Chap013 - Chapter 13 The Organization of International...

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Chapter The Organization of International Business 13
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Case: Organizational change at Unilever One of world’s oldest multinational corporations Organized on a decentralized basis Annual conferences on company strategy and executive education sessions, establish connections between managers Duplication of facilities and high cost structure a problem in new competitive environment 1996: introduced structure based on regional business groups “Lever Europe” established to consolidate the company’s detergent operation in order to reduce costs and speed up new product information
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Organization architecture and profitability Totality of a firm’s organization, including structure, control systems, incentives, processes, culture and people. Superior organization profitability requires three conditions: An organization’s architecture must be internally consistent. Strategy and architecture must be consistent. Strategy, architecture and competitive environments must be consistent.
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Organizational architecture To maximize profitability a firm must achieve consistency between the various components of its architecture Fig 13.1
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Organizational architecture Organizational structure: Location of decision- making responsibilities within the structure (vertical differentiation) Formal division of the organization into subunits e.g. product divisions (horizontal differentiation) Establishment of integrating mechanisms including cross-functional teams and or pan-regional committees Control systems : metrics used to measure performance of subunits and judge managerial performance
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Organizational architecture Incentives: Devices used to reward appropriate employee behavior Closely tied to performance metrics Processes: Manner in which decisions are made and work is performed
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Organizational architecture Organizational culture: Values and norms shared among employees of an organization Strategy used to manage human resources People: Employees Strategy used to recruit, compensate, and retain individuals with necessary skills, values and orientation
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Vertical differentiation Concerned with where decisions are made Where is decision making power concentrated? Two Approaches Centralization Decentralization
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Centralization: Facilitates coordination. Ensure decisions consistent with organization’s objectives. Top-level managers have means to bring about organizational change. Avoids duplication of activities. Decentralization: Overburdened top management. Motivational research favors decentralization. Permits greater flexibility. Can result in better
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This note was uploaded on 09/08/2011 for the course MGNT 3650 taught by Professor Grimes during the Spring '11 term at Georgia Southwestern.

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Chap013 - Chapter 13 The Organization of International...

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