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Chapter Organizational Designs for Multinational Companies © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Learning Objectives •• •• •• •• Understand Understand the the components components ofof organizational organizational design design Know Know the the basic basic building building blocks blocks ofof organization organization structure structure Understand Understand the the structural structural options options for for multinational multinational companies companies Know Know the the choices choices multinationals multinationals have have inin the the use use ofof subsidiaries subsidiaries © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Learning Objectives •• See See the the links links between between multinational multinational strategies strategies and and structures structures •• Understand Understand the the basic basic mechanisms mechanisms ofof organizational organizational coordination coordination and and control control •• Know Know how how coordination coordination and and control control mechanisms mechanisms are are used used by by multinational multinational companies companies •• Understand Understand the the need need for for knowledge knowledge management management systems systems within within organizations organizations © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Organizational Design •• How How organizations organizations structure structure subunits subunits and and coordination coordination and and control control mechanisms mechanisms toto achieve achieve strategic strategic goals goals •• Basic Basic questions: questions: How How toto divide divide work work among among the the organization’s organization’s subunits? subunits? How How toto coordinate coordinate and and control control the the efforts efforts ofof the the units units created? created? © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Nature of Organization Design •• InIn small small organizations, organizations, there there isis little little reason reason toto divide divide work work Everyone Everyone does does the the same same thing thing and and everything everything •• As As organizations organizations grow, grow, there there isis aa need need toto divide divide work work and and the the organization organization •• There There isis no no one one best best organizational organizational design design © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Basic Functional Structure •• Departments Departments perform perform separate separate business business functions functions such such as as marketing marketing or or manufacturing manufacturing •• Simplest Simplest ofof organizations organizations •• Most Most smaller smaller organizations organizations have have functional functional structures structures © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 8.1: A Basic Functional Structure © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Basic Functional Structure •• Works Works best best when when organization organization has: has: Few Few products products Few Few locations locations Few Few types types ofof customers customers AAstable stable environment environment Routine Routine technology technology © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Basic Product and Geographic Structures •• Product Product structure: structure: departments departments or or subunits subunits based based on on different different product product groups groups •• Geographic Geographic structure: structure: departments departments or or subunits subunits based based on on geographic geographic regions regions © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part The Basic Product and Geographic Structures (cont.) •• •• Usually Usually less less efficient efficient than than the the functional functional organization organization Allows Allows aa company company toto serve serve customer customer needs needs that that vary vary by by region region or or product product © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Coordination Systems •• Coordination Coordination system: system: horizontal horizontal organizational organizational links links Provide Provide information information flows flows among among subsidiaries subsidiaries © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Design Options for Control Systems •• Four Four types types ofof control control systems systems Output Output control control system system Bureaucratic Bureaucratic control control system system Decision-making Decision-making control control Cultural Cultural control control system system © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Output Control Systems •• Assesses Assesses the the performance performance ofof aa unit unit based based on on results, results, not not on on the the processes processes used used toto achieve achieve these these results results Profit Profit center: center: unit unit controlled controlled by by its its profit profit or or loss loss performance performance © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Bureaucratic control system •• Focuses Focuses on on managing managing behaviors behaviors within within the the organization organization Budgets: Budgets: financial financial targets targets for for expenditures expenditures Statistical Statistical reports: reports: information information toto top top management management about about nonfinancial nonfinancial outcomes outcomes Standard Standard operating operating procedures procedures (SOPs): (SOPs): rules rules and and regulations regulations ofof appropriate appropriate behavior behavior © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Control and Coordination Systems •• Decision-making Decision-making control: control: level level inin the the organizational organizational hierarchy hierarchy where where managers managers have have the the authority authority toto make make decisions decisions •• Cultural Cultural control control system: system: uses uses organizational organizational culture culture toto control control behaviors behaviors and and attitudes attitudes ofof employees employees © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 8.13: Use of Control Mechanisms in Multinational Organizational Structures © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Design Options for Coordination Systems •• •• •• •• •• Textual Textual communication: communication: e-mail, e-mail, memos, memos, and and reports reports Direct Direct contact: contact: face-to-face face-to-face interaction interaction ofof employees employees Liaison Liaison roles: roles: part part ofof aa person’s person’s job job inin one one department department toto communicate communicate with with people people inin another another department department Task Task forces: forces: temporary temporary teams teams created created toto solve solve aa particular particular organizational organizational problem problem Full-time Full-time integrators: integrators: cross-unit cross-unit coordination coordination isis the the main main job job responsibility responsibility © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Teams •• Teams: Teams: permanent permanent unit unit ofof the the organization organization Global Global virtual virtual teams: teams: groups groups ofof people people from from different different parts parts ofof the the world world who who work work together together by by using using information information and and communication communication technologies technologies such such as as intranets, intranets, web web meetings, meetings, WIKI’s, WIKI’s, e-mails e-mails and and instant instant messaging messaging © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Problems with Global teams •• •• •• •• •• Team Team members’ members’native native languages languages are are different different Differences Differences inin cultural cultural background background Global Global teams teams dominated dominated by by headquarters’ headquarters’perspectives perspectives and and experiences experiences Major Major challenges challenges inin building building team team collaboration collaboration Challenges Challenges inin meeting meeting programmatic programmatic objectives objectives © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Steps to ensure the global teams collaborate to function effectively •• •• •• •• Build Build relationships relationships and and trust trust Devote Devote significant significant attention attention toto project project planning planning and and hold hold project project progress progress meetings meetings regularly regularly Cultural, Cultural, language, language, and and active-listening active-listening training training Be Be aware aware ofof team-development team-development stage stage © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Knowledge Management •• Knowledge Knowledge management: management: refers refers toto the the systems, systems, mechanisms, mechanisms, and and other other design design elements elements ofof any any organization organization to to ensure ensure that that the the right right form form ofof knowledge knowledge isis available available toto the the right right individual individual atat the the right right time time © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Knowledge Management •• Types Types ofof knowledge knowledge •• Explicit Explicit form:found form:found inin records records or or other other repositories repositories ofof information information •• Tacit Tacit knowledge: knowledge: represents represents the the knowledge knowledge that that usually usually resides resides within within employees employees and and isis dependent dependent on on the the organization’s organization’s culture culture and and context context © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Exhibit 8.14: Knowledge Management Barriers © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Knowledge Management: Steps to Develop Successful System •• •• •• •• •• Identify/support Identify/support knowledge knowledge activists activists Make Make knowledge knowledge management management part part ofof the the general general strategy strategy Provide Provide financial financial and and human human resources resources support support Emphasize Emphasize importance importance ofof communication communication Celebrate Celebrate success success © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part Conclusion •• Good Good strategies strategies do not not guarantee guarantee success success –– also also need need good good implementation implementation •• Need Need the the right right organizational organizational designs designs toto carry carry out out strategies strategies •• Chapter Chapter reviews reviews basic basic organizational organizational structures structures and and discusses discusses international international organizational organizational designs designs and and structures structures •• Chapter Chapter also also discusses discusses knowledge knowledge management management systems systems © 2011 Cengage Learning All Rights Reserved May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part ... mechanisms are are used used by by multinational multinational companies companies •• Understand Understand the the need need for for knowledge knowledge management management systems systems within... Allows Allows aa company company toto serve serve customer customer needs needs that that vary vary by by region region or or product product © 2011 Cengage Learning All Rights Reserved May not be
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