Ibm ppts m 4
- 1. I B M Module 4 Syllabi: Organizational structure and control system for international business: Centralized Vs decentralized structure-functional, divisional, product based and matrix structure. Global business planning system - global business organizing system— information system-global business control system Integration of international business.
- 2. Organization Structure in International Business Organization Structure It’s the formal arrangement of roles, responsibilities and relationships within an organization. It’s a powerful tool to implement strategy.
- 3. Centralization V/S Decentralization 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.
- 4. Centralization- characteristics Decisions made by senior level managers at HQ. Facilitates coordination of core values Ensures decisions are consistent with strategic objectives. Senior executives have authority to direct major change. Avoids duplication of activities Reduces the risk of making wrong decisions at low level Ensures consistent dealings with all stakeholders
- 5. Decentralization- characteristics Decisions made by employees, who are very close to the situation Employees directly deal with customers, markets, etc Motivates employees to exercise major organizational changes Enables more flexible response to environmental changes Permits to fix better accountability
- 6. Discussion question What are the advantages and disadvantages of Centralized and decentralized decision making? ( consider the following factors / criteria to discuss the above question) accuracy of decisions, how fast the decision making, Flexibility in decision making, duplication of activities involved in decision making
- 7. Types of Organizational Structures 1. Functional Structure 2. International Division Structure 3. Product Division Structure 4. Geographic (Area) Division Structure 5. Matrix Division Structure
- 8. Functional Structure Specialized jobs are grouped according to traditional business functions. Ideal for companies having a narrow product line, sharing similar technology. Helps maximize economies of scale Highly efficient.
- 9. Functional Structure President V P PRODUCTION Worldwide V P MARKETING Worldwide Subsidiary 1 Subsidiary 2 Subsidiary 3
- 10. 2. International division structure Grouping each international business activity into its own division Creates international expertise Creates quick response to environmental changes enabling them to deal with different markets Prevents duplication of activities Demerits are , Often struggles to get resources Frustrates to exploit economies of scale
- 11. International division structure President V P Domestic Division V P International Division Foreign subsidiary 1 Foreign subsidiary 2 Foreign subsidiary 3
- 12. Product Division Structure These are popular among international companies with diverse products. Similar products are grouped under one product head e.g. 1)Perfumes and Cosmetics, 2)Detergents etc. each CEO focusing on a single product segment for its global market, suitable for a global strategy The limitations are, There may be duplicate functions and activities among divisions. No formal means by which one product division can learn from another international expertise.
- 13. Product based structure President V P Product 1 worldwide V P Product 3 Worldwide Foreign subsidiary 1 Foreign subsidiary 2 Foreign subsidiary 3 V P Product 2 worldwide
- 14. Geographic (Area) Division Structure ( Not in syllabus) 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 possibility 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
- 15. Geographic structure president V P AREA 1 V P AREA 2 V P AREA 3 Subsidiary 2 Subsidiary 3Subsidary 1
- 16. Matrix structure The matrix organizational structure is more complicated and complex than other kinds of organizational structure. It is also known as a ‘hybrid structure’ and has features of both functional and divisional/ area organizations, but is different from both.
- 17. Matrix Division Structure- Advantages Combines the advantages and overcome the disadvantages of other alternative structures. 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. It helps develop cross-functional skill in employees. These are extremely efficient and help get the job done with limited resources.
- 18. Matrix Organizational Structure Chart. President V P Pdt line 1 Pdt A Pdt B V P R&D V P Sales & Mktg Pdt A R&D Team Pdt A S &M Team Pdt B R& D Team Pdt B S&M Team
- 19. Disadvantages A major disadvantage of the matrix structure is that many of the team members get frustrated and irritated while not knowing whom they are to follow, as there are more superiors. This organizational structure also gives rise to conflict between functional heads on issues relating to priorities and deadlines.
- 20. Global business planning Global business plans resemble local and regional business plans in format. But, a global business plans differ from other business plans due to its global operations. Therefore, components of a global business plan differs due to global customers, global pricing and currency issues, and international market legal factors etc.
- 21. Global business planning system It helps you to identify your target markets Helps in understanding consumer need and to offer products that satisfy their needs It gives clarity to who does what, when, where and how Forces you to think about both short term and long term goals Looks your business as whole , allocates the resources properly Provides a guide to measure progress and outcomes
- 22. Components of a global business plan a business overview, which describes the company the projected market and the intended product or service financial results, such as capital and profits a market description that include market size, share, positioning of products, competition etc. An operations and management plan discusses supply, production, marketing and distribution in targeted countries plan on organizational structure , that describes the details of your organization's hierarchy of personnel
- 23. Global Business Organizing System The organization of international business refers to the integrated function of formal organization structure, coordination, control, processes, culture and people. -Charles W.L. Hill” Three factors in organization Division of the organization into subunits Decision-making responsibilities (centralized vs. decentralized) The establishment of integrating mechanisms to coordinate the activities.
- 24. Global business information system An information system can be defined technically as a set of interrelated components that collect (or retrieve), process, store, and distribute information to support decision making and control in an organization. In addition, information systems may also help managers and workers analyze problems, visualize complex subjects, and create new products Global information systems can change the vision of how a business communicates. The use of electronic data interchange(EDI) increases the speed with which businesses can respond to their customers.
- 25. Global business information system Managers are increasingly using information technology to coordinate work, communicate with employees, and to provide information for decision making. Now, the firms become digital, that all of the organization's significant business relationships with customers, suppliers, and employees are digitally enabled. Core business processes are accomplished through digital networks spanning the entire organization or linking multiple organizations.
- 26. Business firms invest heavily in information systems to achieve strategic business objectives such as operational excellence; new products, services and business models; customer and supplier intimacy; improved decision making; competitive advantage; and survival.
- 27. Global business control system Control refers to the task of ensuring that activities are producing the desired results and is limited to monitoring the outcome of activities, reviewing feedback information about this outcome, and if necessary, taking corrective actions". Global business control systems are the metrics that are used to measure the performance of sub-units and make judgments on how well international firms arefunctioning.
- 28. Levels of controlling Strategic control • How the international business formulates achieves its strategic goals : Eg. Innovations Organization control :How the international business response and acts to changes organization environment : Eg: Advertising and promotion Operations control: How the international business focus on operating systems in its subsidiaries Eg. Storage and transport
- 29. Factors affecting controlling Domestic values and practices Communication systems Distance from head quarters Environmental differences Subsidiary performance and Quality of international operations
- 30. Under economic integration, the countries work together with one other in order to eliminate or reduce the barriers to the flow of goods, labour or resources. Economic Integration