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Agenda

1Facultad de Negocios, UPCCarrera de Administracin y Negocios Internacionales

Estrategia Internacional y Formas de organizacinDebate: Liderazgo y estrategia internacionalEstrategia, Estructura, Sistemas de control

Conclusiones

Semana 10

LogroEl alumno explica las formasde organizacin , sistemas decontrol y mecanismos deintegracin disponibles paralas empresas multinacionales.

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Nuestro Mapa de Direccin

2Facultad de Negocios, UPCCarrera de Administracin y Marketing

Globalizacin vs Internacionalizacin The World is Flat

El Entorno Global

Estrategias de Internacionalizacin Factores para el comercio y la inversin, Las

Multinacionales.

Planeamiento yEstrategias de

Internacionalizacin

Joint ventures, Alianzas Estratgicas, IED Plan de Marketing Internacional

Entry Modes + EstrategiaMarketing Internacional

Organizacin de la Multinacional, Produccin ,Logstica, RRHH, Tecnologa de la Informacin

Organizacin y Control deOperaciones Empresa

Internacional

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Check List of the CEO

1. To Define and identify different forms of the organizationalarchitecture that international businesses use to managetheir global operations.

2. To Explore the various components of the architecture

3. To describe the control systems and integrating mechanismavailable to multinational firms

4. To evaluate the advantages and disadvantages of centralizedversus decentralized decision systems

5. To look at ways to match architecture and competitivestrategy to achieve high performance

3

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Structure

People

Culture

ProcessesControls &Incentives

Organizational architecture is the totality of a firms organization, including

Organizational Architecture

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Control systemsMetrics used to measuresubunit performance

Make judgments aboutmanagers abilities to rununits

Incentives are devices to

reward appropriatemanagerial behavior .

Processes

Manner in which decisionsare made

Manner in which work isperformed

Conceptually distinct fromlocation of decision-making responsibility


5

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Culture

Norms and value systemsshared by the emoloyees

within the sameorganizational structure

People

Not just current employees, butalso the strategy to recruit,

compensate, and retainindividuals with necessary skills,

values and orientation

If a firm is going to maximize its profitability, it must payclose attention to achieving

internal consistency among the various components of itsarchitecture.


6

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If a company is to maximize its profits, it

should pay attention to the internalconsistency between the various components

of the architecture

The architecturemust match the

strategy

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Superior enterprise profitability requires 3 conditions

An organizationsarchitecture must beinternally consistent.

Strategy and architecturemust be consistent.Strategy, architecture andcompetitive environmentsmust be consistent.

CONSISTENCY

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InternalArchitecture

Internal Consistency

Strategy

Consistency with the Strategy

Competitive DemandFrom the Market

Consistency with the Market

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OVERALL CONSISTENCY

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The various components of the architecture of theorganization are not independant from each other:

each component shapes and is shaped by othercomponents of the architecture

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Finally their is no use for a Strategy without having theLeader who has the capacity to change his organizations and adapt them

to the necessity of an ever changing world

It is not what you discover but what you dowith your discovery that is important

It is not what you think, but what you do withyour thinking that counts

It is not what you say, but what you do thatmakes a difference

11
http://executive.education.insead.edu/http://executive.education.insead.edu/

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Qu es ser un lder? Veamos

que nos dicen los especialistasde Harvard
http://www.youtube.com/watch?v=j8WRz3CxafE

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Leadership & Strategy

Work in pairs

After the Video Film

Lets discuss the role of Leadershipin the elaboration andimplementation of a strategy

Think out of the Box!!!

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1

Vertical Differentiation

Horizontal Differentiation

Mechanisms of Integration

Where is concentrated the decisionpower within the structure

How it is divided in sub-units

Integration Resources of the Subunits

2

3

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Dimensions of the Organizational Structure

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Centralization

Facilitates coordinationEnsure decisions consistentwith organizationsobjectivesTop-level managers havemeans to bring about

organizational changeAvoids duplication ofactivities

Decentralization

Give top management timeto focus on critical issuesMotivational research favorsdecentralizationPermits greater flexibilityCan result in better decisions

Can increase control

Where the decisions are made

Vertical Differentiation

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Horizontal Differentiation: Domestic Companies (1)

DomesticCompanies

The majority of hecompanies start operatingwith a formal & traditional

Structure

It is divided into major basicfunctions

The Top Executives manageand control

The majority develop intoProduct Divisions

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InternationalCentralize for core

competenciesDecentralize for

operating decisions

Multi-domestic

Decentralize

GlobalCentralize

TransnationalBoth Centralize& Decentralize

STRATEGIES & CENTRALIZATION

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When Companies initially expandsinternationally they gather into an

International Division

About 60 % of the companies eneteringinto an internationalization process use it

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HORIZONTAL DIFFERENTIATION = INTERNATIONALIZATION

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Global Structure by Areas

Low diversification & funcionalnational structure

Global Structure by ProductDivision

For diversified companies

Global Matrix StructureFor diversified companies

Facilitate local sensitivity but mayhave a negative influence on the

implementation policy as well thetraining curves

Better learning curve, but problemswith local sensitivity

Products & Areas to try dealing withboth limitations

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HORIZONTAL DIFFERENTIATION = INTERNATIONALIZATION

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Typically, the structureevolves in a companys

early stage.

Coordination and

control rests withtop management

THE FUNCIONAL STRUCTURE

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DepartmentPurchasing

DepartmentManufacturing

DepartmentMarketing

DepartmentFinance

Buying units Plants Branchsales units

Accountingunits

DivisionProduct line A

Headquarters

DivisionProduct line B

DivisionProduct line C

A TYPICAL PRODUCT DIVISION STRUCTURE

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Probable next stage of international business Development

Reflects company growth into new products

Easescoordinationand control

problems

Each unitresponsible fora product

Semi-autonomous

& accountable forits performance

PRODUCT DIVISION STRUCTURE

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International Division StructureDomestic DivisionGeneral Manager

Product Line A

International DivisionGeneral Manager

Area Line

Headquarters

Domestic DivisionGeneral Manager

Product Line B

Domestic DivisionGeneral Manager

Product Line C

Country 1General Manager

(Product A, B and/or C)

Country 2General Manager

(Product A, B and/or C)

Functional units

Functional units

INTERNATIONAL DIVISION STRUCTURE

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Widely used

Growth canlead toworldwidestructure

Can create conflictbetween domesticand foreign operations

Implied lack of

coordination betweendomestic and foreignoperations.

INTERNATIONAL DIVISION STRUCTURE

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Worldwide Area StructureFavored by firms with

low degree ofdiversification

The area is usuallya country, and

largelyautonomous

Facilitates localresponsiveness

Encouragesfragmentation

WORLDWIDE AREA STRUCTURE

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Regional VPEurope

Regional VPMiddle East/Africa

Regional VPFar East

Headquarters

Regional VPNorth America

Regional VPLatin American

PresidentSubsidiary1



WORLDWIDE AREA STRUCTURE

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WorldwideProduct Groupor Division A

WorldwideProduct Group

or Division C

Headquarters

WorldwideProduct Group

or Division B

Area 1(domestic)

Area 2(international)

Functional unitsFunctional units

WORLDWIDE PRODUCT DIVISION STRUCTURE

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O C S O

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Reasonablydiversified

firms

Attempts to overcomeinternational divisionand worldwide areastructural problems

Believe thatproduct value

creation activitiesshould be coordinated

worldwide

Weak localresponsiveness

IBUS 330 Dr. Nini Yang

PRODUCT DIVISION

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A GLOBAL MATRIX STRUCTURE

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Headquarters

Area 1 Area 2 Area 3

ProductDivision A

ProductDivision B

ProductDivision C

Manager here

belongs to DivisionB

and Area 2


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May not work as wellas theory predicts

Attempts to meetneeds of

transnational strategy

Conflict

and powerstruggles

Flexible matrixstructures

IBUS 330 Dr. Nini Yang


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INTEGRATING MECHANISMS

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Need for Coordination Impediments

Different managerial

orientationsDiffering goals

Time zones

DistanceNationality

Low

High

Multidomestic

International

Global

Transnational

INTEGRATING MECHANISMS

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Integration Mechanisms

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Integration Mechanisms

DIFFICULTIES OF COMMUNICATION

DomesticCompany

InternationalCompany

GlobalCompany

TransnationalCompany

Economies of localization & curve of experience

DISABILITIES

Different targets for each Area

Little respect for other functions

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FORMAL INTEGRATING MECHANISMS

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Increasing complexity of integrating mechanism

Direct contact

Liaison roles

Team spirit

Matrix structures

Low

High

FORMAL INTEGRATING MECHANISMS

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CONTROL SYSTEMS & INCENTIVES

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Types of controls

Personal

BureaucraticOutputCultural

Incentives

Depends on employee andhis/her tasks.Can be used to improve

managerial coordinationbetween units.Need to account for nationaldifferences in institutions and

culture.Beware of the rule ofunintended consequences

CONTROL SYSTEMS & INCENTIVES

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C l S

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Control Systems

Indicators to measure the performanceof subunits and evaluate the work of their

managers

Personel Management

Administrative Procedures,

Budgets

Performance Indicators

Cultural

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PERFORMANCE AMBIGUITY

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It is a function ofthe interdependenceamong subunits

MultinationalOutput/Bureaucratic

Global/TransnationalCultural

Control Systems

PERFORMANCE AMBIGUITY

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Interdependence, Performance Ambiguity, and the Costs of Control for theFour International Business Strategies

Strategy Inter-dependence

PerformanceAmbiguity

Costs of Control

Multi-domestic Low Low

International Moderate Moderate

Global High High

Transnational

Low

Moderate

High

Very high Very high Very high

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A Synthesis of Strategy, Structure and Control Systems

Multi-domestic International Global Transnational

Verticaldifferentiation

Decentralized Core competency;

rest decentralizedSomecentralized

Mixedcentralized anddecentralized

Horizontaldifferentiation

Worldwidearea

structure

Worldwide productdivision

WorldwideProductdivision

Informal

matrixNeed for

coordination Low Moderate High Very high

Integratingmechanisms None Few Many Very many

Performanceambiguity Low Moderate High Very high

Need forcultural controls Low Moderate High Very high

Structureand controls

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Incentives

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IncentivesMechanisms for rewarding results and

behaviors

Bonuses related toAchievements& Performance

Thinking out of the Box

Lets talk about Incentive ModelsHow to create wonderful places where to work?

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ORGANIZATIONAL CULTURE

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Values and norms shared among people

Sources :Founders and important leadersNational social cultureHistory of the enterpriseDecisions that result in high performance

Cultural maintenance :

Hiring and promotional practices

Reward strategiesSocialization processesCommunication strategy

ORGANIZATIONAL CULTURE

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ORGANIZATIONAL CULTURE & PERFORMANCE

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A strong culture :

Not always goodSometimes beneficial,

sometimes notContext is important

Adaptive cultures

Culture must match anorganizations architecture

Culture does not necessarilytranslate across borders

C u l t u r e

Transnational

Multidomestic

Global / International

Strong

Weak

ORGANIZATIONAL CULTURE & PERFORMANCE

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PROCESSES

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Cut across nationalboundaries as well as

organizational boundariesCan be developed anywherewithin the firms global

operations network

PROCESSES

The manner in which decisions are made and work is performedwithin an organization

Basic skills or corecompetences are oftenprocess-integrated

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ORGANIZATIONAL CHANGES

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Change to match competitive and strategyenvironment

Hard to changeExisting distribution of power and influenceCurrent culture

Managers preconceptions about the appropriate businessmodel or paradigmInstitutional constraints

Principles for changeUnfreeze the organizationMoving to the new stateRefreezing the organization

ORGANIZATIONAL CHANGES

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IMPLICATIONS

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An organizations architecture should be consistent

internally and externally.The consistencies are critical to organizationalperformance and profitability.Organizational architecture should be flexible andadapt according to organizational strategy, growth,the external changing environment.Changes may face resistance, and managers need

to learn principle methods in order to launch andimplement necessary changes successfully.

IMPLICATIONS

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Facultad de Negocios UPC

Conclusiones

Cules son los 5 elementos de unaarquitectura organizacional?

Si hablamos de Estrategia, Estructura ySistemas de Control enMultinacionales..deben los sistemas estarimplementados en un site o plataforma

electrnica? Conoces alguno?

dni _10 2013

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