International Business

Organizational Structure, Control

Early Experiences, Evolution of New Structure
and Performance.

Old and New Organization Structure and Control of AIRTEL

IIM Students

Agenda

Organizational Structure

Types of Organizational Structures

Control Systems

Evolution and Change in MNC

Organizational Change

Bharti Airtel

Organizational Structure

Types of Organizational Structures

Control Systems

Evolution and Change in MNC

Organizational Change

Bharti Airtel

International Business

Organizational Structure

There is no permanent organization chart for the world. . . . It is of

supreme importance to be ready at all times to take advantage of
new opportunities.
-Robert C. Goizueta, (Former) Chairman and CEO, Coca-Cola Company

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Organizational Structure
Organization is defined by the formal structure, coordination and
control systems, and the organization culture.
Its the formal arrangement of roles, responsibilities and
relationships within an organization.
Its a powerful tool to implement strategy.

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Vertical Differentiation
Centralization V/S Decentralization
Vertical Integration: The issue of determining where in the
hierarchy, the authority to make decisions stand.
Centralization is the degree to which high level managers,
usually above the country level, make strategic decisions and
pass them over to lower levels for implementation.
Decisions made at foreign subsidiary level are considered
decentralized, and those made at HQ are considered to be
centralized.

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Horizontal Differentiation
The Design of the Formal Structure
Horizontal Differentiation: The way a co. designs its formal
structure to perform the following functions
Specify the set of organizational tasks.
Divide these tasks into jobs, departments, subsidiaries and
divisions to get the work done.
Assign authority relationships to get the work done in a way that
supports co. strategy.

International Business

Organizational Structure

Types of Organizational Structures

Control Systems

Evolution and Change in MNC

Organizational Change

Bharti Airtel

International Business

Types of Organizational Structures

Functional Structure

International Division Structure

Product Division Structure

Geographic (Area) Division Structure

Matrix Division Structure

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Functional Structure
Specialized jobs are grouped according to
traditional business functions.

Ideal for Co. having a narrow product line,

sharing similar technology.

CEO

Helps maximize economies of scale

Production

Highly efficient.

India

International Business

Marketing

USA

India

USA

International division structure.

Grouping each international business
activity into its own division.
Creates a critical mass of international
expertise.
Creates quick response to environmental
changes enabling them to deal with
different markets.
Prevents duplication of activities.
Often struggles to get resources from
domestic divisions.
This structure is suited for multi-domestic
strategies that demand little integration
and standardization between domestic
and foreign operations.
Frustrates its ability to exploit economies
of scale.

International Business

CEO

Industrial
Division

Automotive
Division

Aerospace
Electronics
Division

International
Division

Diesel
Company
(France)

Electronics
Company
(France)

Brake
Company
(Mexico)

Product Division Structure

These are popular among international
companies with diverse products.

Similar products are grouped under one

product head e.g. Perfumes and
Cosmetics, each focusing on a single
product segment for its global market.

CEO

Power Systems
Group

Industry And
Defense Group

Suited for a global strategy

There may be duplicate functions and
activities among divisions.
No formal means by which one product
division can learn from another
international expertise.

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Electric Company
(Belgium)

Meter Company
(Argentina)

Elevator
Company
(Belgium)

Construction
Products
Company (Italy)

Geographic (Area) Division Structure

These are used when foreign operations
are large and not dominated by a single
country or region.
Useful when managers can gain
economies of scale on a regional rather
than on global basis.
Drawback is the potential of duplication of
work among areas as the company
locates similar value activities in several
places rather than consolidating them in
the most efficient place.

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CEO
Europe and
Latin
America
Division

U.K.

Venezuela

North
America and
Pacific
Division

Italy

U.S.

Japan

Canada

Matrix Division Structure

This tries simultaneously to deal with
competing pressures for global integration
and local responsiveness.
Institutes overlaps among functional and
divisional forms.
Gives functional, product, and geographic
groups a common focus.
It makes each group share responsibility
for foreign operations and enables each
group exchange information and
resources more willingly.
Drawbacks- Stop championing their
groups unique needs, and thereby
eliminate the multiple knowledgegenerating and decision making
relationship that it is supposed to engage.

International Business

CEO

Textile
Groups

Agricultural
Products
Group

U.K.

Europe-Africa
Group

Latin
America
Group

Mexico

Organizational Structure

Types of Organizational Structures

Control Systems

Evolution and Change in MNC

Organizational Change

Bharti Airtel

International Business

Control Systems

Control Organizational Strategy and Employees

Formal, target-setting, monitoring, evaluation and feedback

systems that provide managers with information about whether
the organizations strategy and structure are working efficiently
and effectively.

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Organizational Control

Managers monitor and regulate how efficiently and effectively

an organization and its members are performing the activities
necessary to achieve organizational goals

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Control Methods
Market Control
Use external market mechanisms to establish internal
performance benchmarks & standards

Bureaucratic Control
Here company uses centralized authority to install rules and
procedures to power broad range of activities
Clan Control
Shared values among employees to idealize the preferred
behavior

International Business

Organizational Structure

Types of Organizational Structures

Control Systems

Evolution and Change in MNC

Organizational Change

Bharti Airtel

International Business

Evolution and Change in MNC

Internationalization is the process by which a firm gradually changes in

response to international competition, domestic market saturation, and
the desire for expansion, new markets, and diversification.
Structural Evolution (Stages Model) occurs when managers redesign the
organizational structure to optimize the strategys changes to work,
making changes in the firms tasks and relationships and designating
authority, responsibility, lines of communication, geographic dispersal of
units and so forth

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Basic Organizational Structures

A number of basic structures exist that permit an MNC to compete
internationally
Structure must meet the need of both the local market and
the home-office strategy of globalization

Contingency approach
Balances the need to respond quickly to local
conditions with the pressures for providing
products globally
Most MNCs evolve through certain basic structural
arrangements in international operations

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Pressure for globalization

Organizational Structures

High

Global Structural
Arrangements

Low

Initial Division
Structures

Mixed and
Transnational
Structures

International
Division Structures

Low

High

Pressure for local responsiveness

Adapted from Figure 92: Organizational Consequences of Internationalization

Organizational Structure

Types of Organizational Structures

Control Systems

Evolution and Change in MNC

Organizational Change

Bharti Airtel

International Business

Evolutionary and Revolutionary Change

Evolutionary change
gradual, incremental, and narrowly focused
constant attempt to improve, adapt, and adjust strategy and
structure incrementally to accommodate changes in the
environment

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Evolutionary and Revolutionary Change

Revolutionary change
Rapid, dramatic, and broadly focused
Involves a bold attempt to quickly find ways to be effective
Likely to result in a radical shift in ways of doing things, new
goals, and a new structure for the organization

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Steps in the Organizational Change Process

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Implementing the Change

Top Down Change
A fast, revolutionary approach to change in which top
managers identify what needs to be changed and then
move quickly to implement the changes throughout the
organization.

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Implementing the Change

Bottom-up change
A gradual or evolutionary approach to change in which
managers at all levels work together to develop a detailed
plan for change.

International Business

Organizational Structure

Types of Organizational Structures

Control Systems

Evolution and Change in MNC

Organizational Change

Bharti Airtel

International Business

Bharti Airtel
Bharti Airtel Limited is a leading integrated telecommunications
company with operations in 20 countries across Asia and Africa.
Headquartered in New Delhi, India, the company ranks
amongst the top 5 mobile service providers globally in terms of
subscribers.
In India, the company's product offerings include 2G, 3G and
4G services, fixed line, high speed broadband through DSL,
IPTV, DTH, enterprise services including national &
international long distance services to carriers.
In the rest of the geographies, it offers 2G, 3G mobile services.
Bharti Airtel had over 246 million customers across its
operations at the end of February 2012.
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Background

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Business Divisions

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Bharti Airtel - Country Map

Source: Wikipedia

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Bharti Airtel Overseas Operations

Source: Wikipedia

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Earlier Organization Structure

Functional Structure

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Organization Structure After (August 1 2011)

Through this new structure, the
company aims to decentralize
decision making and increase
accountability across all levels of
management.
The new structure, separates the
business to business (B2B) and the
business to consumer (B2C)
segments.
The B2C business unit (Headed by
K Srinivas) will service the retail
consumers, homes and small
offices, by combining the erstwhile
business units mobile, telemedia,
digital TV, and other emerging
businesses.

DECENTRALIZED Structure:

International Business

International Division Structure

Geographic (Area) Division Structure

Organization Structure After Aug 1, 2011

International Division Structure

Geographic (Area) Division Structure

International Business

Organization Structure (South Asia) After August 1 2011

Market operations in India and South Asia is divided into three regions, each
headed by an operations director.

The north, east and Bangladesh operations is headed by Ajai Puri

The south and Sri Lanka operations by Vineet Taneja

Operations in the west is headed by Raghunath Mandava

(along with national distribution portfolio).

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Governance Structure :
The Group Chairman and M.D is responsible for providing strategic
direction, leadership and governance, leading transformational initiatives,
international strategic alliances besides effective management of the
Company with a focus on enhancing Bhartis global image.

The CEO(International) and joint M.D. is based in Nairobi, Kenya and

responsible for the overall business performance, management and
expansion of the international operations.
He is also responsible for employee engagement, customer satisfaction,
outsourcing initiatives and the internal control metrics for the international
operations.
The CEO ( India and south east Asia) heads south asia operations and is
responsible for overall business performance in this region. He is also
responsible for employee engagement, customer satisfaction, ensuring
success of outsourcing initiatives and improvements in the internal control
metrics for India and south asia operations.
International Business

Board Members:
The Board of Directors of the Company has an optimum mix of
Executive and Non-Executive Directors, which consists of three
Executive and fifteen Non-Executive Directors.
The Chairman and Managing Director, Mr. Sunil Bharti Mittal, is an
Executive Director and the number of Independent Directors on the
Board is 50% of the total Board strength.
The independence of a Director is determined on the basis that such
director does not have any material pecuniary relationship with the
Company, its promoters or its management, which may affect the
independence of the judgment of a Director.
The Board members possess requisite skills, experience and expertise
required to take decisions, which are in the best interest of the
Company
International Business

Organization Structure (South Asia) After August 1 2011 B

B.O.D
BOARD OF
DIRECTORS :

Thank You
Thank You