organization structure and control

Organizational Structure, Control –Early Experiences, Evolution of New Structure and Performance.

International Business

IIM StudentsOld and New Organization Structure and Control of AIRTEL

Agenda

Organizational Structure

Control Systems

Organizational Change

Types of Organizational Structures

Evolution and Change in MNC

Bharti Airtel

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Control Systems




Bharti Airtel


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There is no permanent organization chart for the world. . . . It is of supreme importance to be ready at all times to take advantage of new opportunities.

-Robert C. Goizueta, (Former) Chairman and CEO, Coca-Cola Company



Organization is defined by the formal structure, coordination and control systems, and the organization culture.

It’s the formal arrangement of roles, responsibilities and relationships within an organization.

It’s a powerful tool to implement strategy.



Centralization V/S Decentralization

Vertical Integration: The issue of determining where in the hierarchy, the authority to make decisions stand.

Centralization is the degree to which high level managers, usually above the country level, make strategic decisions and pass them over to lower levels for implementation.

Decisions made at foreign subsidiary level are considered decentralized, and those made at HQ are considered to be centralized.

Vertical Differentiation


The Design of the Formal Structure

Horizontal Differentiation: The way a co. designs its formal structure to perform the following functions

Specify the set of organizational tasks.

Divide these tasks into jobs, departments, subsidiaries and divisions to get the work done.

Assign authority relationships to get the work done in a way that supports co. strategy.

Horizontal Differentiation


Control Systems




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Functional Structure

International Division Structure

Product Division Structure

Geographic (Area) Division Structure

Matrix Division Structure



Specialized jobs are grouped according to traditional business functions.

Ideal for Co. having a narrow product line, sharing similar technology.

Helps maximize economies of scale

Highly efficient.


CEO

Production

India USA

Marketing

India USA


Grouping each international business activity into its own division.

Creates a critical mass of international expertise.

Creates quick response to environmental changes enabling them to deal with different markets.

Prevents duplication of activities. Often struggles to get resources from

domestic divisions. This structure is suited for multi-domestic

strategies that demand little integration and standardization between domestic and foreign operations.

Frustrates its ability to exploit economies of scale.

International division structure.

CEO

Industrial Division

Automotive Division

Aerospace Electronics

Division

International Division

Diesel Company (France)

Electronics Company (France)

Brake Company (Mexico)


These are popular among international companies with diverse products.

Similar products are grouped under one product head e.g. Perfumes and Cosmetics, each focusing on a single product segment for its global market.

Suited for a global strategy

There may be duplicate functions and activities among divisions.

No formal means by which one product division can learn from another international expertise.

Product Division Structure

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Power Systems Group

Electric Company (Belgium)

Meter Company (Argentina)

Industry And Defense Group

Elevator Company (Belgium)

Construction Products

Company (Italy)


These are used when foreign operations are large and not dominated by a single country or region.

Useful when managers can gain economies of scale on a regional rather than on global basis.

Drawback is the potential of duplication of work among areas as the company locates similar value activities in several places rather than consolidating them in the most efficient place.


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Europe and Latin

America Division

U.K. Venezuela Italy

North America and

Pacific Division

U.S. Japan Canada


This tries simultaneously to deal with competing pressures for global integration and local responsiveness.

Institutes overlaps among functional and divisional forms.

Gives functional, product, and geographic groups a common focus.

It makes each group share responsibility for foreign operations and enables each group exchange information and resources more willingly.

Drawbacks- Stop championing their group’s unique needs, and thereby eliminate the multiple knowledge-generating and decision making relationship that it is supposed to engage.

Matrix Division Structure

Textile Groups

Agricultural Products Group

Europe-Africa Group Latin

America Group

U.K. Mexico

CEO


Control Systems




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Control Organizational Strategy and Employees

Formal, target-setting, monitoring, evaluation and feedback systems that provide managers with information about whether the organization’s strategy and structure are working efficiently and effectively.

Control Systems


Managers monitor and regulate how efficiently and effectively an organization and its members are performing the activities necessary to achieve organizational goals

Organizational Control


Market Control Use external market mechanisms to establish internal performance

benchmarks & standards

Bureaucratic Control Here company uses centralized authority to install rules and

procedures to power broad range of activities

Clan Control Shared values among employees to idealize the preferred

behavior

Control Methods


Control Systems




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Internationalization is the process by which a firm gradually changes in response to international competition, domestic market saturation, and the desire for expansion, new markets, and diversification.

Structural Evolution (Stages Model) occurs when managers redesign the organizational structure to optimize the strategy’s changes to work, making changes in the firm’s tasks and relationships and designating authority, responsibility, lines of communication, geographic dispersal of units and so forth



A number of basic structures exist that permit an MNC to compete internationally

Structure must meet the need of both the local market and the home-office strategy of globalization

Contingency approach Balances the need to respond quickly to local

conditions with the pressures for providing products globally

Most MNCs evolve through certain basic structural arrangements in international operations

Basic Organizational Structures

Organizational Structures

Pressure for local responsiveness

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glo

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Low

High

Low High

Adapted from Figure 9–2: Organizational Consequences of Internationalization

Global StructuralArrangements

Global StructuralArrangements

Mixed and Transnational

Structures

Mixed and Transnational

Structures

Initial DivisionStructures

Initial DivisionStructures International

Division Structures

InternationalDivision Structures


Control Systems




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Evolutionary change gradual, incremental, and narrowly focused

constant attempt to improve, adapt, and adjust strategy and structure incrementally to accommodate changes in the environment

Evolutionary and Revolutionary Change


Revolutionary change Rapid, dramatic, and broadly focused

Involves a bold attempt to quickly find ways to be effective

Likely to result in a radical shift in ways of doing things, new goals, and a new structure for the organization

Evolutionary and Revolutionary Change


Steps in the Organizational Change Process


Top Down Change

A fast, revolutionary approach to change in which top managers identify what needs to be changed and then move quickly to implement the changes throughout the organization.

Implementing the Change


Bottom-up change

A gradual or evolutionary approach to change in which managers at all levels work together to develop a detailed plan for change.

Implementing the Change


Control Systems




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Bharti Airtel Limited is a leading integrated telecommunications company with operations in 20 countries across Asia and Africa.

Headquartered in New Delhi, India, the company ranks

amongst the top 5 mobile service providers globally in terms of subscribers.

In India, the company's product offerings include 2G, 3G and 4G services, fixed line, high speed broadband through DSL, IPTV, DTH, enterprise services including national & international long distance services to carriers.

In the rest of the geographies, it offers 2G, 3G mobile services. Bharti Airtel had over 246 million customers across its operations at the end of February 2012.

Bharti Airtel


Background


Business Divisions


Bharti Airtel - Country Map

Source: Wikipedia


Bharti Airtel – Overseas Operations

Source: Wikipedia


Earlier Organization Structure



Organization Structure After (August 1 2011)

Through this new structure, the company aims to decentralize decision making and increase accountability across all levels of management.

The new structure, separates the business to business (B2B) and the business to consumer (B2C) segments.

The B2C business unit (Headed by K Srinivas) will service the retail consumers, homes and small offices, by combining the erstwhile business units — mobile, telemedia, digital TV, and other emerging businesses.

DECENTRALIZED Structure:




Organization Structure After Aug 1, 2011




Organization Structure (South Asia) After August 1 2011

Market operations in India and South Asia is divided into three

regions, each headed by an operations director.

The north, east and Bangladesh operations is

headed by Ajai Puri

The south and Sri Lanka operations by Vineet

Taneja

Operations in the west is headed by Raghunath Mandava (along

with national distribution portfolio).


The Group Chairman and M.D is responsible for providing strategic direction, leadership and governance, leading transformational initiatives, international strategic alliances besides effective management of the Company with a focus on enhancing Bharti’s global image.

The CEO(International) and joint M.D. is based in Nairobi, Kenya and responsible for the overall business performance, management and expansion of the international operations.

He is also responsible for employee engagement, customer satisfaction, outsourcing initiatives and the internal control metrics for the international operations.

The CEO ( India and south east Asia) heads south asia operations and is responsible for overall business performance in this region. He is also responsible for employee engagement, customer satisfaction, ensuring success of outsourcing initiatives and improvements in the internal control metrics for India and south asia operations.

Governance Structure :


The Board of Directors of the Company has an optimum mix of Executive and Non-Executive Directors, which consists of three Executive and fifteen Non-Executive Directors.

The Chairman and Managing Director, Mr. Sunil Bharti Mittal, is an Executive Director and the number of Independent Directors on the Board is 50% of the total Board strength.

The independence of a Director is determined on the basis that such director does not have any material pecuniary relationship with the Company, its promoters or its management, which may affect the independence of the judgment of a Director.

The Board members possess requisite skills, experience and expertise required to take decisions, which are in the best interest of the Company

Board Members:

B.O.D Organization Structure (South Asia) After August 1 2011 B

BOARD OF DIRECTORS :

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