Professional Documents
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International Business: by Charles W.L. Hill
International Business: by Charles W.L. Hill
8e
By Charles W.L. Hill
Chapter 13
The Organization of
International Business
McGraw-Hill/Irwin
What Is
Organizational Architecture?
Organizational architecture is the totality of a
firms organization including
1. Organizational structure
the formal division of the organization into subunits
the location of decision-making responsibilities within that
structure - centralized versus decentralized
the establishment of integrating mechanisms to coordinate the
activities of subunits including cross-functional teams or panregional committees
What Is
Organizational Architecture?
3. Processes, organizational culture, and people
Processes - the manner in which decisions are made and work is
performed within the organization
Organizational culture - the norms and value systems that are
shared among the employees of an organization
People - the employees and the strategy used to recruit,
compensate, and retain those individuals and the type of people
they are in terms of their skills, values, and orientation
What Is
Organizational Architecture?
Organizational Architecture
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Why Is Vertical
Differentiation Important?
Vertical differentiation determines where decision-making
power is concentrated
Centralized decision-making
facilitates coordination
ensures decisions are consistent with organizations objectives
gives managers the means to bring about organizational change
avoids duplication of activities
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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Why Is Horizontal
Differentiation Important?
Horizontal differentiation refers to how the firm divides
into sub-units
usually based on function, type of business, or geographical area
What Is A
Functional Structure?
A Typical Functional Structure
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What Is A
Product Divisional Structure?
A Typical Product Divisional Structure
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What Is An International
Divisional Structure?
One Companys International Divisional Structure
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What Is A
Worldwide Area Structure?
A Worldwide Area Structure
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What Is The
Global Matrix Structure?
The global matrix structure is an attempt to minimize the
limitations of the worldwide area structure and the
worldwide product divisional structure
allows for differentiation along two dimensions - product division
and geographic area
has dual decisionmaking - product division and geographic area
have equal responsibility for operating decisions
can be bureaucratic and slow
can result in conflict between areas and product divisions
can result in finger-pointing between divisions when something
goes wrong
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What Is The
Global Matrix Structure?
A Global Matrix Structure
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2.
3.
4.
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What Is
Performance Ambiguity?
Performance ambiguity exists when the causes
of a subunits poor performance are not clear
is common when a subunits performance is dependent
on the performance of other subunits
is lowest in firms with a localization strategy
is higher in international firms
is still higher in firms with a global standardization
strategy
is highest in transnational firms
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What Is
Organizational Culture?
Organizational culture refers to the values and norms
that employees are encouraged to follow and evolves from
founders and important leaders
national social culture
the history of the enterprise
decisions that resulted in high performance
What Is
Organizational Culture?
Managers in companies with a strong culture
share a relatively consistent set of values and
norms that have a clear impact on the way work is
performed
A strong culture
is not always good
may not lead to high performance
could be beneficial at one point, but not at another
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2.
4.
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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.
a) Matrix
b) Worldwide product division
c) Worldwide area division
d) International division
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Review Question
Which type of organization structure has a
dual decision-making system?
a) Matrix
b) Worldwide product division
c) Worldwide area division
d) International division
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Review Question
Which is not one of the four types of control
systems?
a) Cultural control
b) Personal control
c) Input control
d) Bureaucratic control
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Review Question
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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