IAF 605 - International Business Management

Week 12

The Organization of International Business

Reminder

Agenda

Infosys case

Organizational Structures

break

Coordination and Control Systems

Organizational Culture and Strategy

Questions

Consider the options presented in the chapter regarding structural design, coordination and control, and corporate culture. Please profile the interplay among these within Infosys.

What do you think was the key event in the organizational evolution of Infosys? What do you think the Infosys organization will look like in 2015?

Can Infosys continue its historic growth in sales and employees and still retain its founding values? What approaches and tools would you recommend to do so?

What organizational problems do you think prove troublesome to executives at Infosys?

Given what you have read, do you think you would like to work for Infosys? Why or why not?

Profile the evolving understanding of

organizing a company for international

business

Describe the antecedents and

features of traditional structures

Describe the antecedents and

features of contemporary

structures

Study the systems used to coordinate and

control international activities

Profile the role and characteristics of

organization culture

Link the ideas of strategy and

organization in the international company

Chapter Objectives

Vertical Differentiation - the matter of how the company balances centralization versus decentralization of decision making

Centralization

• the degree to which high-level managers, usually above the country level, make strategic decisions and pass them to lower levels for implementation.

Decentralization

• the degree to which lower-level managers, usually at or below the country level, make and implement strategic decisions.

Decision making

• should occur at the level of the people who are most directly affected and have the most intimate knowledge about the problem.

Horizontal Differentiation - describes how the company designs its formal structure to perform three functions

Specify the total set of organizational tasks

Divide those tasks into jobs, departments, subsidiaries, and

divisions so the work gets done

Assign authority and authority relationships to make sure work gets

done in ways that support the company’s

strategy

See Table 15.1

page 562

Functional structure

International division structure

Product division structure

Geographic (area) division structure

Matrix division structure

Contemporary structures, like the network or virtual formats, arrange work roles, responsibilities, and relationships in ways that eliminate the horizontal, vertical, or external boundaries that block

the development of knowledge-generating and decision-making relationships

Source: http://www.flickr.com/photos/greg_scales/

Simplified Network Structure (p570) – core competencies stay in-house – everything else is outsourced

Image source: http://www.itechnews.net

Virtual Organization

Coordination and Control Systems

to prevent duplication of efforts

to ensure that headquarters managers do not withhold the best resources from the international operations

to include insights from anywhere in the organization

Source: http://www.flickr.com/photos/eschipul/

Coordination can take place via standardization, plan, and mutual adjustment

stan

dar

diz

atio

n sets universal rules and procedures that apply to units worldwide

enforces consistency in performance of activities in geographically dispersed units

pla

n requires interdependent units to meet common deadlines and objectives

mu

tual

ad

just

men

t requires managers to interact personally with counterparts (frequently)

Companies exercise control through:

• uses external market mechanisms to establish objective standards.

Market control

• emphasizes organizational authority and relies on rules and regulations.

Bureaucratic control

• uses shared values and ideals to moderate employee behavior.

Clan control

Source: http://www.flickr.com/photos/agroove/

Control Mechanisms

Reports

Visits to Subsidiaries

Cost and Accounting Comparisons

Evaluation Measurements

Information Systems

Organization Culture

The set of fundamental assumptions about the organization and its goals and practices that members of the company share

A system of shared values about what is important and beliefs about how the world works.

Importance of Culture - often shapes the strategic moves it considers.

Key features of a company’s organization

culture include:

• Values and principles of management.

• Work climate and atmosphere.

• Patterns of “how we do things around here.”

• Traditions.

• Ethical standards.

Challenges and Pitfalls

Managers from different countries often have values that differ from those endorsed by the company

People in an MNE often have slight exposure to the values held by senior managers

Evidence suggests that mixing national cultures on teams does not necessarily improve performance

Strategy and Organizational Culture in International Business (p581)

Homework

review Chapter 15

do quiz (Blackboard)

read Chapter 20 – Human Resources Management

read: Tel-Comm-Tek (TCT) p783-787