Agenda

Semana 10

Estrategia Internacional y Formas de organizacin Debate: Liderazgo y estrategia internacional Estrategia, Estructura, Sistemas de control Conclusiones

Logro
El alumno explica las formas de organizacin , sistemas de control y mecanismos de integracin disponibles para las empresas multinacionales.
Facultad de Negocios, UPC Carrera de Administracin y Negocios Internacionales 1

Nuestro Mapa de Direccin

El Entorno Global
Globalizacin vs Internacionalizacin The World is Flat Estrategias de Internacionalizacin Factores para el comercio y la inversin, Las Multinacionales. Joint ventures, Alianzas Estratgicas, IED Plan de Marketing Internacional

Planeamiento y Estrategias de Internacionalizacin

Entry Modes + Estrategia Marketing Internacional Organizacin y Control de Operaciones Empresa Internacional

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

Facultad de Negocios, UPC Carrera de Administracin y Marketing

Check List of the CEO

1. To Define and identify different forms of the organizational architecture that international businesses use to manage their global operations.
2. To Explore the various components of the architecture

3. To describe the control systems and integrating mechanism available to multinational firms 4. To evaluate the advantages and disadvantages of centralized versus decentralized decision systems 5. To look at ways to match architecture and competitive strategy to achieve high performance

Organizational Architecture
Organizational architecture is the totality of a firms organization, including

Structure

Controls & Incentives

People

Processes

Culture
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Organizational Architecture

Control systems
Metrics used to measure subunit performance Make judgments about managers abilities to run units
Incentives are devices to reward appropriate managerial behavior.

Processes
Manner in which decisions are made Manner in which work is performed
Conceptually distinct from location of decisionmaking responsibility

Organizational Architecture
Culture
Norms and value systems shared by the emoloyees within the same organizational structure

People
Not just current employees, but also the strategy to recruit, compensate, and retain individuals with necessary skills, values and orientation

If a firm is going to maximize its profitability, it must pay close attention to achieving internal consistency among the various components of its architecture.
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CONSISTENCY
If a company is to maximize its profits, it should pay attention to the internal consistency between the various components of the architecture
Superior enterprise profitability requires 3 conditions
An organizations architecture must be internally consistent. Strategy and architecture must be consistent. Strategy, architecture and competitive environments must be consistent.
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The architecture must match the strategy

Strategy & Architecture

The strategy is implemented through the architecture of the organization
Changing the architecture is much more difficult than announcing a change in the strategy

OVERALL CONSISTENCY
Consistency with the Market
Consistency with the Strategy Internal Consistency

Internal Architecture

Competitive Demand From the Market

Strategy

Organizational Architecture
The various components of the architecture of the organization are not independant from each other: each component shapes and is shaped by other components of the architecture

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Finally their is no use for a Strategy without having the Leader 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 do with your discovery that is important
It is not what you think, but what you do with your thinking that counts

It is not what you say, but what you do that makes a difference

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Qu es ser un lder? Veamos que nos dicen los especialistas de Harvard

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Leadership & Strategy

Think out of the Box!!!

Work in pairs

After the Video Film

Lets discuss the role of Leadership in the elaboration and implementation of a strategy

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Dimensions of the Organizational Structure

Vertical Differentiation 1 Where is concentrated the decision power within the structure Horizontal Differentiation

How it is divided in sub-units Mechanisms of Integration

Integration Resources of the Subunits

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Vertical Differentiation Where the decisions are made Centralization

Facilitates coordination Ensure decisions consistent with organizations objectives Top-level managers have means to bring about organizational change Avoids duplication of activities

Decentralization
Give top management time to focus on critical issues Motivational research favors decentralization Permits greater flexibility Can result in better decisions Can increase control

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Horizontal Differentiation: Domestic Companies

The majority of he companies start operating with a formal & traditional Structure

(1)

Domestic Companies

It is divided into major basic functions

The Top Executives manage and control

The majority develop into Product Divisions

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STRATEGIES & CENTRALIZATION

Global
Centralize

Transnational
Both Centralize & Decentralize

International
Centralize for core competencies Decentralize for operating decisions

Multi-domestic
Decentralize

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HORIZONTAL DIFFERENTIATION

Function

A firm must reconcile conflict between product and location

How a firm divides itself into subunits

Type of business Geographical area

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HORIZONTAL DIFFERENTIATION = INTERNATIONALIZATION

When Companies initially expands internationally they gather into an International Division

About 60 % of the companies enetering into an internationalization process use it

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HORIZONTAL DIFFERENTIATION = INTERNATIONALIZATION

Global Structure by Areas

Low diversification & funcional national structure

Facilitate local sensitivity but may have a negative influence on the implementation policy as well the training curves

Global Structure by Product Division

For diversified companies

Better learning curve, but problems with local sensitivity

Global Matrix Structure

For diversified companies

Products & Areas to try dealing with both limitations

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THE FUNCIONAL STRUCTURE

Typically, the structure evolves in a companys early stage.

Coordination and control rests with top management

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A TYPICAL FUNCIONAL STRUCTURE

Top Management

Purchasing

Manufacturing

Marketing

Finance

Buying units

Plants

Branch sales units

Accounting units

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A TYPICAL PRODUCT DIVISION STRUCTURE

Headquarters
Division Product line A Division Product line B Division Product line C

Department Purchasing

Department Manufacturing

Department Marketing

Department Finance

Buying units

Plants

Branch sales units

Accounting units
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PRODUCT DIVISION STRUCTURE

Probable next stage of international business Development Reflects company growth into new products

Each unit responsible for a product

Semi-autonomous & accountable for its performance

Eases coordination and control problems

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INTERNATIONAL DIVISION STRUCTURE

Headquarters
International Division Structure
Domestic Division General Manager Product Line A Domestic Division General Manager Product Line B Domestic Division General Manager Product Line C International Division General Manager

Area Line

Functional units
Country 1 General Manager (Product A, B and/or C) Country 2 General Manager (Product A, B and/or C)

Functional units
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INTERNATIONAL DIVISION STRUCTURE

Widely used

Can create conflict between domestic and foreign operations

Implied lack of coordination between domestic and foreign operations.

Growth can lead to worldwide structure

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WORLDWIDE AREA STRUCTURE

Favored by firms with low degree of diversification

Worldwide Area Structure

The area is usually a country, and largely autonomous

Encourages fragmentation

Facilitates local responsiveness

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WORLDWIDE AREA STRUCTURE

Headquarters
Regional VP North America Regional VP Europe Regional VP Far East

Regional VP Latin American

President Subsidiary 1

Regional VP Middle East/Africa

President Subsidiary 2 President Subsidiary 3

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WORLDWIDE PRODUCT DIVISION STRUCTURE

Headquarters
Worldwide Product Group or Division A

Worldwide Product Group or Division B

Worldwide Product Group or Division C

Area 1 (domestic)

Area 2 (international)

Functional units

Functional units

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PRODUCT DIVISION

Reasonably diversified firms

Attempts to overcome international division and worldwide area structural problems

Weak local responsiveness

Believe that product value creation activities should be coordinated worldwide

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IBUS 330 Dr. Nini Yang

A GLOBAL MATRIX STRUCTURE

Headquarters

Area 1 Product Division A Product Division B Product Division C

Manager here belongs to Division B and Area 2

Area 2

Area 3

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A GLOBAL MATRIX STRUCTURE

Attempts to meet needs of transnational strategy

May not work as well as theory predicts

Flexible matrix structures

Conflict and power struggles

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IBUS 330 Dr. Nini Yang

INTEGRATING MECHANISMS

Need for Coordination

Transnational
Global International

Impediments
Different managerial orientations Differing goals Time zones

High

Multidomestic

Low

Distance
Nationality
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Integration Mechanisms
DIFFICULTIES OF COMMUNICATION

Domestic Company

International Company

Global Company

Transnational Company

Economies of localization & curve of experience

DISABILITIES

Different targets for each Area

Little respect for other functions

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FORMAL INTEGRATING MECHANISMS

Low

Direct contact Liaison roles Team spirit Matrix structures

High

Increasing complexity of integrating mechanism

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Informal Mechanism of Communication

Knowledge network based on an organizationl structure which enhances team work & cross cooperation

Companies may encourage the creation of such networks

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CONTROL SYSTEMS & INCENTIVES

Incentives

Types of controls
Personal Bureaucratic Output Cultural

Depends on employee and his/her tasks. Can be used to improve managerial coordination between units. Need to account for national differences in institutions and culture. Beware of the rule of unintended consequences
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Control Systems
Indicators to measure the performance
of subunits and evaluate the work of their managers
Personel Management
Administrative Procedures, Budgets Performance Indicators Cultural
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PERFORMANCE AMBIGUITY

It is a function of the interdependence among subunits

Control Systems

Multinational Output/Bureaucratic

Global/Transnational Cultural

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

Strategy
Multi-domestic
International Global Transnational

Interdependence
Low Moderate High

Performance Ambiguity
Low Moderate High Very high

Costs of Control
Low Moderate High Very high

Very high

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A Synthesis of Strategy, Structure and Control Systems

Structure and controls
Vertical differentiation Horizontal differentiation Need for coordination Integrating mechanisms

Multidomestic
Decentralized

International
Core competency; rest decentralized

Global
Some centralized Worldwide Product division High Many High

Transnational
Mixed centralized and decentralized Informal matrix Very high Very many Very high

Worldwide area structure Low None Low

Worldwide product division

Moderate Few Moderate

Performance ambiguity
Need for cultural controls

Low

Moderate

High

Very high
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Incentives
Mechanisms for rewarding results and behaviors
Bonuses related to Achievements & Performance

Thinking out of the Box Lets talk about Incentive Models How to create wonderful places where to work?
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ORGANIZATIONAL CULTURE

Values and norms shared among people Sources:

Founders and important leaders National social culture History of the enterprise Decisions that result in high performance

Cultural maintenance:
Hiring and promotional practices Reward strategies Socialization processes Communication strategy
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ORGANIZATIONAL CULTURE & PERFORMANCE

A strong culture:
Not always good Sometimes beneficial, sometimes not Context is important

Culture must match an organizations architecture Culture does not necessarily translate across borders

Adaptive cultures

Strong

Transnational

Culture
Weak

Global / International Multidomestic

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PROCESSES The manner in which decisions are made and work is performed within an organization

Cut across national boundaries as well as organizational boundaries Can be developed anywhere within the firms global operations network

Basic skills or core competences are often process-integrated

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ORGANIZATIONAL CHANGES

Change to match competitive and strategy environment Hard to change

Existing distribution of power and influence Current culture Managers preconceptions about the appropriate business model or paradigm Institutional constraints

Principles for change

Unfreeze the organization Moving to the new state Refreezing the organization
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IMPLICATIONS

An organizations architecture should be consistent internally and externally. The consistencies are critical to organizational performance and profitability. Organizational architecture should be flexible and adapt according to organizational strategy, growth, the external changing environment. Changes may face resistance, and managers need to learn principle methods in order to launch and implement necessary changes successfully.

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Conclusiones
Cules son los 5 elementos de una arquitectura organizacional? Si hablamos de Estrategia, Estructura y Sistemas de Control en Multinacionales..deben los sistemas estar implementados en un site o plataforma electrnica? Conoces alguno?

Facultad de Negocios, UPC Carrera de Administracin y Negocios Internacionales 48