Strategy, Structure and Culture

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Strategy, Structure and Culture

• Dr. Carol Reade
• Bus 162

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Introduction

• All major MNCs formulate and implement strategy,
  and create structure to coordinate activities and
  control the actions of their members
• As companies go international, strategic
  processes take on added dimensions, including
  national culture
• Culture influences organizational strategy and
  structure

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Strategic Management

• Strategic management
• Process of determining an organizations basic
  mission and long-term objectives, and then
  implementing a plan of action for pursuing this
  mission and attaining these objectives
• Growing need for strategic management is related
  to
• Increasingly diversified operations in a
  continuously changing global environment.

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Elements of Strategic Planning for International
Management
External Environmental Scanning for MNC
Opportunities and Threats
Internal Resource Analysis of MNC Strengths and
Weaknesses
Strategic Planning Goals
IMPLEMENTATION
Adapted from Figure 82 Basic Elements of
Strategic Planning for International Management
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Approaches to Strategic Planning
Economic Imperative
Political Imperative
Administrative Coordination
Quality Imperative
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Global vs. National Strategies

• Fundamental Tension The globalization vs.
  national responsiveness conflict.
• Global integration Production and distribution
  of products and services of a homogenous type and
  quality on a worldwide basis
• National responsiveness need to understand
  different consumer tastes in segmented regional
  markets and respond to different national
  standards and regulations imposed by autonomous
  governments and agencies

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Global Integration vs. National Responsiveness
Global strategy
Transnational strategy
International strategy
Multi-domestic strategy
Adapted from Figure 81 Global Integration vs.
National Responsiveness
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Strategies for Emerging Markets

• The big emerging markets Mexico, Brazil
  Argentina, South Africa, Poland, Turkey, India,
  Indonesia, China, South Korea
• These nations have captured the bulk of
  investment and business interest from MNCs and
  their managers in recent years.
• Emerging markets present exceptional risks due to
  political and economic volatility. These risks
  show up in corruption, failure to enforce
  contracts, red tape and bureaucratic costs, and
  general uncertainty in legal and political
  environment.

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Two Unique Strategies forEmerging Markets

• First Mover Strategies significant economies
  associated with early entry and first-mover
  positioning
• May be a narrow window of opportunity within
  which these opportunities can be best exploited.
• Strategies for Base of Pyramid (BOP) 4-5
  billion potential customers around the globe
  heretofore ignored by global business
• BOP forces global business to rethink their
  strategies. Must consider relationships with
  local governments, small entrepreneurs, and
  nonprofits rather than depend on established
  partners such as central government.
• BOP strategies challenging to implement
• Represents opportunity to incubate new, leapfrog
  technologies
• Successful BOP strategies can travel profitably
  to higher income markets

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The World Population and Income Pyramid
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MNC Structures

• International Division
• Global Area Division
• Global Product Division
• Global Functional Division
• Global Matrix

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Nontraditional OrganizationalArrangements

• Organizational arrangements from mergers and
  acquisitions, joint ventures, and strategic
  alliances
• Collaborative arrangements result in new
  structures, the form of which is determined in
  part by the national and organizational culture
  of the partner
• Organizational arrangements from Keiretsus

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Asian and Western Management Features
BASIC VALUES
ORGANIZATION
MANAGEMENT STYLE
ACTION
Adapted from Figure 9-9 A Comparison of Asian
and Western Management Features