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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
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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
Organizational Architecture
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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.
Organizational Architecture
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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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Organizational 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
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http://executive.education.insead.edu/http://executive.education.insead.edu/8/13/2019 DNI _10 2013
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Qu es ser un lder? Veamos
que nos dicen los especialistasde Harvard
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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
PresidentSubsidiary2
PresidentSubsidiary3
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
A GLOBAL MATRIX STRUCTURE
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A GLOBAL MATRIX STRUCTURE
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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
A GLOBAL MATRIX STRUCTURE
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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?