14 Chapter Objectives • Define and discuss the nature of international organization design and identify and describe the initial impacts of international business activity on organization design • Identify and describe five advanced forms of international organization design and discuss hybrid global designs 14-2 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Chapter Objectives (continued) • Identify and describe related issues in global organization design • Explain the general purpose of control and the levels of control in international business • Describe how international firms manage the control function 14-3 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Organization Design Organization design (or organization structure) is the overall pattern of structural components and configurations used to manage the total organization 14-4 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Factors Affecting Design Country culture Environment Strategy Technology 14-5 Size Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Functions of Firm Design • Allocates organizational resources • Assigns tasks to its employees • Informs employees about firm’s rules, procedures, and expectations • Collects and transmits information 14-6 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Types of Knowledge Affecting Design Area knowledge Product knowledge Functional knowledge 14-7 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Forms of Global Organization Design Product 14-8 Matrix Area Customer Functional Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Managerial Philosophies Affecting Design Ethnocentric Polycentric 14-9 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Geocentric Global Product Design The global product design assigns worldwide responsibility for specific products or product groups to separate operating divisions within a firm 14-10 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Global Matrix Design (continued) Advantages Disadvantages • Brings together the functional area and product expertise • Appropriate for firms with many products and unstable environments • Promotes organizational flexibility • Provides access to all advantages of other designs 14-23 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall • Employees accountable to multiple supervisors • Decisions may take longer Figure 14.5 A Global Matrix Design 14-24 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Global Hybrid Design Most firms create a hybrid design, rather than pure design, that best suits their purposes, given the firms’ size, strategy, technology, environment, and culture, and blends elements of all the designs discussed 14-25 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 14.6 Nissan USA’s Hybrid Design 14-26 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Coordination Coordination is the process of linking and integrating functions and activities of different groups, units, or divisions 14-27 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Control Control is the process of monitoring ongoing performance and making necessary changes to keep the organization moving toward its performance goals 14-28 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Control Function in International Business • Process of monitoring ongoing performance and making necessary changes to keep the organization moving toward its performance goals • Three levels: – Strategic – Organizational – Operations 14-29 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 14.7 Levels of International Control 14-30 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Map 14.1 Nestlé's Global Holdings 14-31 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 14.8 Steps in International Control 14-32 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Essential Control Techniques Accounting systems Procedures Performance ratios 14-33 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Map 14.2 Kenyan Rainfall 14-34 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Reasons for Resistance to Control Overcontrol Inappropriately focused control Increased accountability 14-35 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Overcoming Resistance to Control • Promote participation • Control system with clear and appropriate focus that creates reasonable accountability • Diagnostic mechanism • Cultural perspective 14-36 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher Printed in the United States of America Copyright © 2010 Pearson Education, Inc publishing as Prentice Hall ... specific areas or regions of the world 14- 14 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 14. 2 Cadbury Schweppes PLC Global Area Design 14- 15 Copyright 2010 Pearson Education,... Strategic – Organizational – Operations 14- 29 Copyright 2010 Pearson Education, Inc publishing as Prentice Hall Figure 14. 7 Levels of International Control 14- 30 Copyright 2010 Pearson Education,... general purpose of control and the levels of control in international business • Describe how international firms manage the control function 14- 3 Copyright 2010 Pearson Education, Inc publishing