Reminders

1. Acme & Omega revisions due Monday. 2. Rhodes Industries Case due Monday. 3. Please leave your mid-term course evaluations with me at your convenience.

Designing Organizations for The International Environment

BA 152

The International Environment

Government/Political Sector

PRIMARY SECTORS
Human Resources

Organization
THROUGHPUT

Financial Resources INPUT

Material Resources Economic Sector

Industry/ Competition

OUTPUT

Customers Cultural/ Demographic Sector

Technology

SECONDARY SECTORS

Why Enter the Global Environment

Growth opportunities Economies of scale Economies of scope Move expensive operations to lower cost locations outsourcing Others?

Stages of International Development

Domestic with modest global efforts

International

Aware of an export market (might have an Export Department)

Multi-domestic thinking - views issues as independent across countries (might have an International Division)

Stages of International Development

Multinational

Global

Marketing and manufacturing facilities are located around the world. Goods and services are produced to meet the needs of the global market. (stateless company)

Fitting Design & International Strategy

Globalization Strategy
Product design, manufacturing, and/or advertising strategies are standardized for world markets.

Fitting Design & International Strategy

Multi-domestic Strategy
Competition in each country is assumed to be independent of competition in other countries. Product design, manufacturing, and/or advertising strategies are tailored to each country.

Fitting Design & International Strategy

Design Choices will be a function of these two competing demands.

Forces for global integration Forces for national responsiveness

Fitting Design & International Strategy

High
Forces for Global Integration

Global Product Structure

Transnational Model

Global Matrix Structure

International Division Global Geographic Structure

Low

Low Forces for National Responsiveness High

A Hybrid Organization
with an International Division
President

Personnel

Finance & Accounting

Vice-President Electrical Products

Vice-President Scientific Products

Vice-President Medical Products

Vice-President International Ops.

Europe Asia

Partial Global Structure use by Eaton Corp.

CEO Legal Relations Engineering President F&A International

Global Instruments Global Industrial Product Group Group

Global Materials Handling Group

Regional Coordinators

Colgate-Palmolives Global Geographic Structure

CEO International Business Development Worldwide
Sales & Marketing

Corporate Staff

Corporate Development

Chief Operating Officer

North America

Europe

Latin America

Far East

South Pacific

GMs Global Geographic Structure

CEO

US Australia South Korea Sweden German Division Division Division Division Division

GMs Global Geographic Structure: The Problems

Reversing 80 Years of History GM Is Reining In Global Fiefs Detroit Makes Key Decisions on Design, Manufacturing To Cut Costly Duplication Chinese Build a Chevy Engine
General Motors Corp. is the biggest car company in the world. But in many parts of the globe it has long operated like a smaller regional player, with executives in places like Australia and Sweden given wide autonomy over the design of new models. Now GM has put an end to that policy, which dates back to the 1920s and legendary president Alfred P. Sloan. It's insisting that its world-wide units share basic parts and work together to design vehicles that can be sold, with modest variations, anywhere in the globe. One example: GM wants to reduce the types of radios it uses in its cars to 50 from 270 currently, saving 40% in radio costs. GM's struggle to find the balance between local autonomy and central control is a familiar one for global corporations. Mr. Wagoner says he wants GM to be the winner in what he calls "a race to the middle" in the centralization vs. decentralization debate.

ABBs Global Matrix Structure

International Executive Committee Business Areas Germany Latin American

Country Managers
Canadian Far East

Power Transformers
Transportation Products High Voltage Towers Other Business Areas

The Transnational Model: Philips NV

The Transnational Model

Highly specialized operations dispersed worldwide and linked through interdependent relationships. Structure is flexible and changeable as needed.

The Transnational Model

Local managers can initiate strategic changes that may infiltrate the rest of the organization. Coordination is largely a function of strong culture, shared vision and values, and management style.

The Downside Risks of the Global Environment

Western business plans may not translate well. (Wal-Mart/Disney) Backlash in the home market. Exposure to foreign laws and regulations Political instability Others?

Next Time

Rhodes Industries