Chapter-14-The-Organization-of-International-Business.ppt
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1、International Business 9e By Charles W.L.HillMcGraw-Hill/Irwin Copyright 2013 by The McGraw-Hill Companies,Inc.All rights reserved.Chapter 14The Organization of International Business14-3What Is Organizational Architecture?Organizational architecture is the totality of a firms organization including
2、 1.Organizational structurethe formal division of the organization into subunitsthe location of decision-making responsibilities within that structurecentralized versus decentralized the establishment of integrating mechanisms to coordinate the activities of subunits including cross-functional teams
3、 or pan-regional committees14-4What Is Organizational Architecture?2.Control systems and incentives control systems-the metrics used to measure performance of subunitsincentives-the devices used to reward managerial behavior14-5What Is Organizational Architecture?3.Processes,organizational culture,a
4、nd peopleprocesses-how decisions are made and work is performed within the organizationorganizational culture-norms and values that are shared among the employees of an organizationpeople-the employees and the strategy used to recruit,compensate,and retain those individuals and the type of people th
5、ey are in terms of their skills,values,and orientation14-6What Is Organizational Architecture?To be the most profitablethe elements of the organizational architecture must be internally consistentthe organizational architecture must fit the strategythe strategy and architecture must be consistent wi
6、th each other,and consistent with competitive conditions14-7What Is Organizational Architecture?Organizational Architecture14-8What Are The Dimensions Of Organizational Structure?Organizational structure has three dimensions 1.Vertical differentiation-the location of decision-making responsibilities
7、 within a structure 2.Horizontal differentiation-the formal division of the organization into sub-units 3.Integrating mechanisms-the mechanisms for coordinating sub-units14-9Why Is Vertical Differentiation Important?Vertical differentiation determines where decision-making power is concentratedCentr
8、alized decision-makingfacilitates coordinationensures decisions are consistent with the organizations objectivesgives managers the means to bring about organizational changeavoids duplication of activities14-10Why Is Vertical Differentiation Important?Decentralized decision-makingrelieves the burden
9、 of centralized decision-makinghas been shown to motivate individualspermits greater flexibilitycan result in better decisionscan increase control14-11Why Is Horizontal Differentiation Important?Horizontal differentiation refers to how the firm divides into sub-unitsusually based on function,type of
10、 business,or geographical areaMost firms begin with no formal structure,but as they grow,split into functions reflecting the firms value creation activities-functional structure functions are coordinated and controlled by top managementdecision-making is centralized product line diversification requ
11、ires further horizontal differentiation14-12What Is A Functional Structure?A Typical Functional Structure14-13Why Is Horizontal Differentiation Important?Firms may switch to a product divisional structure each division is responsible for a distinct product lineheadquarters retains control for the ov
12、erall strategic direction of the firm and for the financial control of each division14-14What Is A Product Divisional Structure?A Typical Product Divisional Structure14-15What Happens When Firms Expand Globally?When firms expand internationally,they often group all of their international activities
13、into an international divisionOver time,manufacturing may shift to foreign marketsfirms with a functional structure at home would replicate the functional structure in the foreign marketfirms with a divisional structure would replicate the divisional structure in the foreign marketIn either case,the
14、re is the potential for conflict and coordination problems between domestic and foreign operations 14-16What Is An International Divisional Structure?One Companys International Divisional Structure14-17What Happens Next?Firms that continue to expand will move to either a 1.Worldwide product division
15、al structure-adopted by firms that are reasonably diversifiedallows for worldwide coordination of value creation activities of each product division helps realize location and experience curve economiesfacilitates the transfer of core competenciesdoes not allow for local responsiveness 14-18What Is
16、A Worldwide Product Division Structure?A Worldwide Product Divisional Structure14-19What Happens Next?2.Worldwide area structure -favored by firms with low degree of diversification and a domestic structure based on functiondivides the world into autonomous geographic areasdecentralizes operational
17、authorityfacilitates local responsiveness can result in a fragmentation of the organization is consistent with a localization strategy14-20What Is A Worldwide Area Structure?A Worldwide Area Structure 14-21How Does Organizational Structure Change Over Time?The International Structural Stages Model14
18、-22What Is The Global Matrix Structure?The global matrix structure tries to minimize the limitations of the worldwide area structure and the worldwide product divisional structureallows for differentiation along two dimensions-product division and geographic areahas dual decisionmaking-product divis
19、ion and geographic area have equal responsibility for operating decisionscan be bureaucratic and slowcan result in conflict between areas and product divisionscan result in finger-pointing between divisions when something goes wrong14-23What Is The Global Matrix Structure?A Global Matrix Structure14
20、-24How Can Subunits Be Integrated?Regardless of the type of structure,firms need a mechanism to integrate subunitsneed for coordination is lowest in firms with a localization strategy and highest in transnational firmscoordination can be complicated by differences in subunit orientation and goalssim
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- Chapter 14 The Organization of International Business
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