international organization design and control international business, 5th edition chapter 14 Chapter Objectives • Define and discuss the nature of international organization design and identify and describe the initial impacts of international business activity on organization design • Identify and describe five advanced forms of international organization design and discuss hybrid global designs 14-2 Chapter Objectives • Identify and describe related issues in global organization design • Explain the general purpose of control and the levels of control in international business • Describe how international firms manage the control function 14-3 Organization Design Organization design (or organization structure) is the overall pattern of structural components and configurations used to manage the total organization 14-4 Factors Affecting Design Country culture Environment Strategy Technology 14-5 Size Functions of Firm Design • Allocates organizational resources • Assigns tasks to its employees • Informs employees about firm’s rules, procedures, and expectations • Collects and transmits information 14-6 Types of Knowledge Affecting Design Area knowledge Product knowledge Functional knowledge 14-7 Forms of Global Organization Design Product 14-8 Matrix Area Customer Functional Managerial Philosophies Affecting Design Ethnocentric Polycentric 14-9 Geocentric Global Product Design The global product design assigns worldwide responsibility for specific products or product groups to separate operating divisions within a firm 14-10 Global Functional Design Advantages Disadvantages • Transference of expertise • Practical only when firm has few products or customers • Highly centralized control • Focused attention of key functions 14-19 • Coordination difficult • Duplication of resources Global Customer Design The global customer design is used when a firm serves different customers or customer groups, each with specific needs calling for special expertise or attention 14-20 Figure 14.4 Eastman Kodak’s Global Customer Design 14-21 Global Matrix Design A global matrix design, the most complex of designs, is the result of superimposing one form of organization design on top of an existing, different form 14-22 Global Matrix Design Advantages Disadvantages • Brings together the functional area and product expertise • Appropriate for firms with many products and unstable environments • Promotes organizational flexibility • Provides access to all advantages of other designs 14-23 • Employees accountable to multiple supervisors • Decisions may take longer Figure 14.5 A Global Matrix Design 14-24 Global Hybrid Design Most firms create a hybrid design, rather than pure design, that best suits their purposes, given the firms’ size, strategy, technology, environment, and culture, and blends elements of all the designs discussed 14-25 Figure 14.6 Nissan’s Hybrid Design 14-26 Coordination Coordination is the process of linking and integrating functions and activities of different groups, units, or divisions 14-27 Control Control is the process of monitoring ongoing performance and making necessary changes to keep the organization moving toward its performance goals 14-28 Control Function • Process of monitoring ongoing performance and making necessary changes to keep the organization moving toward its performance goals • Three levels – Strategic – Organizational – Operations 14-29 Figure 14.7 Levels of International Control 14-30 Figure 14.8 Steps in International Control 14-31 Essential Control Techniques Accounting systems Procedures Performance ratios 14-32 Reasons for Resistance to Control Overcontrol Inappropriately focused control Increased accountability 14-33 ... levels – Strategic – Organizational – Operations 14- 29 Figure 14. 7 Levels of International Control 14- 30 Figure 14. 8 Steps in International Control 14- 31 ... general purpose of control and the levels of control in international business • Describe how international firms manage the control function 14- 3 Organization Design Organization design (or organization... organizes the firm’s activities around specific areas or regions of the world 14- 14 Figure 14. 2 Global Area Design 14- 15 Disadvantages of Global Area Design • Firm may sacrifice cost efficiencies