organizational design, structure

1. Thomson Learning
© 2004 6-1
Chapter Six
Designing Organizations for the
International Environment

2. Thomson Learning
© 2004 6-2
Four Stages of International
Evolution
I.
Domestic
II.
International
III.
Multinational
IV.
Global
Strategic
Orientation
Domestically
oriented
Export-oriented,
multidomestic
Multinational Global
Stage of
Development
Initial foreign
involvement
Competitive
positioning
Explosion Global
Structure
Domestic
structure plus
export
department
Domestic
structure plus
international
division
Worldwide
geographic,
product
Matrix, trans-
national
Market
Potential
Moderate,
mostly
domestic
Large,
multidomestic
Very large,
multinational
Whole world
Sources: Based on Nancy J. Adler, International Dimensions of
Organizational Behavior (Boston: PWS-KENT, 1991), 7-8;
and Theodore T. Herbert, “Strategy and Multinational Organization
Structure: An Interorganizational Relationships Perspective,”
Academy of Management Review 9 (1984): 259-71.

3. Thomson Learning
© 2004 6-3
Matching Organizational Structure to
International Advantage
When Forces for
Global
Integration are . .
.
And Forces for
National
Responsiveness
are . . .
Strategy Structure
Low Low Export International
Division
High Low Globalization Global Product
Structure
Low High Multidomestic Global
Geographic
Structure
High High Globalization and
Multidomestic
Global Matrix
Structure

4. Thomson Learning
© 2004 6-4
Domestic Hybrid Structure with
International Division
Scientific
Products
Division
Research &
Development
Human
Resources
Medical
Products
Division
Europe
(Sales)
Electrical
Products
Division
Corporate
Finance
CEO
International
Division
Brazil
(Subsidiary)
Mid East
(Sales)
Staff (Legal,
Licensing)

5. Thomson Learning
© 2004 6-5
Partial Global Product Structure Used by
Eaton Corporation
Engineering President InternationalLaw &
Corporate
Relations
Chairman
Finance &
Administration
Regional
Coordinators
Global
Automotive
Components
Group
Global
Industrial
Group
Global
Instruments
Product
Group
Global
Materials
Handling
Group
Global
Truck
Components
Group
Source: Based on New Directions in Multinational Corporate
Organization (New York: Business International Corp., 1981).

6. Thomson Learning
© 2004 6-6
Global Matrix Structure
International
Executive
Committee
Power
Transformers
Germany Norway
Argentina/
Brazil
Spain/
Portugal
Transportation
Industry
Business
Areas
Country Managers
Local
Companies

7. Thomson Learning
© 2004 6-7
Building Global Capabilities
 The Global Organizational Challenge
Increased Complexity and Differentiation
Need for Integration
Knowledge Transfer
 Global Coordination Mechanisms
Global Teams
Headquarters Planning
Expanded Coordination Roles

8. Thomson Learning
© 2004 6-8
Cultural Differences in Coordination
and Control
 National Value Systems
Power Distance
Uncertainty Avoidance
 Three National Approaches to Coordination and Control
Centralized Coordination in Japanese Companies
European Firms’ Decentralized Approach
The United States: Coordination and Control
through Formalization

9. Thomson Learning
© 2004 6-9
Transnational Model of
Organizations
 Assets and resources are dispersed worldwide into highly
specialized operations that are linked together through
interdependent relationships.
 Structures are flexible and ever-changing.
 Subsidiary managers initiate strategies and innovations that
become strategy for the corporation as a whole.
 Unification and coordination are achieved primarily through
corporate culture, shared visions and values, and
management style rather than through formal structures and
systems

10. Thomson Learning
© 2004 6-9
Transnational Model of
Organizations
 Assets and resources are dispersed worldwide into highly
specialized operations that are linked together through
interdependent relationships.
 Structures are flexible and ever-changing.
 Subsidiary managers initiate strategies and innovations that
become strategy for the corporation as a whole.
 Unification and coordination are achieved primarily through
corporate culture, shared visions and values, and
management style rather than through formal structures and
systems