Chapitre 14

Question 1

organizational architecture

Answer 1

all aspects of a firm organization; organizational structure, control system, incentives, processes, people and organizational culture.

Question 2

organizational structure

(3 components)

Answer 2

1) horizontal differentiation: formal division of organization into sub-units ex; production division, national operation, function
2) vertical differentiation: location of decision making Ex: decentralized/centralized
3) integrating mechanisms: coordinate sub-units, cross-functional and pam-regional teams

Question 3

centralization

Answer 3

Decisions are in the hands of upper-level managers, fewer people make important decisions

Question 4

pros of centralization

(4)

Answer 4

1. Facilitates coordination and integration of operations.
2. Helps ensure that decisions are consistent with
   organizational objectives.
3. Gives top-level managers the means to bring change.
4. Avoids the duplication of activities that occurs when
   similar activities are carried on by various subunits.

Question 5

what is Typically centralized:

Answer 5

overall firm strategy, major financial
expenditures, financial objectives, and legal issues.

Question 6

what is decentralization

Answer 6

Decisions are in the hands of micro-level/subunit managers, more people make important decisions

Question 7

pros of decentralization

(5)

Answer 7

1. time savings for top manager: Gives top management time to focus on critical issues by
   delegating more routine issues to lower-level managers.
2. Motivational research favors decentralization.
3. Permits greater flexibility: more rapid responses
4. Can result in better decisions. (on the field)
5. Can increase control by holding micro-level individuals
   accountable for performance.

Question 8

what may be decentralized

Answer 8

operating decisions, such as those
relating to production, marketing, R&D(for more creativity), and human
resource management.

Question 9

Organizational Structure strategies:
Localization strategy

Answer 9

subsidiaries make operating decisions.
* Cost pressures low: low need for coordination
* Local responsiveness high
* Focus on local responsiveness.
* Operating decisions are decentralized to functionally self-
contained country subsidiaries.
* Need for coordination or integrating mechanisms is low.

Question 10

Organizational Structure strategies:
international strategy

Answer 10

subsidiaries make operating decisions
(e.g., sales).
* Cost pressures low: moderate need for coordination
* Local responsiveness low
typically centralized r and d to avoid redundancy
* Firms attempt to create value by transferring core
competencies from home to foreign subsidiaries.
* Headquarters maintains centralized control over firm’s
core competency, other decisions are decentralized.

Question 11

Organizational Structure strategies:
Global standardization strategy

Answer 11

Very centralized org.
* Cost pressures high – thus location of production matters, HQ decides.
focus on location and experience economies and on coordinating activities
* Local responsiveness low
* Firms focus on the realization of location and experience
curve economies.
* Headquarters typically maintains ultimate control over
most operating decisions.
* The need for integration and a strong organizational
culture are high.
* Incentive systems are typically linked to performance
metrics at the corporate level.

Question 12

Organizational Structure strategies:
transnational strategy

Answer 12

• Cost pressures are high
  thus location of production matters, HQ decides.
  try to focus on location and experience economies
  operation centralized (for lower cost). high need of coordination
• Local responsiveness high
  thus marketing is decentralized
• Focus is on simultaneous attainment of location and
  experience curve economies, local responsiveness, and
  global learning.
• Some operating decisions are centralized (production,
  R&D).
• Need for coordination is high.
• Need a strong culture and incentives to promote
  cooperation.

Question 13

(Horizontal Differentiation)
name 2 Structure of DOMESTIC Firms.

Answer 13

• Functional structure – functions reflect the firm’s value creation activities (for example, production, marketing, R&D, sales).
  good when firm sells a specific product
• Product divisional structure – each division is
  responsible for a distinct product line (business area).
  good when firm sell lots of different product

Question 14

Characteristics of International Division

Answer 14

-Tends to be organized by geography.
-Typically replicates the structure in the home market
as Dual structure can create conflict and coordination, limit transfer of core competenties and create
problems between domestic and foreign operations. (Iimite consolidation at best place, thus limit location and experience econom ikes

Question 15

Worldwide Area Structure

Answer 15

fonction structure
* Favored by firms with a low degree of diversification and a
domestic structure based on functions.
* The world is divided into geographic areas
* Good for local responsiveness (allows for customization)
- autonomous within the area
- good for low cost pressure

appropriate for firm persuing localization strategy

Question 16

Worldwide Product Divisional Structure

Answer 16

-Favored by firms that are reasonably diversified and originally with high cost pressure and low pressure for local responsivness
had domestic structures based on product divisions.
* Helps overcome coordination problems.
Autonomous Entity

appropriate for firm persuing global standardization or international strategy

Question 17

pros and cons of Worldwide Product Divisional Structure

Answer 17

pros:
* Location economies
* Experience curve
economies
* Transfer core
competencies
cons:
Local responsiveness (same division for every area)

Question 18

Global Matrix Structure

Answer 18

Horizontal differentiation proceeds along 2 dimensions:
product division and geographic area.
* Dual decision-making and dual responsibility.
* Often clumsy and bureaucratic: slow decision making; difficulty to adapt

specific manager for each division and area

appropriate for firms pursuing transnational strategy

Question 19

What is an integrating mechanism?

Answer 19

a way to achieve effective coordination between subunits

Question 20

coordination allows for…? (3)
and in what strategies is it the most needed

Answer 20

-location/experience economies
-transfer of core competencies between sub-units,
-smooth flow within the global value chain

demands is highest in transnational> global> international> location strategies

Question 21

impediment/obstacle to coordination
(2)

Answer 21

-differences in subunits’ orientation coming from their different goals. may cause a lack of communication and coordination. ex. prod unit focuses on cost reduction and marketing units focus on sells
-May be lack of respect between subunits, inhibiting
communication.

Question 22

characteristics of Formal Integrating Mechanisms.

and 4 different types

Answer 22

The greater the need for coordination, the more complex the formal integrating mechanisms need to be. From low to high:
1) direct contact: Managers get in touch whenever there is a concern
2) liaisons roles: rep in a subunit coordinates with another rep in another subunit regularly
3) teams: Staff from different departments form a team to ensure coordination
ex; team between r&d and prod. dep. to ensure reasonable cost of future products.
4)matrix structure: manager for each specific area-division

Question 23

characteristics of Informal Integrating Mechanism (5)
on what is it based?
how can you build it?

Answer 23

-knowledge networks = informal communication via chains of connections between managers.
- can be built by doing activities between managers (to build connections)
1) more efficient/ less time-consuming/reduced cost
2) Transmitting information based on informal contacts
between managers.
3) Can be used as a non-bureaucratic conduit for knowledge
flows within a multinational enterprise.
4) Makes use of distributed computer and telecommunications information systems.
5) Managers must share a strong commitment to the same
goals, norms, and values (need a common culture)

Question 24

what is a control systems

Answer 24

metrics used to control performance of subunits

Question 25

Personal Controls 4

Answer 25

* Control via personal contact with subordinates. * One-on-one meetings * Most widely used in small firms. * Structures relationships between managers at different levels in multinational enterprises

Question 26

Bureaucratic Controls 2

Answer 26

* Rules and procedures that direct actions of subunits. * Most important are budgets and capital spending rules.

Question 27

Output Controls 4

Answer 27

* Relatively objective performance metrics such as profitability, productivity, growth, market share, and quality. * Managers judged by their ability to achieve these goals. * Goals are normally established through negotiation between subunits and headquarters. * Fosters management by exception; freedom as long goals are meet

Question 28

Cultural Controls 3

Answer 28

* Employees “buy into” the norms and value systems of the firm and control their own behavior. * Can reduce the need for other control systems. * Example: If your group has an unwritten rule of silence regarding unethical practices

Question 29

what are incentive systems

Answer 29

Devices used to reward appropriate employee behavior ex; bonuses. Usually closely tied to performance metrics used for output controls.

Question 30

4 characteristics of incentive systems

Answer 30

1) The type of incentive varies depending on employees/tasks. (managers vs floor workers (team performance incentives)) 2) Requires significant cooperation between managers in different subunits to be successful. 3) Often adjusted to account for national differences in institutions and culture. (certain incentives don't work in some countries) 4) Can have unintended consequences. ( ex: reduced quality to produce more...)

Question 31

one limitation of incentive/control systems

Answer 31

performance ambiguity

Question 32

what is performance ambiguity, and its consequence and in what international strategy is it predominant

Answer 32

Occurs when causes of good or bad performance are not identifiable. and when a subunit's performance depends on another. consequence: people may get demotivated/reduce inputs Strategy, Interdependence, and Ambiguity; the more coordination is needed the more perf. ambiguity as each firm's division blames another thus * Localization strategy: performance ambiguity is low. * International strategy: higher level, integration mechanism is necessary. * Global standardization strategy: higher still, many activities are interdependent. * Transnational: highest level of performance ambiguity due to high degree of joint decision-making and interdependence

Question 33

perf. ambiguity Implications for Control and Incentives (cost of control)

Answer 33

cost of control: * Costs defined as amount of time top management devotes to monitoring and evaluating subunits’ performance. * Costs are greater when performance ambiguity is greater. * Management must devote time to resolving problems arising from performance ambiguity.

Question 34

degrees of coordination needed, integrating mechanisms, performance ambiguity and cost of control in each international business strategies

Answer 34

the more coordination is needed, the more integrating mechanisms are needed, the more performance ambiguity arises from workings with different subunits, the more cost of controls. location< international< global< transnational

Question 35

what are processes

Answer 35

How decisions are made, and work performed

Question 36

examples of processes

Answer 36

* Formulating strategy. * Allocating resources. * Evaluating new-product ideas. * Handling customer inquiries and complaints. * Improving product quality. * Evaluating employee performance, etc.

Question 37

advantages of good processes

Answer 37

-Efficient and effective processes can lower the costs of value creation and add additional value to a product

Question 38

why network between subunits is important with regards to processes

Answer 38

Managing Processes in an International Business -Valuable new processes that might lead to a competitive advantage can be developed anywhere within the organization’s global network of operations (importance is to recognize and communicate good processes) * Many processes cut across organizational boundaries, embracing several different subunits, or across national boundaries.

Question 39

what is Organizational Culture

Answer 39

Culture is a system of values and norms that are shared among people

Question 40

what influences culture 3

Answer 40

-Founders or leaders have a profound impact. * The broader social culture of the nation. * The history of the enterprise.

Question 41

how culture is maintained? 4

Answer 41

* Hiring and promotional practices of the organization. * Reward strategies. * Socialization processes – formal or informal. * Communication strategy – corporate mission statements, stories, and symbols. Self Study

Question 42

Strong cultures.

Answer 42

* All managers share a consistent set of values and norms that have a clear impact on work performance. * Strong doesn’t necessarily mean good (nazi, gm(lack initiative)

Question 43

Adaptive cultures.

Answer 43

* Most managers care deeply about and value customers, stockholders, and employees. * People and processes that create useful change are valued. Self Study ex: 3M

Question 44

2 condition for a firm to succes internationally

Answer 44

* The firm’s strategy must be consistent with the environment in which the firm operates. * The firm’s organizational architecture must be consistent with its strategy.

Question 45

how to change an organization (3)

Answer 45

1) unfreeze org 2) move to new state 3) refreeze org

Question 46

reason why organization is difficult to change

Answer 46

Organizational Inertia ( cause to keep old architecture)

Question 47

what causes organizational inertia (4)

Answer 47

* Existing distribution of power and influence within an organization. * Existing culture expressed in norms and value systems. * Senior managers’ preconceptions about the appropriate business model or paradigm. * Institutional constraints, such as national regulations.

Question 48

how to Unfreeze an Organization?

Answer 48

* May require bold action ex: closure of unprofitable plants * Senior management must articulate need for change and take steps (reprimand old cultural behavior)

Question 49

how to move to a new state

Answer 49

move to a new state: * Requires substantial change; reorganising components of org's architecture) * Requires sufficient speed, solution; delegate ; makes subunits happy

Question 50

how to refrezze an org.

Answer 50

* Long-term endeavor. -using management education prog * New culture must be established while old is dismantled ensure consistent hiring processes.