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Flashcards in Designing International Organizations Deck (30):
1

Globalization drivers

- Economies of scale (can only be achieved by going global)
- Economies of scope
- Factors of production

2

Economies of scope

Number/variety of products, services, markets, countries. Can push you to become global

3

Factors of production

Lower cost resources, reduced government restrictions. Most common reason

4

International evolution: Domestic
i) Strategic orientation
ii) Stage of development
iii) Structure
iv) Market potential

i) Domestically oriented
ii) Initial foreign investment
iii) Domestic structure plus export department
iv) Moderately domestic

5

International evolution: International Global
i) Strategic orientation
ii) Stage of development
iii) Structure
iv) Market potential

i) Export oriented, multidomestic
ii) Competitive positioning
iii) Domestic structure plus international division
iv) Large, multidomestic

6

International evolution: Multinational
i) Strategic orientation
ii) Stage of development
iii) Structure
iv) Market potential

i) Multinational
ii) Explosion
iii) Worldwide geographic, product
iv) Very large, multinational

7

International evolution: Global
i) Strategic orientation
ii) Stage of development
iii) Structure
iv) Market potential

i) Global
ii) Global
iii) Matrix, trans-national
iv) Whole world

8

The four evolutionary stages for international companies

1. Domestic
2. International Global
3. Multinational
4. Global

9

Explanation of
i) Domestic
ii) International Global
iii) Multinational
iv) Global

i) Anyone with an export department
ii) You have a division for each country
iii) The world is your marketplace but you have a standard product. E.g. Coca Cola
iv) Not tied to any country and do a balance of ii and iii. Some products tailored to international markets. E.g. G.E.

10

Global Expansion through Strategic alliances

- Joint venture
- Consortia

11

Joint venture

Separate entity created with two or more active firms as sponsors (e.g. competitors joining forces to compete globally)

12

Consortia

Groups of independent companies that join together to share skills, resources, access to one another's markets, etc.

13

Types of global strategies

1. Globalization strategy
2. Both globalization and multidomestic strategy
3. Export strategy
4. Multinetwork

14

Axies for Structure to Global Strategy (uncertain/certain or low/high)

High/Low
- Forces for global integration/standardization
- Focus for national responsiveness

15

Globalization strategy
1. Forces for global integration/standardization
2. Focus for national responsiveness
3. Structure

1. High
2. Low
3. Global Product structure

16

Both Globalization strategy & multidomestic strategy
1. Forces for global integration/standardization
2. Focus for national responsiveness
3. Structure

1. High
2. High
3. Global matrix structure

17

Export strategy
1. Forces for global integration/standardization
2. Focus for national responsiveness
3. Structure

1. Low
2. Low
3. International division

18

Multidomestic strategy
1. Forces for global integration/standardization
2. Focus for national responsiveness
3. Structure

1. Low
2. High
3. Global geographic sructure

19

What does a domestic hybrid structure with international division look like

You have your main divisions (HR, R&D, etc.), then you have your other divisions (scientific products division, international division, etc.) Each area of the world gets their own division underneath international division

20

International domestic hybrid structure with international division:
Pros/cons/when is it a good idea to implement

- Pros: Ability to strategize and focus staff attention on specific regions rather than a diffused, undifferentiated strategy
- Cons: standardized products across geographic locations since product development is independent of geographic location
- When would it be a good idea to implement this kind of structure: For a small/medium company looking to expand their reach internationally

21

Types of global structures

- Global product structure
- Global matrix
- International division
- Global geographic

22

Global Product structure:
Pros/cons/when is it a good idea to implement

- Pros: Save resources by standardizing products regardless of location
- Cons: complex but essential to implement horizontal communication structures among the functional and divisional structures. The product is rigid and cannot be modified to suit different regions’ needs
- When would it be a good idea to implement this kind of structure:
- A huge multinational corporation with a product that isn’t affected by different needs and wants from differing populations

23

What does global product structure look like

No more regional differences, focused strictly on the product and more divisional structure

24

Global Geographic structure:
Pros/cons/when is it a good idea to implement

- Pros: Ability to differentiate products to tailor to populations’ varying tastes
- Cons: lose the potential economies of scale that can be achieved from a more standardized product. Need to ensure there are strict bureaucratic measures(i.e. procedures, rules) among the departments that are universal (e.g. finance, accounting) to ensure a uniform employee structure and treatment among different geographic divisions
- When is it a good idea: For a large company looking to expand with international locations that require differentiation

25

What does a global geographic structure look like

Only divided up by region

26

What does global matrix structure look like

Business areas vs region matrix

27

Global matrix structure:
Pros/cons

- Pros: The flexibility to differentiate products when necessary to different regions
- Cons: complex and difficult to make function efficiently and harmoniously
Huge global company with a wide range of products

28

Example of:
- Global product structure
- Global matrix
- International division
- Global geographic

- Global product structure: Apple
- Global matrix: GE
- International division: Any small/medium company with an international/export division
- Global geographic structure: H&M

29

The challenges to building global capacity

- increased complexity and differentiation
- need for integration: going to need regional managers, how are you going to create these horizontal information linkages
- knowledge transfer: power struggle where different regions might not share info. or knowledge is written down and is just known

30

The mechanisms to overcome the challenges to build global capacity

- Global teams
- HQ planning: this is the way we're all going to do it
- Expanded coordination roles: vertical linkages