Académique Documents
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Decentralized decision-making
relieves the burden of centralized decision-making has been shown to motivate individuals permits greater flexibility can result in better decisions can increase control
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Most firms begin with no formal structure, but as they grow, the organization is split into functions reflecting the firms value creation activities - functional structure
functions are coordinated and controlled by top management decision-making is centralized product line diversification requires further horizontal differentiation
Firms may switch to a product divisional structure where each division is responsible for a distinct product line
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In either case, there is the potential for conflict and coordination problems between domestic and foreign operations
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Worldwide area structure - favored by firms with low degree of diversification and a domestic structure based on function
divides the world into autonomous geographic areas decentralizes operational authority facilitates local responsiveness can result in a fragmentation of the organization is consistent with a localization strategy
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Bureaucratic controls a system of rules and procedures that directs the actions of subunits
budgets and capital spending rules
Output controls setting goals for subunits to achieve and expressing those goals in terms of objective performance metrics
compare actual performance against targets and intervene selectively to take corrective action
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Cultural controls exist when employees buy into the norms and value systems of the firm
strong culture implies less need for other forms of control
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Firms pursuing an international strategy create value by transferring core competencies from home to foreign subsidiaries
the need for control is moderate the need for integrating mechanisms is moderate performance ambiguity is relatively low and so is the cost of control the worldwide product division structure is common
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Firms pursuing a transnational strategy focus on simultaneously attaining location and experience curve economies, local responsiveness, and global learning
some decisions are centralized and others are decentralized the need for coordination and cost of control is high an array of formal and informal integrating mechanism are used a strong culture is encouraged matrix structures are common
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Organizations can be difficult to change because of the existing distribution of power and influence, the current culture, managers preconceptions about the appropriate business model or paradigm, and/or institutional constraints
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Review Question
Which of the following is not an advantage of centralized decision-making? a) It facilitates coordination b) It motivates employees c) It gives top-level managers the means to bring about organizational change d) It avoids duplication of activities
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Review Question
Most firms begin their international expansion with a(n) ________ structure.
Review Question
Which type of organization structure has a dual decision-making system?
Review Question
Which is not one of the four types of control systems?
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Which type of organizational structure is often associated with a transnational strategy? a) worldwide area division b) worldwide product division c) matrix d) international division
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Review Question
The norms and value systems that are shared among the employees of an organization are called a) processes b) organizational culture c) control systems d) incentives
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