bahçeşehir university social science institutions ph d. business program management &...

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Bahçeşehir UniversitySocial Science InstitutionsPh D. Business ProgramManagement & OrganizationOrganizational TheoryProf. Dr. Atilla DİCLE

Designing Organizations for the International

EnvironmentPrep. by: İlhan ÇİFTÇİ

Bahçeşehir University - Organizational Theory

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Industrial Revolution & Globalization

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Orientation Stages

Domestic Orientation

Global Orientation

International Orientation

MultinationalOrientation



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Four Stages of Int’l EvolutionI - Domestic II - International III - Multinational IV - Global

Strategic Orientation

Domestically oriented

Export – oriented multi domestic

Multinational Global

Stage of Development

Initial foreign involment

Competitive positioning

Explosion Global

Structure Domestic structure, plus export department

Domestic structure, plus international division

Worldwide geographical product

Matrix, transnational

Market Potential

Moderate, mostly domestşc

Large, multidomestic

Very large, multinational

Whole world

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# CountryRevenue

(billion $)# of Firm in

Global Market1 US 5.841 1892 Japan 2.181 823 France 1.246 374 Britain 1.079 35

5 Germany 1.363 346 China 358 157 Canada 185 13

8 Netherlands 388 12

9 Switzerland 382 12

10 South Korea 266 11


Fortune 500 Investigation - 2006

The number of US companies was 189 in the

500 biggset company.


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Maps - The World US & Turkey

7Bahçeşehir University - Organizational Theory

Fortune 500 Investigation - 2008TÜ

PRAŞ

BOTA

Ş

TEDA

Ş

PETR

OL O

FİSİ

SHEL

L & T

URCA

S PE

T.

TÜRK

TEL

EKO

M

ENKA

İNŞA

AT

TURK

CELL

EÜAŞ

FORD

OTO

MO

TİV

ERDE

MİR

ARÇE

LİK

0

50

100

150

200

250

300

350

400

450

500

0

2

4

6

8

10

12

14

12

3

4

5

6

7

8

910

11

12

108

159 163

206

315332 363 377

379

448464 469

Kendi Ülkesindeki Yeri (Sağ eksen)

US ile Karşılaştırıldığında

In accordance to revenue

basis,Tüpraş is the biggest company in Turkey and the number of Tüpraş

is 108 in an US market

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To Expand Int’l Market Motivators

Economies of Scope

Low Cost Production

Factors

• Indutrial Revolution• Innovations• Technology• ...

Economies of Scale

• Diversification of Products• Increase in product quantity• Expand regions, country and market

• Invest raw materials with a lowest possible cost• Get opportunity to obtain scare• Obtain source of cheap labor



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Strategic Alliances

ConsortiaJoint Ventures

Licensing

Strategic Alliance is one of the way of getting involved in international trade

Source: ....


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Strategic Alliances Benefits

Service through anaother country’s distrubution channels

Achieve production cost savings through economies of scale

Share complementary technological strengths

Distrubute new products


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Jonit Ventures,Consortias

CONSROTIAAirbus French,

British,German vs Boeing (US)

JV,Gold ExplorationRobex Resources

(Canada)Inc. &Geo Services

International (Mali)

JVPharmaceutical

Merck,Eli Lilly,Pfizer,

Warner Lambert

JVBanking Sector

ICiCI (India) & Prudential (UK)

(Asset Management)

Strategic Alliances Samples

Source: ....


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Model for Global vs Local Opportunities

Decision between the Globalization vesrsus a multidomestic global strategy

Whether the manager want each global affiliate to act autonomously or whether activities should be standardized across countries

Globalization strategy means that product design, manufacturing and marketing strategy are standardized throught the world (Coca – Cola only the advertising and marketing need to be tailored for different regions)

A multidomestic strategy menas that competition in each counrty is handled independently of competition in other countries (Dominos - - > The compnay has 2.500 int’l restaurants and offers 100 different pizza pies)


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Model to Fit Org. Structure to Int’l Advantages

Globalization Staretegy:

GlobalProductStructure

Both Globalization and Multi Domestic Strategy:

GlobalMatrixStructure

Export Strategy:

International Division

Multi Dpmestic Strategy:

GlobalGeographic Structure

High

High

Low

Low Forces for National Responsiveness

Forces for GlobalIntegration


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Int’l Divison & Domestic Division

Domestic Division:

Typicially Orginized along functional or product lines

International Divison:

Orginized according to geographical interest

Has its own hierarchy to handle business (licensing, joint ventures) in various countries

Selling the products and services and prodcuts created by the domestic division

Openning subsidiary plants

Moving the organization into more sophisticated international operations


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Domestic Hybrid Structure with Int’l Division

CEO

ElectircialProduct Div.

ScientificProduct Div.

MedicalProduct Div.

Internatinal Division

Brazil (Subsidiary)

Human Resources

Corporate Finance

Research &Development

EuropeSales

Mideast(Sales)

Staff (Legak, Licensing)


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Global Product Divison Structure

Planning

Organizing

Issues

Distrubition of product

Controlling

Successful global Division Structure

All Divison Manager is responsible

The Product based structure

works best when a division handles products that are

tecnology similar and can be standarized for marketing worldwide


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Global Geographical Divison Structure

• Divides the world into geographical • regions

• Each geographical divison reporting• to CEO

• Each Division has full control of• functional activities wtihin a geog. area

• Difficult to transfer new domestic tech. and products, (each div. thinks what it need)

Source: ....


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Global Matrix Structure

It provides a way to achieve vertical and horizontal coordination simultaneously along

two dimensions

The matrix works best when pressure for decision making balances the interests of

both product standarzation and geographical localization and when coordination to share

resources is important


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Global Matrix Structure

Business Areas

Audit

Corporate Finance

Tax

ERS

DeloitteInternational

Executive Committee

Tax

ERS

Egypt

Audit

Corporate Finance

Tax

ERS

Tax

ERS

Switzerland

Audit

Corporate Finance

Tax

ERS

Turkey

Audit

Corporate Finance

UK

Audit

Corporate Finance


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Building Global CapabilitiesThe Global Organizational Challenge

Increased Complexity and Differenciation

Need for Integration

Transfer of Knowledge and Innovation

Global Coordination Mechanisms

Global Teams

Headquarters Planning

Expand Coordination Roles


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Cultural Differences in Coordination and Control

National Value Systems

Three National Approaches to Coordination and Control

Centralized Coordination in Japannese CompaniesEuropean Firms’ Decentralized ApproachThe U.S.


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Questions and Explanations

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