Reminders

1
Reminders

1. Acme Omega revisions due Monday.
2. Rhodes Industries Case due Monday.
3. Please leave your mid-term course evaluations
   with me at your convenience.

2
Designing OrganizationsforThe International
Environment

• BA 152

3
The International Environment
Government/Political Sector
PRIMARY SECTORS
International Context
Organization
Industry/ Competition
INPUT
THROUGHPUT
OUTPUT
Customers
Cultural/ Demographic Sector
Technology
Economic Sector
SECONDARY SECTORS
4
Why Enter the Global Environment

• Growth opportunities
• Economies of scale
• Economies of scope
• Move expensive operations to lower cost locations
  outsourcing
• Others?

5
Stages of International Development

• Domestic with modest global efforts
• Aware of an export market (might have an Export
  Department)
• International
• Multi-domestic thinking - views issues as
  independent across countries (might have an
  International Division)

6
Stages of International Development

• Multinational
• Marketing and manufacturing facilities are
  located around the world.
• Global
• Goods and services are produced to meet the needs
  of the global market. (stateless company)

7
Fitting Design International Strategy

• Globalization Strategy
• Product design, manufacturing, and/or advertising
  strategies are standardized for world markets.

8
Fitting Design International Strategy

• Multi-domestic Strategy
• Competition in each country is assumed to be
  independent of competition in other countries.
• Product design, manufacturing, and/or advertising
  strategies are tailored to each country.

9
Fitting Design International Strategy

• Design Choices will be a function of these two
  competing demands.
• Forces for global integration
• Forces for national responsiveness

10
Fitting Design International Strategy
High
Global Product Structure
Transnational Model
Global Matrix Structure
Forces for Global Integration
Global Geographic Structure
International Division
Low
Low Forces for National Responsiveness High
11
A Hybrid Organization with an International
Division
12
Partial Global Structure use by Eaton Corp.
13
Colgate-Palmolives Global Geographic Structure
14
GMs Global Geographic Structure
15
GMs Global Geographic Structure The Problems
Reversing 80 Years of History GM Is Reining In
Global Fiefs Detroit Makes Key Decisions on
Design, Manufacturing To Cut Costly
Duplication Chinese Build a Chevy Engine
General Motors Corp. is the biggest car company
in the world. But in many parts of the globe it
has long operated like a smaller regional player,
with executives in places like Australia and
Sweden given wide autonomy over the design of new
models. Now GM has put an end to that policy,
which dates back to the 1920s and legendary
president Alfred P. Sloan. It's insisting that
its world-wide units share basic parts and work
together to design vehicles that can be sold,
with modest variations, anywhere in the globe.
One example GM wants to reduce the types of
radios it uses in its cars to 50 from 270
currently, saving 40 in radio costs.
GM's struggle to find the balance between local
autonomy and central control is a familiar one
for global corporations. Mr. Wagoner says he
wants GM to be the winner in what he calls "a
race to the middle" in the centralization vs.
decentralization debate.
16
ABBs Global Matrix Structure
Country Managers
17
The Transnational ModelPhilips NV
18
The Transnational Model

• Highly specialized operations dispersed worldwide
  and linked through interdependent relationships.
• Structure is flexible and changeable as needed.

19
The Transnational Model

• Local managers can initiate strategic changes
  that may infiltrate the rest of the organization.
• Coordination is largely a function of strong
  culture, shared vision and values, and management
  style.

20
The Downside Risks of the Global Environment

• Western business plans may not translate well.
  (Wal-Mart/Disney)
• Backlash in the home market.
• Exposure to foreign laws and regulations
• Political instability
• Others?

21
Next Time

• Rhodes Industries