International organizational structure

International organizational structure

1. International Business The organizational structure Dr. Nguyen Hai Ninh - FTU

2. 13- 2

3. Vertical Differentiation W here decision-making power is concentrated - Centralized decision-making - Decentralized decision-making

4. Decision is being centralized at the headquarter Decisions are consistent and go through the whole organization’s body organization’s objectives Lower managers do not have right to change the upper level decisions Tight – control in all decisional actions Avoids the duplication of activities and decisions Centralized decision-making

5. Decisions may be made at all level of organization Relieves the burden of centralized decision-making for the head- quarter Motivate individuals and personal innovation Greater flexibility Decision suitable with the real situation of market Decentralized decision-making

6. Horizontal Differentiation How the firm divides into sub-units - Functional Structure - Product Divisional Structure

7. Functional Structure

8. Product Divisional Structure

9. Go global… What should they do

10. they often group all of their international activities into an international division 1 firms with a functional structure at home would replicate the functional structure in the foreign market firms with a divisional structure would replicate the divisional structure in the foreign market P otential for conflicts and coordination problems between domestic and foreign operations

11. Worldwide product divisional structure - adopted by firms that already have domestic product divisions. 2 Transfer core competencies among subsidiaries H elps realize location and experience curve economies Effective where the local responsiveness low Not good for local responsiveness

12. Worldwide area structure - favored by firms with low degree of diversification and a domestic structure based on function 3 divides the world into autonomous geographic areas decentralizes operational authority Effective where the local responsiveness high  localization strategy can result in a fragmentation of the organization

13. Global Matrix Structure - is an attempt to minimize the limitations of the worldwide area structure and the worldwide product divisional structure 4 allows for differentiation along two dimensions - product division and geographic area has dual decision–making - product division and geographic area have equal responsibility for operating decisions can be bureaucratic and slow can result in conflict between areas and product divisions can result in finger-pointing between divisions when something goes wrong

14. S implest formal integrating mechanism is direct contact between subunit managers, followed by liaisons temporary or permanent teams composed of individuals from each subunit is the next level of formal integration the matrix structure allows for all roles to be integrating roles Formal integrating mechanism

15. A knowledge network is a network for transmitting information within an organization that is based not on formal organization structure , but on informal contacts between managers within an enterprise and on distributed information systems Informal mechanism A B C F E D G

16. Structure International business Strategies   Multi-domestic International Global Transnational Vertical differentiation Decentralization Core competency more centralized. Rest decentralized Centralization Mixed Centralization and decentralization Horizontal differentiation World-wide area structure World-wide product divisional structure World-wide product divisional structure Matrix Integrating mechanism None Few Many Very Many Strategy - Structure

17. Activity Imagine Trung Nguyen coffee corporation intend to expanse their business globally, based on your study: Draw the most suitable organizational structure for their global business Identify their decision – making model The integrating mechanism in cross – culture environment.