398 CHAPTER NOTES 06 DESIGNING ORGANIZATIONS

398 CHAPTER NOTES 06 DESIGNING ORGANIZATIONS - DESIGNING...

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DESIGNING ORGANIZATIONS FOR THE INTERNATIONAL ENVIVRONMENT 1 CHAPTER SIX DESIGNING ORGANIZATIONS FOR THE INTERNATIONAL ENVIRONMENT CHAPTER OVERVIEW This chapter explores how managers design the organization for the international environment. Reasons for expanding internationally are provided along with the stages of international development and the use of strategic alliances. The chapter examines global strategic approaches and the application of various structural designs for global advantage as well as specific challenges global organizations face and how they cope with them. Finally the transnational model is explained. Entering The Global Arena Motivations for Global Expansion By going global companies can realize economies of scale and exploit economies of scope— the number and variety of products and services it offers. Another reason for moving to global market is to take advantage of low-cost production factors, especially lower-cost labor. Stages of International Development As a company evolves toward full-fledged global operations, they tend to go through four stages : Domestic stage means that the company is predominantly domestically oriented, but managers are developing initial international involvement, often to increase market potential. International (Multidomestic) stage means that exports are taken seriously and that the company deals with the competitive issues of each country separately. Multinational means that it has marketing and production facilities in many countries, worldwide access to capital, and has more than one-third of its sales outside the home country. Global stage means that the company transcends any single country and does not identify with a single home country. Global Expansion through International Strategic Alliances International strategic alliances offer one way to get involved in international operations. Licensing agreements allow a company to use the technology or name of another. Joint ventures are separate entities created with two or more active firms as sponsors. Consortia of organizations are groups of firms which venture into new products and technologies together. The virtual organization
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This note was uploaded on 02/06/2011 for the course BUSINESS 398 taught by Professor Allanmarshal during the Spring '11 term at Wilfred Laurier University .

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398 CHAPTER NOTES 06 DESIGNING ORGANIZATIONS - DESIGNING...

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