organization of the multinational firm vk int. unternehmensführung ss 2005 elmar kiesling, 0008665...

Organization of the Multinational Firm

VK Int. Unternehmensführung SS 2005

Elmar Kiesling, 0008665Irmgard Krebner, 9804601

Padmini Ranawat, 9905070


Outline

1. Introduction2. Structural Designs for Global Operations3. Home-based vs. heterarchical MNC4. Multidivisional & Network Form (M&N)5. The Transnational form6. Case Study: Acer7. A glimpse at the future: 2 scenarios8. Discussion

Introduction Structural Designs Home/heterarchical M&N Transnational form ScenariosCase Study


Global trends and developments

• Intense competition among developed countries

• Increasing competition through newly industrialized Asian countries

• Shift towards market economies (e.g. Eastern Europe, China)

• Power blocks (e.g. European Union, Yen-Block, NAFTA)



Today´s Challenges

To enable organizations to compete effectively in this global environment MNC´s have to:

• be at least as good as a local firm providing similar products or services

• approach new organization design possibilities



Stages of International Development

Domestic

International

Multinational

Global



International corporate structure model

Global Transnational

MultidomesticInternational

explorer

need for localization

Low High

High

Economies of global standard-

ization and size



Structural Designs for Global Operations

Global product structure

• Product divisions responsible for global operations

• Uses globally based advantages• Overlook of locally advantages

Geographic area structure

• Each region has functional activities

• Exploits local advantages

CEO

EuropeanDivision

AmericanDivision

Asian Division

CentralStaffs

CEO

President

Brand A Brand CBrand B

CentralStaffs




Matrix structure

• balances global product and local market concerns

• Problems: - complexity- dual reporting structure- confusion over responsibility and decision making

• Solution: 3 C’s- clarity of firm’s basic objectives- continuity in commitment to those objectives

- consistency in the work of divisions together




Horizontal organization

• Structured around workflows and processes

• Flat vertical hierarchy

• Management tasks delegated to lowest level

• Customer-driven

ProcessCoordinator

ProcessCoordinator

ProcessCoordinators

Team Team

TeamTeam

TeamTeam

Logistics Process

Order Fulfillment Process

Product Development Process

Management



Horizontal organization structure

Decision making:

• lateral decision processes direct contact, temporary task forces, self-directed teams, …

• horizontal network flexible responding to external changes

• common decision premises shared set of values



Horizontal organization structure

Differentiation from matrix structure:• Coordination more mixed and flexible• Internal flexible processes link system elements• Latterly resolution of conflicts

Advantages:

• Simultaneously achieving global and local advantages• reduced barriers among departments

Problems:• Time intensive coordination of decisions• „Being stuck in the middle“



Home-based vs. heterarchical MNC

1. Home-based: • Core functions (strategic decision making,

R&D etc.) in a limited geographic area • Links to

- other firms- local research and education facilities- governmental bodies

2. Heterarchical:• many centers of different kinds• combining diverse technologies worldwide



Home-based MNC

1. „Simple“ home-based MNC• Home base of all businesses in home country

2. Selective tapping• Core technology in home base• Selective tapping of international

environment for support

3. Multi-home-based MNC• Separate bases for individual lines of

businesses• Often connected to mergers and acquisitions



Heterarchical MNC

• Many centers: traditional HQ functions geographically dispersed

• Holographic structure: information stored in each part of the organization

• Interdependencies: tasks of any unit complexly related to the tasks of other units

• „firm as a brain“: thinking not only restricted to one exclusive center, but goes in whole enterprise => global competitive advantage



Multidivisional & Network Form (M&N)

Contrasts between the multidivisional and the network :

Multidivisional Network

Dividing things Combining things

permanent structures (departments)

Temporary groupings (teams)

coordination through managers delegation to lower levels

vertical communication lateral dialogueSenior managers as monitors and resource allocators

senior managers as technical, human and knowledge catalysts

Development diversifying into separate organizational units.

development combining rich areas of knolewdge



The Transnational form

• Network form:philosophy of responsiveness, flexibility and ability to learn of a MNC in a borderless world

• Objective: respond to the MNC´s central dilemma of having to be globally integrated but locally responsive at the same time

Global form

Transnational form

Multidomestic form



The Transnational form

Asymmetrical organizational form:

• Multilateral communications between all levels and layers

• Resources, responsibilities and decision-making dispersed across all types of units



Case Study: Acer Group

• Taiwanese company founded 1979

• PC and computer component manufacturer

• 1992: „global brand, local touch“ • First corporate re-engineering• Decentralized its organization towards network structure



Client-server organization (1994)

Acer GroupChairman and CEO

Acer America Acer Inc.

Acer Europe Acer Peripherals

Acer Latin America TI-Acer

Acer Sertec Acer Labs

RegionalBusiness Units

StrategicBusiness Units


RBUs SBUs


Restructuring 1997-1998

• External challenges:• Direct vendors, price cuts of market leaders• New price war (sub-$1000 PCs)

• Internal problems:• Service and support• Serious coordination problems• Redundant functions• Duplicate investments • Inefficient use of enterprise resources.• Lack of IT infrastructure• No common information system



Organizational structure 1998


Special Teams- IT- Logistics- Brand Mgmnt- Customer Services

CorporateFunctions

InternationalServices Group

Sales & ServiceGroup

SemiconductorGroup

InformationProduct Group

PeripheralsGroup


1997-98: simplification of organization structure restructuring into 5 core businesses:


Organizat. structure since 2001


High TrustTechnology

ServicesTWP Acer Inc.

Sertek WeblinkApacer

• Flexible, cell based organization structure• Interaction of semi-autonomous firms



A glimpse at the future: 2 scenarios for 2015

• Elaborated by MIT Scenario Working Group between 1994 and 1997

• Main focus: size of companies

Two extreme scenarios for 2015:1. Small companies, large networks

nearly every task is performed by autonomous teams

2. Virtual countriesdominance of keiretsu-style alliances



1. Small companies, large networks

• Linked by fluid networks• Temporary combinations for each project• Importance of electronic markets• Rapid innovation in dynamically changing

markets

e.g. radical outsourcing in producing athletic shoes, computer displays and software

Autonomous and self-organizing teams of 1-10



1. Small companies, large networks

Stable communities providing:• health insurance• protection against unemployment and income

fluctuation• professional development• sense of belonging

Comparable to guilds of pre-industrial times

e.g. guilds in film industry



2. Virtual countries

• Providing job-security, health care etc.• Pervasive role of firms in employees‘ lives• Employee ownership of firms• Employee selection of firm management• Oligopolistic structure in most sectors• Minimal national allegiance

e.g. Merger wave

Large vertically- and horizontally-integrated firms each with operating companies in

almost every industry


Discussion

Thank you for your attention!


References

• Daft, R. (1998), Organization Theory and Design, Chicago, Chap. 7.

• White, R. E., T. A. Poynter (1991), Organizing for World-wide Advantage, in: C. A. Bartlett, Y. Doz, G. Hedlund (eds.), Managing the Global Firm, London, 95- 113.

• Söllvell, Zander (1995) Organization of the Dynamic Multinational Enterprise, Int. Studies of Organization and Mangement, 25. 17 - 38.

• Segal-Horn & Falkner (1999), The Dynamics of International Strategy, Ch. 9.

• Laubacher, R. J., T. W. Malone (1999), Two Szenarios for 21st Century Organizations: Shifting Networks of Small Firms or All-Encompassing ‚Virtual Countries‘, Working Paper, MIT.

• Dedrick, J., K. L. Kraemer, T. Tsal (1999), Acer: an IT company learning to use Information Technology to compete, Center for research on IT and organization, University of California

organization of the multinational firm vk int. unternehmensführung ss 2005 elmar kiesling, 0008665...

Documents

multinational firm vk

local firm

international customer

structure model global

global environment mncs

local needs

market economies

based advantages