Note for IBA 350 with Professor Turner at UA-Intro World Business (6)
Note for IBA 350 with Professor Turner at UA-Intro World Business (6)
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This 3 page Class Notes was uploaded by an elite notetaker on Friday February 6, 2015. The Class Notes belongs to a course at University of Alabama - Tuscaloosa taught by a professor in Fall. Since its upload, it has received 74 views.
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Date Created: 02/06/15
CHAPTER THIRTEEN REVIEW MATERIALS A company s organizational structure helps to determine where formal power and authority will be located within the organization Organizational Structure refers to the wav that an organization forrnallv arranges its various domestic and international units and activities and the relationships among these various organizational components The structure of an international organization is constantly evolving over time especially as the international business increases and foreign markets are added Moreover this structural evolution is managed by senior management Organizational structure deals with how an international business should be organized in order to ensure that its worldwide business activities are intergrated Organizational Design is a process that deals with how an international business should be organized in order to ensure that its worldwide business activities are able to be integrated in an ef cient and effective manner Organizational design 1 must consider the size of an organization and the complexity of its business operations and 2 must be able to evolve over time in order to enable the organization to respond to change There are four primary dimensions that need to be considered when desi ing the structure of an international company including 1 product and technical expertise 2 geographic expertise 3 customer expertise and 4 functional expertise Indeed most companies establish worldwide organizations based on product region function or customer classes Two major concerns that management faces in designing the organizational structure for an international company are 1 finding the most effective way to departmentalize to take advantage of the ef ciencies gained from the specialization of labor and 2 coordinating the activities of those departments to enable the firm to meet its overall objectives Note Changes in an international company s strategy may require changes in the organization but the reverse is also true For example a new CE 0 joining a firm or a new company may be acquired and this will require change of the strategy As firms grow they will do importing and exporting then they might invest some in another country so they set up an International Division This group reports to the CEO not the domestic organization and is responsible for all non home country business As companies grow even more they will go from the International Division eliminate it to a worldwide organization based on product function customer class or regional geographic area Eventually they will evolve to a Global Matrix Indeed to simplify this a typical evolutionary path for an international company s structure is from international division to worldwide product division to global matrix or from international division to worldwide geographic regions to global matrix Global Product formorganization The product global corporate form tends to duplicate product and area specialists so headcount sometimes grows too much The use of a global product organizational structure frequently represents a return to pre exp01t depaItment times and this structure has product divisions responsible for the worldwide operations such as marketing and production of products under their control Again this can lead to an increased headcount situation The regionalized organizational structure is normally more popular with companies that manufacture products with a rather low technological content Note Both multinational and GLOBAL companies use regionalized organizational structures often The main disadvantage of a large international company being organized along regional lines is that each region must have its own product and functional specialists This adds headcount Global firms that organize along functional lines at the top level have functional managers that report directly to the CEO Hybrid Organizational Structure An organizational structure organized by more than one dimension at the top level Note Such organizations are often the result of a regionally organized company having introduced a new and different product from what the regionally organized form is accustomed to handling and senior management feels it can best be handled by a worldwide product division A hybrid organization may result also from the company acquiring a company with distinct products and distribution channels Matrix organization This style of organization has evolved from management s attempt to mesh product and regional and functional expeItise while maintaining clear lines of authority In a typical matrix organization based on area and product dimensions the country managers will be responsible to BOTH the area managers and the product line managers The main problem with a matrix organization is that often two or three managers must agree on a decision This can often be difficult Hence a Matrix Overlay organizational form has evolved so that some of the decision making process can be simpli ed However decision making can still be slowed by the complicated structure Strateg39c Business Units gSBUs A business entity with a clearly defmed market the ability to carry out business mission and a size appropriate for control by a single manager eg A SBU is an organizational form in which product divisions are de ned as th ongh they were independent businesses Virtual Corporation An organization that coordinates economic activity to deliver value to customers using resources outside the traditional boundaries of the organization Outsourcing is an example of utilizing expeItise that the company just does not have A Virtual Corporation is also called a Network organization Subsidiaries Companies controlled by other companies through ownership of enough voting stock to elect Boards of Directors Affiliates A term sometimes used interchangeably with subsidiaries but more forms exist than just stock ownership In large international companies that have affiliatessubsidialies decisions are made at either the IC headquarters or at the af liatesubsidiary level Also some decisions are made jointly The larger and older the international company the more decisions that are often made at headquarters Yet this depends on the corporation and the corporate management culture In larger ICs senior executives are often moved around to different afflliatessubsidialies to gain experience and increase con dence and mutual reliance Reengineering Many large ICs see a need for frequent reorganization in order to cut costs and to be more efficient Reengineering is normally a task to significantly reduce middle management personnel and to empower employees to make more decisions Control is very important in large ICs and their affiliatessubsidialies The types of information that an IC needs to have reported by subsidiaries include 1 financial and technological 2 market opp01tunities and 3 political and economic events Every successful company uses CONTROLS to put its plans into effect evaluate correct and reward individuals
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