Highly responsive to pressures for cost efficiencies b/c allows for consolidation ona worldwide basis and reduces inefficient duplication in multiple countriesoE.g. Unilever reduced # of soap-producing factories in Europe from 10 to 2 after adopting this structureThis strategy is on the rise globallyMain drawback local responsiveness suffersoGlobal MatrixAlleviates disadvantages associated with both geographic area and global product division structures, especially for MNEs adopting a transnational strategyHallmark coordination of responsibilities b/w product divisions and geographic areas in order to be both cost efficient and locally responsiveE.g. country manager in charge of Japan (i.e. Japan manger) reports to Product division1 and Asia Division both of which have equal powerin theory supports the goals of transnational strategy, but in practiceit is often difficult to deliver
reason while managers usually find dealing with one boss headache enough, they don’t appreciate having two bosses who are often in conflictthis matrix may:add layers of managementslow down decision speedincrease costs while not showing significant performance improvementno conclusive evidence for the superiority of the matrix structurewhen things went well didn’t know whom to rewardwhen things went bad didn’t know whom to blameABB recently withdrew from the matrix structure (they were the poster child for this structure)The Reciprocal Relationship between Multinational Strategy and StructureoRelationship between strategy and structure is reciprocaloThree key ideas stand out:Strategy usually drives structureFit b/w strategy and structure is crucialMisfit, i.e. combing global standardization strategy with geographic area structure = may have grave performance consequencesRelationship is not one wayStrategy drives structure, but structure also drives strategyWithdrawal from the unworkable matrix structure at MNEs such as ABB has called into question the wisdom of transnational strategyNeither strategy nor structure is staticOften necessary to change strategy, structure or bothIn effort to move toward global standardization strategy many MNEs adopted global product division structure while de-emphasizing the role of country HQsoBut unique challenges in certain countries (CHINA) pushed some MNEs torevive country HQs to more effectively coordinate numerous activities within a large, complex and important host country12-2 How Institutions and Resources Affect Multinational Strategy, Structure, and LearningExhibit 12.8:Institution-Based Considerations:oMNEs face two sets of rules of the game: formal and informal institutions governing:External relationshipsSubject to formal institutional frameworks erected by various home-country and host-country governments
oE.g. to protect domestic employment, British gov’t taxes the foreign earnings of British MNEs at a higher rate than their domestic earningsHost-country gov’ts often attract, encourage, or coerce MNEs into undertaking
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